Internal investigations can arise from credible allegations or suspicions of wrongdoing, which may include whistleblowers, audit findings, or regulatory inquiries.
Ensuring that the process is pragmatic is key to uncovering the truth, addressing concerns and restoring confidence. Acting promptly, but proportionately to the risk faced, is crucial.
Kathryn Karssiens explains the steps general counsels should take to ensure the process is smooth and trust in management is maintained, from documentation to ensuring confidentiality and deciding on appropriate actions.
Trust is the foundation of any successful, well-managed, business.
Stakeholders, be it supply chain counterparts, employees, banks, regulators or shareholders, each place great value in the trust that is built by management, and that’s often through demonstrating an ability to make reasoned decisions when faced with challenge. If that trust is compromised, the impact can be immediate and substantial.
Making reasoned decisions requires access to contextualised facts… particularly where the integrity of business operations or executives may be under question.
Running a practical and pragmatic internal investigation can be key to uncovering the truth, addressing concerns and restoring confidence within (and outside) an organisation.
These investigations should be initiated upon credible allegations or suspicions of wrongdoing, which may arise from: whistleblowers, audit findings, or regulatory inquiries.
Acting promptly – but proportionate to the risk faced – is crucial.
1. The first thing a GC should do is have a comprehensive understanding of the background information… and identification of key facts are essential.
What is the nature of the case?
Does it have potential ties to misconduct or compliance issues?
Does it impact on the company’s legal or regulatory obligations?
Establish a streamlined process to assess cases quickly, and escalate them to the right teams to ensure a proportionate – yet effective – investigation.
Remember that a small issue to you could have a big impact elsewhere and might result in collateral damage – for example, it could be the reason financial statements are not signed.
In some instances, it may be necessary to seek external assistance – this could be independent investigators to provide objectivity, legal advisors, or strategic communications experts to help control the narrative of the issue.
2. The second step would be to collect and preserve evidence.
Get hold of your documents that are likely to be relevant to the issue and secure them. This should be relatively straightforward and inexpensive with modern email tools.
Ensure that any key parties are interviewed – the whistleblower (if applicable), the subject, and anyone else who may have relevant information. Be objective and non-judgmental. If a communications review is likely to prove useful, ensure that it is conducted appropriately with a sufficient audit trail in place.
3. Next comes reporting.
Throughout your investigation, document everything. It is essential to justify the decisions made and actions taken. It’s far more difficult to explain and defend your actions if they’re not recorded.
Also, produce a report on your findings. It doesn’t need to be extensive, but it does need to include your methodology, your findings, and your possible next steps.
4. Finally, it’s time to take proportionate action.
This may be in the form of training, revised policies, disciplinary action, self-reporting to regulators, or sometimes, it may lead to no action at all. In any case, post-investigation, it is important to monitor the situation to ensure it has been resolved appropriately.
Remember to maintain confidentiality not only during the investigation, but also once it’s complete. Internal investigations are crucial for maintaining integrity within an organisation. By addressing issues promptly, organisations: protect their reputation, foster a culture of accountability, and ensure compliance with legal and regulatory requirements.
