Corporate Internal Investigations

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Ben Rose

Partner

Corporate bodies which suspect internal wrongdoing have, in recent years, faced greater risk and liability under the criminal and regulatory law.

Gone are the days when a company, on learning of any suspected legal breach, could ‘look the other way’ in the hope that no regulatory or law enforcement agency may notice. Companies and associations which suspect wrongdoing must now act quickly and proactively in order to identify and limit the significant risks that they may face.

A well managed internal investigation can be a vital tool in doing this while also protecting the interests of the company and its senior officers. In some cases it can help avoid unwanted investigation by external agencies.

There are many benefits to involving a professional third party in an investigation. These include:

Retaining confidentiality and legal professional privilege
Having an intermediary to negotiate with prosecutors and regulators
Advising on any compulsory information requests
Identifying and advising on any unlawful conduct
Preventing involvement of external regulators and investigatory bodies
Resolving internal disciplinary matters while minimizing business impact

The investigation process

Internal investigations as conducted by a trusted third party can take many forms, but they have a few common characteristics. These include:

Collecting and preserving evidence
Reviewing relevant material
Conducting internal interviews
Liaising with the company and senior directors about the findings

In order to conduct the above in an efficient and effective manner, it is necessary to have a clear plan on how to conduct the investigation. Careful consideration must be given to the proper preservation of evidence, as well as future possible disclosure and information production obligations from third parties. It is also necessary to ensure that employees are given the proper warnings during the course of interviews and, where possible, minimise the distress and disruption that an internal investigation can cause.

Self-reporting

There is no legal requirement for a company to self-report concerns of bribery or corruption. However, increasingly, the Serious Fraud Office (‘SFO’) is incentivising companies to do so, through offering the possibility of a Deferred Prosecution Agreement (see below). However, there could be risks to a company and its senior directors in doing so. It is therefore critical that a company has a completely clear picture of the situation before doing so.

This is where a comprehensive and detailed internal investigation is a vital tool for a company that may suspect wrongdoing.

There may be other reporting requirements that a company needs to comply with depending on the sector it operates in. This could include reporting to the Financial Conduct Authority (‘FCA’) or making a disclosure to the National Crime Agency (‘NCA’).

In all of these circumstances, it is critical that a company is fully on top of the facts before liaising with an investigatory third party and is properly advised of the significance in taking such a step.

Deferred Prosecution Agreements

Deferred Prosecution Agreements (DPAs) are relatively recent legal instruments in which a co-operating company can admit to wrongdoing in lieu of criminal prosecution.

DPAs are most commonly offered by the SFO in relation to fraud and corruption allegations. However, in order for a corporate to be eligible for a DPA, the SFO will expect to see open and honest cooperation from the outset. This leaves only a very small window opportunity for a company to decide whether or not to self-report. It is critical that expert legal advice is sought as early as possible in this process.

A thorough and effective internal investigation can be a vital tool in making strategic decisions at the outset, which can impact upon the direction that negotiations may take.

Expertise

Hickman & Rose has vast experience in the course of an investigation. The firm’s expertise across criminal, civil and regulatory legal disciplines means it is perfectly placed to advise on the often complex ways in which these areas of law can intersect.

The firm’s expert lawyers, and its network of trusted outside experts, are able to assist with a breadth of issues including data protection breaches, confidentiality and maintaining protection under legal professional privilege, and forensic accounting matters, as well as any multi-jurisdictional concerns.

Hickman & Rose has the experience and expertise necessary to plan and deliver the strategy which will ensure that a company and directors’ interests are best protected at every stage.