Internal investigations can lead to legal action if they uncover crimes or violate employee rights. To avoid this, companies must conduct investigations lawfully, ensuring evidence is properly obtained and employee statements are voluntary. Mishandling the process may result in compensation claims, while unauthorized disclosure of trade secrets can trigger both civil and criminal penalties. Clear, rights-respecting procedures are key to minimizing legal risks.
Introduction
Internal investigations may be prompted by various factors, ranging from employee misconduct to serious criminal violations. Depending on the nature and severity of the case, these investigations can lead to legal proceedings, especially in instances where a crime must be reported. Furthermore, the manner in which an internal investigation is conducted can itself give rise to legal risks, including claims for compensation. This article explores the legal challenges companies in Türkiye may face following internal investigations, focusing on criminal liability, damages, and the disclosure of trade secrets.
Post Investigation Considerations: Criminal Proceedings
When an internal investigation reveals the commission of a crime, criminal proceedings are likely to be initiated against the offender. Legal action may be taken against the individual company officials to hold them personally liable. Legal responsibility may extend beyond the individual employee to include corporate officials, and, in some cases, the company itself. This is particularly true if the offense was committed within the scope of employment and for the benefit of the company, potentially exposing corporate management to criminal liability due to the company's legal status.
Although companies are not explicitly obligated to report crimes, Article 278 of the Turkish Penal Code ("TPC") imposes a general duty to notify the authorities of criminal activity, with non-compliance punishable by up to one year of imprisonment. However, Article 38 of the Turkish Constitution protects individuals from self-incrimination, providing a crucial exception to this is found in Article 38 of the Constitution, which ensures that no individual can be forced to incriminate themselves or provide self-incriminating evidence. Additionally, employees are bound by a duty of loyalty to the employer, are expected to report any criminal conduct that could damage the company or its reputation.
Common white-collar crimes triggering internal investigations include breach of trust, fraud, bid rigging, and bribery. These offenses, regulated primarily by the TPC, vary in their prosecution requirements. Some, like aggravated breach of trust under Article 155, require a formal complaint to initiate. For instance, pursuant to Article 155, criminal proceedings for aggravated breach of trust may be initiated against a company official in a managerial position if an investigation reveals that they have misused property entrusted to them. Given the commercial relationship between the company and the offender, the individual could face an aggravated penalty, including a prison sentence of up to seven years.
Under Article 73 of TPC, there is a six-month statute of limitations for crimes that require a complaint to trigger prosecution. This period begins when the authorized individual becomes aware of the crime and the perpetrator. Furthermore, Article 66 provides a broader statute of limitations for the initiation of criminal proceedings based on the imprisonment term for the specific crime.
That said, internal investigations may uncover crimes subject to ex officio prosecution, such as bribery and fraud, where no formal complaint is needed for authorities. In such cases, the TPC's provisions on sincere repentance may incentivize individuals or companies to self-report offenses. For example, individuals involved in the offence of bribery can avoid penalties by proactively informing the authorities and returning any illicit gains before detection. Similar leniency applies to other crimes such as theft, fraudulent bankruptcy, and breach of trust. Leniency programs also offer reduced penalties for cooperation during investigations.
Once criminal proceedings are initiated, the information and findings collected during the internal investigation can serve valuable evidence in reaching the material truth, provided that they are "legally obtained" as mandated by Article 38 of the Constitution.1 Therefore, a primary consideration during internal investigations should be to respect fundamental rights of the employees arising from the Constitution, other related legislations and international human rights Companies must recognize that they lack the authority to compel accused employees to disclose information, as doing so could jeopardize the legal admissibility of the investigation report.2 Article 148 of the Criminal Procedure Code, which mandates that any statement made by an accused employee must reflect their free will. Therefore, any attempt by an investigator to compel a statement through mistreatment, threats, violence, or psychological pressure will not only undermine the integrity of the statement but also force the employee to act beyond their legal obligations. Although it is not regulated under any legislation, since signature is the most important indicator of proof in Turkish Law, simultaneous reporting of the interviews with the employee and obtaining the employee's signature at the end of the interview will minimize the possibility of the employee later not accepting what the employee declared and will help prove that the interview was conducted with free will.
