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
"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,"
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
"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
"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.
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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