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Cross Border Investigations

These investigations occur in not only business transactions, but legal altercations as well. Cross border investigations are often very difficult — when an in-depth investigation happens, it requires expert knowledge on laws and procedures. When dealing with foreign laws and procedures, there may not be someone involved who knows them as well as a party should.

Why do you think in-house or outside council recommend an investigation?

Largely, an internal investigation is for defensive purposes. Most corporations value their reputation. One of the reasons to commence an investigation in a forensically sound manner is because there are reputational interests which need to be protected.

Many company leaders will ask, “Can’t we just go talk with a few people and see what happened?” Well, the answer is, yes, but if it turns out there is a problem, you’re going to have to go back and do it over again, repeating a lot of the work you’ve already done.

Triggering a cross border investigation

These investigations can arise in a multitude of ways, but the most common reason for an investigation to begin is due to an accusation from an employee of the company itself. Nearly half of those internal reports come from anonymous whistleblower hotlines, protecting individuals from potentially negative repercussions. Investigations can also begin by audit findings, outside source allegations, and other enforcement agency findings. How an allegation is received and dealt with, can be a defining moment. You don’t want to step over on someone authority, even before the investigation has begun. A KPMG survey states that 45% of the primary trigger for a cross border investigation has been “Leads provided by someone (employee) inside the company (other than whistleblower program)”.

So let’s change the viewpoint and look at the reporting party. They are concerned and they would want to report in their language. Now imagine that language is a foreign language to the investigator. Well, before jumping into a translation, speak to a native speaker (confidentially) to understand double meaning words, common slangs, etc.

Protocols! Protocols! Protocols!

Factors which are uncommon to an investigation and Cross Border investigations would be:

  1. Timeframe within which an investigation must occur;

  2. Data privacy,

  3. Transfer of information; notifications to employees or their representatives;

  4. Notifications and deadlines to governmental agencies or law enforcement,

  5. Type, jurisdictional authority and timeframe in which disciplinary action(s) taken, and

  6. Mindset of the person carrying out an investigation (especially when working in an hostile environment – Afghanistan or Iraq) and obviously COST!

Planning holds the key OR ELSE it will be the Battle of Waterloo – What steps to take when you unearth an issue

As a lead Investigator with the consent from the management an Investigator at a bare minimum should:

  1. Understand the underlying substantive issue involved in the allegation;

  2. Draw a linked analysis with the facts known  or provided by the whistle-blower. The gaps will be filled in later on. Use the analysis match the potential wrong doings;

  3. Identify the local laws and cultural impacts / hindrances you might face. Join hands with legal counsel. Try to identify the relevant policies;

  4. The credibility of the allegation. This is covered in the next section;

  5. Determine the acceptable Subject Matter Expert (SME) who might be required in the background or forefront. Always run the plan through the subject matter expert, where ever possible;

  6. Commence writing an investigation diary;

  7. Develop a credible communication channel with the informant ( if he / she has disclosed their name(s));

  8. Formulate an investigation task force; and

  9. Keep a backup person ready. Invariably a team member could for variety of reasons (health, performance, injury, etc.) might have to return home. Keep an up to date back copy of e-documents.

Determine if an allegation is true or vindictive

It is a difficult situation to differentiate between the scenarios. They both will appear to be very real. Take a very calculative step. The parallels which surrounds decisions to term an allegation vindictive or true have their own cost.

Some of the steps which POTENTIALLY help differentiated the two are:

  1. Diligent, thorough fact-finding: Utilize confidential resources within the firm e.g.  Risk Managers, Legal, COO, CEO to understand if problems similar to the allegations exist. Top management does have a clue, though they might act ignorant;

  2. Review personal file of the alleged and the whistle-blower; the whistle-blower might have a scar somewhere in his history with the firm. What if the person is new to the organization? Well, a vindictive complaint / grudge is generally held by a person who has been around a couple of appraisal cycles at least. But if the new comers try to be a problem child, the surroundings will identify it for you;

