Companies today face increasingly complex regulatory frameworks globally and intense levels of corporate scrutiny from government enforcement agencies around the world. As government agencies embrace sophisticated crime-busting technology and the world shrinks through greater inter-agency cooperation, there are more ways than ever for governments to identify misconduct and hold companies to account through criminal prosecutions and steep fines. Accordingly, companies faced with a potential compliance issue need to be prepared to respond to these issues with an effective internal investigation.

An effective internal corporate investigation can benefit a company in a number of ways. Not only does it assist a company in uncovering compliance failures and putting remedial measures in place, it also assists the company, when faced with evidence or allegations of potential wrongdoing, to respond deliberately and thoughtfully, ensuring that it understands all the facts. Effective internal investigations can also benefit the company by influencing the amount of a criminal fine, the type of government resolution potentially available, and protecting the company’s reputation. To maximize these benefits, corporate defendants need to be able to show prosecutors that the internal investigation was independent, reliable, and credible.

In a previous article, we have outlined the unique challenges of conducting effective internal investigations in Africa. Here, we revisit some of the lessons learned from our investigations practice (in Africa and elsewhere), outlining five universal considerations for effectively handling sensitive internal corporate investigations.

  • Define the Scope of the Investigation

Investigations can be initiated for a multitude of reasons, from allegations of wrongdoing by the media, civil litigation, whistleblower complaints, regulatory inquiries, or even findings in an unrelated investigation. The potential issues to probe can be just as varied. Defining the scope of the investigation is therefore a crucial step to be taken at the outset of the inquiry. Among the questions to ask in order to ensure that the investigation is appropriately scoped are the following:

  • What are the specific allegations?
  • What is the company’s potential legal exposure?
  • Who are the potential perpetrators?
  • What are the relevant timeframes?
  • Who are the potential witnesses?
  • Who may possess documentary evidence relevant to the inquiry and where can these documents be found?

A written investigation plan is a useful tool to outline the goals of the investigation and the investigative steps, and more generally to keep the investigation on track. The contents of the investigation plan and the proposed investigative steps will of course have to be determined on a case-by-case basis, but it should generally include at least a review of documents and interviews with key individuals and witnesses. Bearing in mind that it is never possible to predict the entire course of an investigation, from the outset, with mathematical precision, it is important to ensure that the investigation plan allows for a degree of flexibility, providing the investigation team the ability to adapt the plan as the investigation progresses and evidence is reviewed.

  •  Preserve All Potentially Relevant Data – Documents, Devices and Testimony

Document and data preservation is a vital consideration in any investigation. Generally, companies should consider issuing a document hold (sometimes called litigation hold) to all individuals who potentially have relevant documents. There are, however, sometimes strategic reasons for not publicizing an investigation through a document hold, such as where there are concerns that notice of the investigation may raise the risk that employees will make efforts to destroy relevant documents and data. In such cases, companies can mitigate this risk of spoliation through advanced imaging of employee devices, disabling deletion functionality on company platforms, and other preservation measures as may be appropriate.

To the extent that preserving witness accounts by interviews is concerned, there may be instances in which the investigation team is faced with the imminent departure of an employee from the company. In those instances, it will be important that the employee’s account is obtained as quickly as possible. If a government agency is or becomes involved in the investigation, the company is likely to be called upon to explain what steps it took to preserve potentially relevant data, and it is therefore essential that all steps taken to do so are well documented.

  • Interview Witness At The Right Time

Companies need to be thoughtful about the appropriate timing of witness interviews. In an ideal world, interviews would not take place until a company has been able to review and digest all of the relevant documents necessary to have a full picture of the written record. Documents not only provide the interviewer with context to ask targeted questions, they also serve as a vital tool to jog forgetful interviewees’ memories, or to confront witnesses with facts they may be reluctant to acknowledge.

But investigations are often fast-moving, with real-time implications for the company and unique circumstances that merit accelerating certain witness interviews before a full document review can be completed. These situations include instances where an employee is imminently departing the company, where misconduct may be ongoing, or where they are necessary to meet the demands of government agencies.

Additionally, to account for circumstances where witnesses may speak to one another regarding the substance of the interviews (despite instructions not to do so), the company should consider the order and timing of interviews, including potentially conducting simultaneous interviews.

  • Consider Whether To Voluntarily Disclose

Deciding whether or not to make a voluntary disclosure to prosecutors is often a vexing question for the company, with the potential for significant ramifications. Depending on the laws of the relevant jurisdiction, there may be significant incentives to making a voluntary disclosure in the form of a more favorable resolution of an enforcement action, or a declination from prosecution altogether.

