Nigeria: Conducting Internal Investigations In Organisation

Last Updated: 5 November 2019
Article by Dayo Adu and Adeola Oyeola

INTRODUCTION

Internal investigations seek to detect the verity about an alleged misconduct within the organization. Misconduct in organization is defined as a substantial or intentional disregard of the employer's interests or contract of employment. For an internal investigation to be conducted properly, it must carried out without compromising the relationship with innocent employees, tarnishing reputations and fact finding. This requires good planning, consistent execution, analytical skill, and understanding of the legalities involved.

Each alleged misconduct is different, some involving directors or employees. Some are prompted by an internal reporting or monitoring system, tip line or whistleblowers. And thus an internal investigation is conducted within the organization.

To conduct investigations involves the laws where the misconduct was violated such as Economic Financial Crime Commission, Investment Securities Act, Foreign Corrupt Practices Act, market manipulation, accounting fraud, environmental violations and many others.

The article discusses about what are and the requirements for internal investigation, alleged misconduct, why internal investigation is necessary.

WHAT IS NECESSARY FOR INTERNAL INVESTIGATION

Employers are advised to advance significant resources in developing the capabilities necessary to conduct effective investigations. This includes reviewing the employer's entire attitude to investigations, resources devoted to this effort; evaluating and if necessary restructuring policies and procedures related to investigations; establishing programs for maintaining effective enforcement of policies, and enlightening managers and employees about their responsibilities under the employer's complaint and investigation policies and procedures. Also creating new in-house investigation teams where necessary, as well as establishing hotlines and other effective procedures for filing complaints.

REQUIREMENT FOR EFFECTIVE INTERNAL INVESTIGATION

To conduct internal investigation on any issue, the internal workplace investigations or complaints should evince the following:

  1. Planning and organization

Proactive planning will reduce mistakes, ensure compliance to other important investigatory laws and standards that the employer made effort to identify and fairly resolve the alleged misconduct. Pre-investigation planning should include an assessment of the objectives of the investigation, review of relevant law and employer policies and procedures, identification of the specific factual and legal questions to be resolved, Careful selection of an appropriate investigator or investigation team, establishment of a primary logical order and timeline for interviews. Document of this organizational process in the form of a preliminary investigation plan.

  1. Promptness

Prompt means "immediate." The U.S. Supreme Court, in Meritor Savings Bank, F.B. v. Vinson, 497 U.S. 57, 106 S.Ct. 2399 (1986), directed employers to take "prompt" and effective action to remedy sexual harassment in the event of a complaint. Collective agreements between organization and employee or the organization own written policies may also specify the length of time in which an investigation must be initiated and or concluded. At the same time, investigations must never be "hasty." Taking time to identify and organize the relevant policies and procedures; understand the issues; identify appropriate sources of information for an effective investigation be done timely. Even in a situation that does not necessitate extraordinary speed, employers must proceed more expeditiously than with other business matters.

  1. Thoroughness

The investigations are also required to be through. An organization omitting an important witness or neglecting to pursue complaints, however unintended. Creating a preliminary investigation plan will help reduce mistakes but it is also important to check and recheck during the course of an investigation for gaps in needed information, for avenues which remain to be pursued and concluded. Certainly, a careful review of the entire investigation must be undertaken and oversights corrected before any final conclusions are drawn. Investigations must remain flexible until the end of the inquiry. Investigations should serve as the fact finder and actual decisions based on the facts.

D. Fairness

Fairness is a relative term, it must apply to all phases and details of an investigation. Employees investigated who have been treated unfairly, for example, disciplined more harshly than similarly situated individuals, defamed or unnecessarily humiliated should not be the situation. An employer should not behave "unfairly" regarding any details of workplace complaint handling. Employers must thus bear in mind that the standard of requisite "fairness" to each of the employees involved in a workplace investigation and or complaint handling is set exceptionally high. Employers must check and recheck each of their actions in this context against that very high standard.

E. Accuracy and precision

To withstand later scrutiny, investigations must be accurate and precise. Conclusions must be backed by sufficient and specific facts, and investigations must reject and pin down evasive answers. Persons being investigated must be pressed for details such as times, dates, places. Whether or not they create a written report, investigations should identify fact and link them to conclusions. Findings and related conclusions should be reviewed for accuracy, preferably by someone other than the fact finder, before an ultimate decision is reached particularly where the case is carried out by an in-house investigator or non-independent investigator is used for the fact finding.

F. Confidentiality

Privacy concerns are affected by different laws, and employee privacy is important considering the fact gotten during investigation. Achieving the balance between obtaining requisite information for taking action and avoiding invasion of privacy is often difficult but is another aspect of effective investigations that ordinarily must be looked into. Thus, employers have several important avenues for reducing privacy invasions. First, this can be curtailed by intruding especially into delicate or personal matters, only when important. Second, a less intrusive form of information collection should be utilized e.g., consulting, where possible, company-held files and documents for a given piece of information rather than interviewing a non-party witness. This can reduce the degree of the invasion by disclosing information only to those with a clear need to know it.

G. Adequate documentation

"Documentation" is necessary for internal investigations. The fact gotten is used for reference in the process of making a decision after the investigation. The documents can also be required for scrutiny by a lawyer or representative of the employee. The documents can also be used to guide the company in making polices and procedure for internal investigations.