  3. Review the annual declarations, Conflicts of Interest declarations, vendor sponsorship decelerations from both (informant / Alleged), these can be a good starting point while adjudging the allegation;

  4. Some activities require that an investigator have some faith. Appropriate consultations with Line Management, Special Committees, etc. is important;

  5. Professional knowledge & experience: Experience does hold the key. Something does just don’t “seem right” or they do. Once you spend 3-4 years in a firm (getting soaked in to the culture) as an investigator you will have radar to identify the same;

  6. “Innocent until proven otherwise”. That’s my motto for both the parties. Give them both a fair chance. Don’t disclose potential names to anyone, please. This can be detrimental someone’s life, family, future jobs and earnings; and

  7. Conduct discussions on a “Need-Only” basis: Once there is decent / vague hints towards the potential allegations, discuss with the legal counsel.

It is always good to include the following in your whistle-blowing policy

If individual deliberately make a false or malicious allegation, disciplinary action will be taken against them.

This may act as a deterrent against malicious complaints from an anonymous whistle-blower.

What do you advise a company to do if it learns that it may be investigated in a country where it is not familiar with the rules and the procedures?: It is vital that a company responds quickly and effectively to any allegations that arise — delayed response may not bode well for the company being investigated. Having a well-developed plan even before allegations occur is vital for the success of the investigation — everyone in the company should be prepared with a specific protocol that covers standards, principles, region-specific or country-specific requirements, customs, and practices. A key part of this plan is clear communication — there have been many cases where language became a difficult barrier to overcome, so having a team that can understand and translate the situation is vital.

Determining who should be notified: Proper notification is a very important step in the early investigation process. The first step is to alert the upper-level management that an allegation has been made and an investigation will occur. It is important to tell only those that need to know the information — telling others may violate the integrity of the investigation. However, in some countries that is common practice, so be sure to understand the custom and policies of the area.

An investigation committee always helps in this case. They play an important role  in project management, oversight and monitoring the tweaked investigation procedures.

Assess special legal or cultural considerations: Before the investigation begins, it is critical to discuss with in-house counsel whether or not the investigation will be protected under attorney-client privilege laws. It is also important to understand an area’s own laws, as they may not be in alignment with international corporate law — these miscommunications can often be disastrous for companies that don’t fully understand the area in which they operate.

Another example, while working in Afghanistan, every step had to be planned to perfection else you could say Adios to the world. As given by KPMG cultural differences remain one of the top three challenges in conducting cross-border investigations, which is up from twenty six percent in 2007, to thirty seven percent in 2013.

One cannot rely on local procedures of investigations of the originating country but rather one needs to tweak the procedures and have a flexible plan (rather the plan is ever changing!) The procedures must be tweaked to comply with different local laws and to respect diverse cultures and customs.

In another example, in Middle East For example, the word “investigation” may aggravate negative emotions, one should use the words like “Special Review,” “analysis,” and rather than saying “whistleblower,” “informant,” or “witness,” use words like “employee” or “colleague”.

In another example, some countries like Australia requires that the government be informed in an event of external investigation if  the government has a stake / interest in them.

Administrative planning is of utmost importance:

Additionally, the admin staff, your driver in hostile places is very important. You simply cannot conduct a cross-border investigation without people who know the intricacies and peculiarities of their jurisdiction. Plan them in your budget.  In case of working in hostile environment, plan for a local escort and armored vehicle and a driver up and above the normal costing.

Is it useful to learn even the basics of another country’s laws and procedures?

It is very important to understand at least the basics of another country’s criminal laws and procedures — this can help with any issues that may arise when the investigation begins.

Cost is always a problem – May it be consultants or for In-house Investigators

An assessment of a problem is very critical. You need to have miscellaneous budget while planning such investigation. You don’t want to be caught in a no man’s land. From a consultant point of view, it is sometimes difficult at times to get an approval for the miscellaneous section in the commercial proposal. But these commercial proposals need to follow a fixed as well as variable costing strategy. It includes intercity travelling, security, vehicle, translator, witness being bought to a safe house, payment for local authorities to authenticate papers in case of transferring electronic data crossing jurisdictions, etc.