While there is no magic formula to make these decisions, some of the factors a company should take into consideration include the likelihood that enforcement authorities will come to learn of the investigation findings in the absence of voluntary disclosure, the seriousness of the alleged conduct, and the risk posed to the company should the allegations come to light.

  • Remediate

With the benefit of a credible and reliable investigation, a company will be well positioned to make effective decisions about how to remediate any issues identified.

The critical element of any remediation plan is that the actions taken be appropriate and proportional to the conduct identified. The appropriateness of the remedial steps taken by a company, including initiating disciplinary action against the responsible employees and potentially terminating their employment, and implementing and/or enhancing existing practices, policies and procedures, are critical factors taken into account by government agencies when assessing an appropriate resolution of potential civil or criminal charges.

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Conducting an effective corporate internal investigation that is well-designed, with a specific work plan that addresses key elements such as document preservation, witness interviews, and prompt remediation, can yield many benefits for a company facing allegations of misconduct.

While no two investigations will ever be the same, building an investigation with these five building blocks in mind will provide companies with a solid foundation from which to move their organizations forward while minimizing disruption to the extent possible.

If you have questions about handling internal corporate investigations, please contact Ben Haley at bhaley@cov.com, Mark Finucane at mfinucane@cov.com, Sarah Crowder at scrowder@cov.com, or Ahmed Mokdad at amokdad@cov.com. This article is intended to provide general information. It does not constitute legal advice.

© 2019 Covington & Burling LLP. All rights reserved.

Photo of Benjamin Haley Benjamin Haley

Ben Haley leads the firm’s White Collar and Anti-Corruption Practice in the Middle East and Africa and is a chair of the firm’s broader Africa Practice. With deep experience representing clients before regulators in high-profile white collar and disputes matters and a history operating on…

Ben Haley leads the firm’s White Collar and Anti-Corruption Practice in the Middle East and Africa and is a chair of the firm’s broader Africa Practice. With deep experience representing clients before regulators in high-profile white collar and disputes matters and a history operating on the ground in emerging markets, he helps clients assess and mitigate a wide range of complex legal and compliance risks.

Complementing his investigations and dispute resolution practice, Ben has a broad-based compliance advisory practice, helping clients proactively manage compliance risk in areas including anti-corruption, trade controls, anti-money laundering, fraud, and data privacy.

Ben represents corporate and individuals clients in a wide range of investigations and disputes, including:

  • Investigations under the U.S. Foreign Corrupt Practices Act (“FCPA”).
  • Investigations into anti-money laundering, financial crimes, anti-terrorism, and sanctions and export control issues.
  • Securities fraud and accounting matters.
  • Board investigations and shareholder litigation.
  • Insurance recovery.

Ben also regularly advises clients on a range of regulatory compliance and corporate governance issues. His compliance advisory practice includes:

  • Performing risk and compliance program assessments.
  • Leading compliance reviews on business partners and assisting companies with third-party risk management processes.
  • Conducting forensic accounting reviews and testing and enhancing financial controls.
  • Advising on market entry, cross-border transactions, and pre-acquisition diligence and post-acquisition integration.
  • Assisting companies in designing, implementing, and maintaining best-in-class compliance programs.

In recent years, Ben has steered a number of clients to successful resolutions and declinations in complex FCPA and corporate fraud matters with the U.S. Department of Justice and Securities Exchange Commission. In his advisory practice, Ben has served as lead compliance counsel on a number of major M&A and investment transactions. He has developed special expertise assisting clients in leveraging technology in their compliance programs, including assisting one of the world’s largest consumer goods companies in the design and implementation of an award-winning compliance data analytics and monitoring system.

Ben has been described by the Chief Compliance Officer of one of his clients as “[a]n outstanding senior lawyer and advisor,” and “a guiding light for all things compliance advisory in Africa,” whose “advice is crystal clear, covers all angles and is business friendly.”

Photo of Mark Finucane Mark Finucane

Mark Finucane specializes in representing institutions and individuals in sensitive government and regulatory enforcement matters. He has also conducted numerous internal investigations involving issues relating to bribery, fraud, business and human rights, money laundering, and other matters presenting significant risk. In addition to…

Mark Finucane specializes in representing institutions and individuals in sensitive government and regulatory enforcement matters. He has also conducted numerous internal investigations involving issues relating to bribery, fraud, business and human rights, money laundering, and other matters presenting significant risk. In addition to Mark’s investigations practice, he regularly advises clients on compliance program obligations under the U.S. Foreign Corrupt Practices Act and other U.S. laws.