MISCONDUCT IN ORGANISATION

Alleged misconduct carried out in organizations or companies that required an internal investigation to be done is discussed here;

  1. ACCOUNTING FRAUD

Accounting fraud is intentional manipulation of financial statements to create a facade of a company's financial health. It involves an employee, account or the organization itself and is misleading to investors and shareholders. A company can falsify its financial statements by overstating its revenue or assets, not recording expenses and under-recording liabilities. It also involves unrecorded expense, intentional manipulation. Investigation is required to be carried out. Erroneous financial reporting

  1. ASSET MISAPPROPRIATION

Asset misappropriation fraud involves employees abusing their position to steal from an organization through fraudulent activity. This type of fraud can be committed by company directors or anyone else entrusted to hold and manage the assets and interests of an organization or its employees. The different types of asset misappropriation fraud include, embezzlement by manipulating accounts or creating false invoices, false expense claims, Outright theft of physical assets, fake inventory scheme, cheque tampering, payroll fraud by diverting payments or creating fictitious ghost employee, data theft and intellectual property theft.

Skimming of cash and cash larceny

Cash larceny refers to the act of stealing cash that has already been recorded in the books of accounts during a specific period. This fraud is perpetrated by an employee without the consent or knowledge of the employer. Larceny often occurs at the cash register, cash collection point, or from deposits in transit.

Skimming refers to the theft of money that has not been captured in the employer's books of accounts or accounting system.

This type of asset misappropriation consists of taking cash before it even enters the company's accounting system.

It's very hard to uncover because it requires finding evidence of something that hasn't been recorded yet. And, it doesn't require a lot of sophistication to execute, making it a popular choice among those that commit fraud.

  1. MISUSE OF COMPANY ASSETS

In a situation it can be one employee misusing the company computer system and violating an employee permissive use policy or theft of office supplies .In others, it involves employees running a competing business right out of the company. Cases also ranging from misuse of the company vehicle to take a personal vacation to employees using multiple company work vehicles to perform side jobs after hours and on weekends. Renting out the company's equipment to third parties, intentionally producing scrap product that is actually being sold by the employee, taking vehicles for recreation, hosting their own websites on company servers, and even directing other employees to perform tasks that unknowingly benefit a ghost or personal business. When the misuse of company assets results in liability for the company because their asset is involved in some type of accident or loss this is even worst. This conduct requires investigation.

D. THREATS, SEXUAL HARASSMENT OR OTHER INAPPROPRIATE FORMS OF BEHAVIOR OR COMMUNICATION

Threat can defined as an expression of intent to injure or punish another person were this is consistently done an employee, it can lead to conducting an internal investigation to secure such employee from such threat.

An offence is aggravated if there is a threat, whether actual or implied, or it is done in the company of other people, or under authority of a person, or involves the use of a weapon, force or threat. Sexual harassment is a cause of action which may arise from the failure to perform an investigation at all. It is imperative that every employer have a policy against sexual harassment, procedures for the reporting of such harassment, and a policy of immediately launching an investigation as order to avoid liability.

Liability for sexual harassment will be found where the employer knew or should have known of the harassment and failed to take prompt remedial action. On the other hand, prompt remedial action by the employer may relieve it of liability for sexual harassment committed by one of its employees.

E. OTHER VIOLATIONS OF POLICIES, MISCONDUCT, OR CRIMINAL ACTIVITY

Under this category, were the form of violation, misconduct is not clearly defined, the policies of the company should guide in conducting a proper investigation. And were government agencies or the police is required to look into the issue this should be done promptly as required by the company policy. Health and safety violation the appropriate agency or regulators can be invited also.

The investigation group may include representatives from any of this field;

* Physical security

* IT or information security

* Finance/Audit

* Human resources

* Legal

* Employees departmental management

* External investigation or forensics firms

WHY IS INTERNAL INVESTIGATION NECESSARY

No company is excluded from misconduct or misbehavior from ensuing as this is inevitable in any organization, thus internal investigation is set to be carried out. However, this must be done considering all the requirements as stated above to mention a few, to avoid any form of liabilities, charges from ensuing by employees who are unfairly treated by the procedure or policies adopted. To save the company from issues that might arise best practices is advised.

And the position in Nigeria as decided in a number of cases as in Zenabor V. Bayero University, Kano (2009) 17 Nwlr (Pt. 1169) 96 C.A, where the courts have held that an employer has the power to discipline an employee for an infraction on its code of conduct irrespective of any other action that may be taken by the public prosecutorial authorities against the employee, thus internal investigation can be conducted in organizations as long as procedures do not infringe the employees' rights and when challenged in court can be upheld.

CONCLUSION

For an effective internal investigation to be conducted every detail must be kept and procedure duly followed to ensure that a proper decision is arrived at, and the company or organization is not being dragged to court for failing to be reasonable in carrying out its investigation. To avoid employees from slamming the company with even more liability or charges for not allowing fair hearing to be exercised or were privacy rights was violated and summary dismissal is done.

Thus were experts are required in carrying out an investigation employers should not hesitate to search for, were policy are required to be drawn up it should be carried out even if the management team or human resource department requires training as such company should divest a part of their funds to ensure this is carried out.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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