At this point, it is important to distinguish between statements made by the accused during investigations and other tangible evidence compiled in the internal investigation report. While statements from employees may not be admissible for the reasons mentioned above, the company is at liberty to utilize other concrete evidence, such as invoices, receipts, and other documented information, to substantiate the alleged crime.3
Post Investigation Considerations: Damages
Internal investigations may expose a company to civil liability. Employees may file claims for both material and moral damages in response to rights violations such as. These claims may stem from negative behaviors during investigations, including insults, mobbing, discrimination, attacks on personal rights, damage to honor and dignity, and psychological pressure. Within the context of the employment relationship, the provisions of the Turkish Civil Code ("TCC") and the Turkish Code of Obligations ("TCO") serve as general legal principles to protect employees from violations of their personal rights and ensure compensation for any resulting material and non-material damages. Indeed, Article 417 of the TCO places a duty on employers to protect and respect the personal rights of employees within the employment relationship.
Accordingly, Article 58 of the TCO stipulates that individuals whose personal rights have been violated may seek moral compensation for non-material damages, and similarly, under Article 24 of the TCC, the employee may also claim both material and moral compensation for any damages suffered as a result of the violation of their personal rights. If an employer breaches its duty towards an employee during an internal investigation—whether through psychological pressure, insults, or the unlawful use of their personal data—the employee is entitled to terminate the employment contract with just cause and pursue claims for damages against the employer or the specific investigator. Moreover, in cases where an internal investigation wrongfully accuses an employee, resulting in harm, the determination of moral compensation may consider factors such as the employee's psychological distress, loss of reputation, and potential future earnings from missed job opportunities.
Disclosure of Trade Secrets to Third Parties
Internal investigations may also uncover breaches involving the unauthorized disclosure of trade secrets. In Turkey, trade secrets are protected under unfair competition provisions of the Turkish Commercial Code ("TCL"), due to the absence of dedicated trade secret legislation.
Article 55/1(b)(3) of the TCL identifies as unfair competition any act that induces employees or agents to disclose trade secrets in breach of contract. For example, if an employee shares confidential business information in exchange for payment, both the disclosing employee and the recipient may be liable. Additionally, Article 55/1(d) defines unauthorized disclosure of business secrets as an act of dishonesty.
In such cases, the company may pursue various legal remedies, including a claim for compensation, an action for the prevention of unfair competition, or proceedings for the elimination of the material situation arising from the unfair competition as per Article 56. However, under Article 60 of the TCL, the party whose trade secrets have been violated must file their claim within one year from the date they became aware of the violation, and in any event, within three years from the date the violation occurred.
Furthermore, Article 239 of the TPC criminalizes the unauthorized disclosure of trade, banking, or client secrets. Offenders may face imprisonment of one to three years upon complaint, providing the company with an additional legal avenue to pursue accountability.
Conclusion
Internal investigations inherently carry the risk of exposing companies to legal actions and potential reputational damage. To proactively address these risks, it is essential for companies to recognize the potential legal challenges that may arise from such investigations and implement appropriate policies and procedures to mitigate them. A best practice approach involves developing comprehensive guidelines that outline the investigative steps, strategically designed to minimize litigation risk. Companies must ensure that both their investigative methods and the resulting findings are robust enough to withstand scrutiny by courts and regulatory authorities, thereby fulfilling their legal and ethical obligations. Adopting such an approach safeguards the company's legal standing while upholding its duty to operate in a transparent and accountable manner.
References
"Compliance" Fenomeni Ekseninde Şirket İç Soruşturmalar ve Türk Ceza Hukukundaki Olası Sonuçları. (2023, 01). Retrieved from ResearchGate: https://www.researchgate.net/publication/366974405_Compliance_Fenomeni_Ekseninde_Sirket_Ic_Sorusturmalar_ve_Turk_Ceza_Hukukundaki_Olasi_Sonuclari
Aras, B. (2021, 06 30). Hukuka Aykırı Delillerin Disiplin Soruşturmasında Kullanılması Sorunu. Ankara Barosu Dergisi. Retrieved from DergiPark: https://dergipark.org.tr/tr/download/article-file/1908549
Footnotes
1. (Aras, 2021, pp. 36-37)
2. ("Compliance" Fenomeni Ekseninde Şirket İç Soruşturmalar ve Türk Ceza Hukukundaki Olası Sonuçları, 2023, p. 1255)
3. Ibid., p. 1277
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