UK: Internal Investigations: How To Protect Your Business

Internal investigations are becoming an increasingly important risk management tool. Whilst normally a fact finding exercise, they also play a vital part in a company's compliance with regulatory obligations. Internal investigations are a good way of establishing potential risks to the company, whether they are reputation or legal, and can expose potential criminal, civil or regulatory liability. We discuss what you should consider when undertaking an internal investigation.

Why initiate an internal investigation?

Internal investigations can be initiated for many reasons. They may be a result of an internal audit, company compliance procedure or as a result of whistleblowing within the company. If it is the latter, the company must consider their duties and obligations as an employer towards the whistle-blower and any other employees who may be involved. In this context it may also be necessary to consider foreign law depending on where the employees work and are employed.

Defining the scope

It is imperative at the outset of any internal investigation that you determine its scope and purpose. This will ensure the investigation is focused and yields results. The scope and purpose should be defined in a "Terms of Reference" document, which should be agreed at the outset and followed.

Who should conduct the investigation?

From the outset, the company must identify who will take responsibility for leading the investigation. This will normally be in conjunction with the company's HR, legal and compliance departments, internal audit, and board of directors.

The company must also decide whether to instruct outside counsel to conduct the investigation. This is certainly a good idea where there are any suspicions or concerns about management knowledge of, or involvement in, the issue to be investigated.

Investigative work is by its nature intrusive, but the investigation should be objective and independent, and it must be borne in mind that it might, at a later date, be necessary to demonstrate the impartiality and legitimacy of the investigation to a regulator or prosecutor.

The issue of privilege

The issue of privilege is key when deciding who should conduct the investigation, as it can assist in controlling the evidence from external scrutiny. There are two types of legal professional privilege: legal advice privilege and litigation privilege. Generally legal advice privilege is more relevant during internal investigations.

Legal advice privilege can be claimed over communications between a lawyer and their client created for the purpose of giving or receiving legal advice, or documents evidencing the content of those communications. This type of privilege has its limitations as, for example, interview notes of a meeting with a witness may not attract privilege even if taken by lawyer since they are not communications between a lawyer and his client. However if the notes were in the form of a communication addressed to the client and gave the lawyer's impression of the witness, they may then fall within the definition of legal advice privilege.

Litigation privilege is much wider since it covers all documents obtained throughout the litigation process. However this only applies where actual litigation is contemplated.

Knowledge of the investigation

Knowledge of the investigation should be limited and as a general rule be on a "need-toknow" basis only.

This is important not only in terms of preserving evidence but also when it comes to interviewing witnesses, whose recollection may be influenced if they discuss the issue with other people once the investigation has begun.

The importance of gathering evidence

It is normally recommended to notify relevant employees of the need to preserve all documents, both in hard and electronic form. However there is also a need to prevent deliberate destruction which can be a real risk where employees may be implicated in some form of wrong-doing.

It is also prudent to understand as soon as possible where evidence is held. This could include central servers, desktops, laptops and smartphones. Where information is held electronically, it is recommended to involve an IT professional in the extraction of the data so that it is preserved with its meta-data intact.

Data protection must be considered when gathering and storing personal data of employees, as this is governed by the Data Protection Act 1998. It is imperative that this is stored securely to minimise any risk of data leaks. Where data is held overseas, careful consideration needs to be given to local law distinctions.

Potential consequences of an internal investigation

The outcome of an internal investigation will vary case by case and unfortunately may have commercial and reputational consequences for the company. Actions you may need to consider include: 

  • Disciplinary action. This should be done in conjunction with the HR department, as they will be best placed to advise on the firm's policies and disciplinary procedure
  • Self-reporting to the authorities or regulators
  • Alerting your banks/financiers to any wrongdoing that may have been discovered. In many finance transactions companies are required to enter into prescriptive and pervasive covenants, in particular regarding legality, anti-bribery and money laundering. These should be examined carefully

Preventing reoccurrence

Depending on the outcome of the investigation, it will often be prudent for a company to consider what steps can be taken to prevent reoccurrence. Measures include:

  • Reissuing the compliance handbook 
  • Delivering training on compliance issues to employees
  • Reviewing reporting lines and accountability

It is also important that these remedial and preventative measures are monitored and reviewed on a regular basis.

Internal Investigations: How To Protect Your Business

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions