According to the 2013 KPMG Cross-Border Investigations survey of sixty global executives, ninety percent indicated that the number of cross-border investigations have either increased or remained the same over the last year. Yet over fifty percent of these executives also reported that they have limited protocols in place and have insufficient resources to conduct cross-border investigations. As global regulations, laws, and enforcement actions increase, companies with well designed cross-border investigation protocols will be positioned for more positive outcomes than those that are not prepared.
"Conducting cross-border investigations is no simple endeavor," said Phil Ostwalt, Global Coordinator for Investigations for the Global Forensic practice at KPMG and Investigations leader in the United States. "Add the complexities of legal and cultural differences and you have one of the biggest challenges facing global corporations."
Only thirty five percent of respondents in KPMG's survey indicated that their companies conduct cross-border investigation training each year, a vast decline from KPMG's 2007 survey when that figure was eighty percent. And forty two percent of the executives believe their companies lack sufficient resources to handle cross-border investigations.
"Given the velocity with which compliance happens, management can never be prepared enough when it comes to its investigation protocols and procedures and yet our findings show that many companies are underprepared to meet this challenge," said Ostwalt.
Data privacy laws
Foreign data privacy laws and regulations pose some of the greatest challenges to conducting cross-border investigations because of restrictions on the kinds of data that can be collected and transferred out of the jurisdiction. Many countries have enacted laws that place a high priority on protecting personal data, including establishing a fundamental legal right on the privacy of personal data, even if such data are contained on an employer's system or computer. In fact, over forty six percent of the respondents in KPMG's survey reported that their greatest challenge in conducting cross-border investigations is handling data privacy issues.
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. No longer can companies rely on procedures and resources used for domestic investigations. Instead, they must be customized to comply with different local laws and to respect diverse cultures and customs.
"You simply cannot conduct a cross-border investigation without people who know the intricacies and idiosyncrasies of certain jurisdictions," continues Ostwalt. "What may be acceptable to say or do in one culture may totally offend someone from another culture. Loyalties also differ by culture and some employees may be hesitant to speak out against a countryman for the benefit of a foreign company."
His advice for organizations is to proactively develop case management and investigative procedures that align with the company's values, standards, and principles and take into account region-specific or country-specific requirements, customs, and practices. Oftentimes, one size does not fit all, and procedures will need to be customized to meet the requirements of a particular jurisdiction.
"We learned as children to stop, look, and listen before crossing the street, and the same prudence should be applied before taking any action with regard to an allegation of misconduct," said Déan Friedman, leader of KPMG's Investigations Network in the Europe, Middle East and Africa region for the Global Forensic practice. "Taking the time to assess the matter is critically important for the sake of confidentiality and privacy, as well as the credibility of the compliance program, the integrity of the investigation progress, and the reputation of those involved. Balancing the integrity of the investigative process with the legal rights that overseas subjects enjoy under local law is both an art and a science."
Bribery and corruption most common
As far as the types of allegations that companies are conducting, bribery and corruption investigations was identified by more than sixty seven of respondents. This was closely followed by allegations of embezzlement or misappropriation, selected by nearly 65 percent of the participating executives, and conflicts of interest, which was chosen by 63 percent of respondents.
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