Mark was included in Global Investigations Review’s 2020 “40 under 40” list of the world’s most accomplished young investigations and white collar lawyers. Clients have praised Mark as having “thorough, substantive knowledge of the applicable law and excellent strategic judgment in dealings with governmental agencies.”

Photo of Sarah Bishop Sarah Bishop

Sarah Bishop is a U.S. and UK-qualified lawyer who advises companies on ethics and compliance programs, compliance with anti-corruption and anti-money laundering laws, business and human rights (BHR) and environmental, social, and governance (ESG) matters, white collar investigations, and suspension and debarment.

Sarah’s…

Sarah Bishop is a U.S. and UK-qualified lawyer who advises companies on ethics and compliance programs, compliance with anti-corruption and anti-money laundering laws, business and human rights (BHR) and environmental, social, and governance (ESG) matters, white collar investigations, and suspension and debarment.

Sarah’s compliance advisory practice includes helping multinational corporations develop and test the robustness of ethics and compliance programs, conducting risk assessments, conducting transactional and third party due diligence, supporting post-acquisition compliance integration projects, and delivering compliance training. She has particular expertise advising on the U.S. Foreign Corrupt Practices Act (FCPA) and UK Bribery Act and has advised companies in the energy, mining, pharmaceutical, healthcare, technology, and consumer goods sectors, among others, on anti-corruption compliance risks and program development.

As a member of Covington’s Business and Human Rights practice group, Sarah advises companies on the developing legal and enforcement landscape related to the corporate responsibility to respect human rights. She advises on enforcement risks under Withhold Release Orders (WROs), the Uyghur Forced Labor Prevention Act (UFLPA), and the Trafficking Victims Protection Reauthorization Act (TVPRA) in the United States, as well as developing ESG due diligence and reporting requirements in Europe. Sarah has helped multinational corporations in the healthcare, technology, automotive, energy, mining, and consumer goods sectors develop human rights due diligence programs, navigate human rights-related enforcement matters, and report on human rights due diligence efforts.

Sarah has extensive experience conducting internal and government-facing white collar investigations. Sarah has conducted investigations involving allegations of bribery, money laundering, export control and sanctions violations, fraud, human rights violations, and other forms of misconduct. She has handled matters before major international enforcement authorities and has been recognized in the Global Investigations Review Women in Investigations survey.

Sarah also assists clients in suspension and debarment matters before the World Bank and other international financial institutions.

Photo of Ahmed Mokdad Ahmed Mokdad

Ahmed Mokdad is an associate based in the Johannesburg office, and a member of the firm’s White Collar Defense and Investigations and Anti-Corruption Practice Groups, as well as the Privacy and Cyber Security Practice Group. With a depth of experience representing clients across…

Ahmed Mokdad is an associate based in the Johannesburg office, and a member of the firm’s White Collar Defense and Investigations and Anti-Corruption Practice Groups, as well as the Privacy and Cyber Security Practice Group. With a depth of experience representing clients across various sectors, Ahmed regularly assists clients navigate and mitigate a broad spectrum of regulatory and compliance risks.

Ahmed’s investigations practice includes internal and government investigations into anti-corruption, anti-money laundering, fraud, and financial crimes matters more generally. Complementing his investigations practice, Ahmed has a broad-based compliance advisory practice in these areas and in data protection and information security matters. This includes assisting clients in numerous sectors with compliance under South Africa’s Protection of Personal Information Act (POPIA).

Adding to his investigative, regulatory and compliance advisory experience, Ahmed has extensive experience advising on numerous M&A and complex financial transactions. He has also been involved in several high profile international arbitrations, and litigious matters before the South African courts relating to, among other things, commercial and tax disputes, exchange control violations, government procurement irregularities, and defending white collar crimes. This experience gives Ahmed valuable perspectives and insights when advising on compliance advisory matters.

For international clients facing compliance issues cutting into Africa, Ahmed regularly advises on a range of issues that can arise in such context, e.g., labor and employment considerations, legal professional privilege, whistleblower protections, corporate governance reporting obligations, and control processes and protocols for engaging with government and law enforcement agencies. Ahmed is recognized by clients for providing practical advice and solutions on complex legal issues in ambiguous statutory regimes.