Concerned about possible bribery?, Internal investigations - Written by on Tuesday, May 3, 2011 2:43 - 1 Comment

2) You’ve uncovered a possible bribe: Putting out the fire and setting up the investigation

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After our piece last week (what to do WHEN you find a possible bribe) it’s decided to call in the fire trucks – the tip-off about the possible bribe merits investigation.

What should you do next?

Time is of the essence but some very quick planning is required.

This week we’re looking at what skills your investigators need and putting out the fire.

Let’s look at the skillset first.

Overlap

Internal or external, expertise in what is being investigated and the likely collateral issues, for example, privacy and data protection will be important.

Similarly, local language capability along with country/regional specific experience.  How else will local documents and correspondence be reviewed and local nuances be picked up? – This doesn’t mean that everyone on the team needs to be bi-lingual but ensuring that member(s) of the team (whether an attorney or trusted translator) can understand the local language is essential.

Oh, and by the way, in our experience there are translators and translators…

Internal investigations

A big plus factor in conducting an investigation in-house is that internal investigators should be fluent in the corporate financial, auditing and IT systems.

Weighed against this are potential resources and privilege concerns.

One way of dealing with the resources problem is to consider bulking up with some paralegals.  You could hire your own, or have a chat to your lawyers some (for example we can) may be able to lend you paralegals from their own outsourcing operation for the purposes of document review to share the load.

Privilege, is more tricky.  All the usual rules apply, including:

  • exercise caution communicating confidential information and communicate this orally where necessary
  • do not mix business advice with legal advice (mixing the two could lose privilege over the legal aspect)
  • circulate external written legal advice directly with verbal not written opinion
  • be aware of the rules in different jurisdictions
  • segregate privileged documents and clearly mark and file them
  • disclose privileged documents and circulate on a need to know basis
  • send documents through external lawyers making clear on those documents that the communications are privileged by stating “Privileged and Confidential – External Lawyers-Client Communication subject to Legal Professional Privilege.  Attorney Work Product”

External counsel investigations

In-house counsel and external law firms are fiercely independent so some of what follows is sensitive.

As we said in last weeks piece, in appropriate circumstances, using external counsel can be a sensible way forward.  It avoids the perception that in-house counsel was placed in an uncomfortable practical situation (or worse a legal conflict).

  • Ensure independence

In choosing your firm there are very good reasons for using long serving advisers.  They will be familiar with the business.  They will also be able to carry out the investigation quicker and more efficiently than a new firm from a standing start.   When appointing an investigating firm it should be borne in mind that prior legal work carried out by the proposed investigating firm should not interfere with its independent professional judgment.

  • Relationships

Whoever you choose their relationships with relevant agencies are useful.  In the UK the SFO and the FSA will be the primary agencies.  In the US the DOJ and the SEC.

In practice, we find that either the US (with a focus on their Washington or New York offices) or the UK (London) are centers of gravity for the advisers on international investigations.

In turn these advisers typically call on relationships with local counsel in relevant jurisdictions (either within their own firm’s network of offices or among trusted colleagues in other firms).   It is still likely that, however big your usual lawyers are, advice will be needed in a place they do not have a presence – though in most cases they will have attorneys who are familiar with that jurisdiction.

  • Project management

Whoever you choose will also need the skills of an orchestra conductor, since the chances are they will need to liaise with and bring in experts in other fields, whether local counsel, forensic experts or industry specialists.

Putting out the fire

While busy considering all these items it’s important to identify and put an immediate stop to any potentially illegal activity.  This means that transactions in progress, payments to relevant third parties and deals may need to be halted.  It will, in some circumstances, be necessary to consider the feasibility of continued operations.

We never said it was going to be easy…

Next week.  The nuts and bolts of the investigation.

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Howard@OpenAIr
May 3, 2011 14:00

This is a really useful couple of articles, and I look forward to the rest.

I would add that we’re assuming that a call comes internally. There’s what I like to call a SHTF policy, where HTF is “hits the fan.” That’s a policy that defines what to do when the press calls with an allegation, not an employee.

The other thing I would add is that investigations often snowball. You get a call about something pretty minor, an employee worried about something. When you start picking at it, the threads start to unravel and pile up, until you’re in over your head. In my opinion, it’s important—vitally important—to begin every investigation with an eye toward what you would do if it’s much bigger than at first appears.

I’m looking forward to your nuts and bolts post.

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