Always try to link the justification to a reputational impact that can occur if you try to reduce an item from your costing. They all have an impact somewhere.

Create an investigative plan

Always take baby steps.  The objective should be to plan to protect integrity of people, the process you are going to follow, privacy and confidentiality, company property, and potential evidence.

There are a few critical aspects to a successful plan, which must include:

Objectives: Objectives of the investigation should be clear.

Witnesses: The plan should identify the relevant witnesses to whom the investigators should be speaking.

Document and data plan: The plan should compile what documents and data may be needed for the investigation.

Security: Data security should be implemented depending on the area of the investigation.

Reporting structure: Clearly establishing a reporting structure, as well as points of contact, will greatly improve the investigation.

Local counsel: Employ local counsel for a deeper understanding of the area’s laws and policies.

Conducting a cross border investigation

When conducting a cross border investigation the huge chunk below the iceberg, is associated with acquisition of data and e-discovery process:

Acquisition / Seizure / Obtaining Data: Collecting relevant information is a crucial step of any investigation, but different data privacy laws often make this process difficult. This is another area where it is important to understand the local laws and procedures. As an example

  1. Persons whose data are processed must be given notice of the processing, and must be given access to their data upon demand

  2. Persons whose data are processed must give explicit permission to processing of their data

  3. The data processed must be accurate

  4. The data processed must be limited to only that which is necessary for the purposes pursued

  5. The purpose of that processing must be fair and lawful

  6. Data may only be shared with persons located in countries that afford adequate protection to data in the eyes of the European Commission.

Applying those principles in practice, particularly in the context of a cross-border FCPA investigation, is not necessarily straightforward, say for instance, Providing notice to wrongdoers will tip them off that an investigation has started  or When looking for evidence, exculpatory or otherwise, it may be technologically impossible to examine limited data or Non-EU legal requirements or requests from non-EU authorities do not overrule EU data protection laws and consequently may not be lawful, etc.

And there are numerous exceptions for transferring data outside the EU. While in some cases that may be true that transferring data outside the EU is tedious, there are at a minimum risk mitigation strategies that can be adopted, such as determining the exact location of the data; transferring de-identified data; filtering data prior to transfer; etc.

Analysis: Analysis & carrying on with filling in the blanks towards the linked analysis is facilitated with a good mid night brainstorming session. Refer to your investigation diary. This always helps.

Interviewing employees: First and foremost, as an investigator be culturally sensitive. Always remember that the person sitting in front of you is a “potentially” alleged no matter how many evidence you might have. You need to be culturally sensitive during interviewing.

In a cross border one need to realize many countries allow employees to refuse to cooperate in an investigation or allow them to have limited access to files that identify them as relevant to the investigation. Again, understanding the culture can help with this process. Sometime the only weapon you might have (remember other companies jurisdictional document also might not be valid in another country such as Afghanistan) is the skill of persuasion.

In an investigation have a trustworthy translator if necessary. Interviewees oftentimes speak with different dialects, or use slang or local jargon. Have your body language radar up and running all times, it is very imperative to have a sense if his body language is coinciding with his expressions and words.

Reporting findings: After the investigation is complete, the investigation team needs to report its findings to a larger authority. Understanding the larger chain of reporting is an important part of the process — privacy laws may not allow some of the information to be seen outside of the jurisdiction.

Always remember, report may contain data that is restricted from being transferred out of a jurisdiction, such as names of individuals, financial information, or personal data. Therefore, the proper data export channels need to be established before providing a report (even a report in draft form) to management or directors outside of the country. These considerations apply likewise to reports and materials prepared by experts and consultants.

Remediation across borders

Remediation is the final step of the process before formal charges are brought to a company, and effectively implementing these changes may alter the severity of the charges against a company. Having a preemptive plan and understanding the local laws are vital for the success of any international corporation.

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