1 The Decision to Conduct an Internal Investigation
1.1 What statutory or regulatory obligations should an entity consider when deciding whether to conduct an internal investigation in your jurisdiction? Are there any consequences for failing to comply with these statutory or regulatory regulations? Are there any regulatory or legal benefits for conducting an investigation?
Firstly, an entity should consider if there is an ongoing statutory or regulatory investigation and, if so, how that might impact the decision to conduct an internal investigation. For example, it should consider whether there exists a reporting obligation to An Garda Síochána (the police authority). Section 19 of the Criminal Justice Act 2011 ("the 2011 Act") makes it an offence for a person to withhold information from An Garda Síochána which may be of material assistance in (a) preventing the commission of a relevant offence, or (b) securing the apprehension, prosecution or conviction of a person for a relevant offence. A "relevant offence" for the purpose of the 2011 Act includes offences in the areas of banking and other financial activities, company law, money laundering and terrorist financing, theft and fraud, bribery and corruption, consumer protection and criminal damage to property.
Prior to undertaking an internal investigation, it is important to consider whether the information giving rise to the investigation, has originated from a whistleblower. If it has, the entity must ensure that the protections afforded to whistleblowers by the Protected Disclosures Act 2014 ("the 2014 Act") are adhered to. In any investigation, the principles of constitutional and administrative law are applicable; in particular, fair procedures must be followed.
If an effective internal investigation is conducted and the report is subsequently made available to a statutory or regulatory body contemplating undertaking its own investigation, the relevant statutory or regulatory body may accept the findings of the internal report and decide to take no further steps. For example, they might instead insist on being updated in relation to the implementation of recommendations in the internal report. In that regard, a regulator may attach more credibility to the findings of an internal investigation where it is carried out by an external third party.
1.2 What factors, in addition to statutory or regulatory requirements, should an entity consider before deciding to initiate an internal investigation in your jurisdiction?
There are a number of factors which must be considered, including understanding the scale of the issues, the ability of the entity to conduct the investigation, the manner in which the investigation is intended to be carried out and the potential impact of the investigation.
1.3 How should an entity assess the credibility of a whistleblower's complaint and determine whether an internal investigation is necessary? Are there any legal implications for dealing with whistleblowers?
Under the 2014 Act, employers may not dismiss or otherwise penalise, or cause detriment to, a worker for having made a "protected disclosure". The appropriate way to initially assess a protected disclosure is to see whether it meets the criteria under the legislation. It should be noted that there is a presumption that a disclosure is a protected disclosure.
The requirement to have in place a whistleblowing policy under the 2014 Act is mandatory for all public bodies, and highly recommended for all entities. In assessing the credibility of a whistleblower's complaint, an entity should have regard to any internal procedure as set out in the whistleblowing policy. The entity should assess whether or not the concern raised is in fact a protected disclosure or if it is, for example, a grievance issue. Where the matter is being treated as a protected disclosure, depending on the level of information provided by the whistleblower, further discussion with the whistleblower may be required in order to clarify the substance of the allegations. The 2014 Act provides a number of protections to whistleblowers. For example, an employee may be awarded up to five years' remuneration for unfair dismissal on the grounds of having made a protected disclosure.
1.4 How does outside counsel determine who "the client" is for the purposes of conducting an internal investigation and reporting findings (e.g. the Legal Department, the Chief Compliance Officer, the Board of Directors, the Audit Committee, a special committee, etc.)? What steps must outside counsel take to ensure that the reporting relationship is free of any internal conflicts? When is it appropriate to exclude an in-house attorney, senior executive, or major shareholder who might have an interest in influencing the direction of the investigation?
In determining who the client is, outside counsel will usually consider those individuals who are expressly charged with seeking and receiving legal advice on behalf of the entity. The client does not extend to every employee of the entity for the purpose of claiming privilege over communications. In certain circumstances, it may be appropriate to establish a sub-committee to deal with a particular issue. At the outset, outside counsel should determine who the client is. They should establish clear lines of reporting with those individuals, as legal advice privilege may only attach to communications between the client as defined and the external lawyers.
Those individuals who may be the subject of the investigation or may be considered a relevant witness should be excluded from the running of the investigation.
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Previously published in the International Comparative Legal Guide
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.