Concerned about possible bribery?, Financial Services, Internal investigations - Written by on Friday, June 3, 2011 4:49 - 0 Comments

5) Investigating a possible bribe: are we there yet? Conducting the investigation

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Yes.

In (5) we drill down on some specifics: documentation, location and where else?

Before we get going it’s worth a short recap.

The lifecycle of the investigation kicks off with the question, do you need to investigate anything at all? – we looked at this in (1)

This leads to first steps which we dealt with in (2) broadening in (3) and (4) to the basic set up of the investigation.

Documentation, documentation, documentation

The importance of continuously documenting what you are doing right from the get-go cannot be overstated.

It will be critical that any investigation undertaken is defensible and credible.

Why?

Those potentially interested in any investigation speak for themselves. Broadly they can be separated into two key camps.

1. Internal (namely the audit committee or the Board)

2. External: principally regulatory (in the UK the SFO and/or the FSA)

An investigation should be organised on the basis that disclosure is a possibility.

Location, location, location

We touched on scope and the competing desire for speed and detailed investigation in our last post.

In more detail it will be necessary to conduct the investigation in relevant countries.

In our experience the number of countries involved can quickly spiral.  It is important to assess which countries are implicated directly or indirectly.

Take this fictional example: a UK company, with a US listing, a bribery allegation in a third country involving a resident of a fourth country.

This is not an uncommon fact pattern.  Throw in the use of offshore holding companies and bank accounts in other jurisdictions and before you’ve started there are a minimum of 6 or 7 countries involved.

It will be necessary to run through the same analysis in relation to organisations involved, namely contracting counterparties, joint ventures (and their parents) as well as suppliers and agents.  Each of these may add another country to the mix.

For each country local laws and cultures  will need to be factored in when undertaking the investigation. It is important to comply with local law and also to be sensitive to local cultures.

Where else?

A short question which can cost a lot of money.

Regulators may ask it.

As a result it is usual to consider the likelihood that the suspected wrongdoing extends beyond the initial area of focus.  If on balance it is possible that the suspected wrongdoing could have bled into another area the best way to kick the tyres is to sample transactions in those areas to uncover if the potential problem is more widespread than at first thought.

Next up: Forensics – some insight from our in house forensic colleagues on what financial information to look for.

 

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