Introduction.
All complex inquiries start with and are shaped by a model or plan. Each fraud recovery model must be custom-built from the bottom up. Hastily-prepared, 'top-down' reactions to a problem as multi-faceted and nigh impenetrable as a newly-discovered serious fraud must be rejected. An analyst's 'feeling' for, or purported 'intuition' about, how to solve a fraud puzzle are hazardous.
Each model must be built to withstand the stress of high risk and be malleable enough to sustain the effects of dynamic change. When a person starts to search for a solution to a complex fraud – "What he knows, is that he knows nothing."1 The solution will not come from speculation. It can only come from sustained, well-organized and well-managed work.
Most major investigations involving fraud have their beginning in an environment of sudden discovery, panic and recrimination. It was not long ago when it was thought that the public disclosure of the fact of a significant fraud would suffer such severe damage on the careers of the managers of a business who "allowed" the wrong to occur on their watch, and on the reputational capital of the business itself, that they would be quick to brush the problem aside and conceal it. This is no longer thought of as being an appropriate response. Moreso, it may be illegal to suppress the presence of a serious violation of duty – or of any substantial form of wrongdoing.
For instance, the 2003 legislative package from the U.S. Congress known as the Sarbanes-Oxley Act has had, and will continue to have, a major impact on all legal professionals involved in fraud investigation or restraint. Under the Sarbanes-Oxley Act, any lawyer, whether domestic to the United States or not, who acts for an "issuer" of securities that are traded in U.S. capital markets, is deemed to "appear before" the Securities and Exchange Commission (the "SEC"), if such lawyer is involved in any matter concerning the investigation of a "violation." A "violation" is deemed by Sarbanes-Auxley to mean any breach of fiduciary duty, securities laws or other broadly-defined legal restraints under U.S. state or federal law (including, obviously, fraud or other forms of malfeasance). Once a lawyer is deemed to be "appearing before" the SEC, he must comply with a complex series of reporting requirements – notwithstanding the principles of client confidentiality and privilege.
Moreover, the law of vicarious liability and directors' and officers' liability for failing to take due care in the management and administration of a company's affairs – each impose an arguably strict duty to inquire into any apparent fraud, thoroughly.
Once it has been concluded that an investigation must be launched, what are the inputs that ought to be included in building an appropriate investigatory model? They include:
- a clear statement of the over-arching goal and objectives
of the inquiry;
- an inventory of allegations and suspicions against or
about the subject of the inquiry;
- a description of the extra- and intra-judicial methods of
investigation (or of fact discovery) that are to be employed
(i.e., database inquiries; public record searches; the covert
development of sources; the overt interviewing of witnesses
either in a sequential or on a sudden and mass basis; the
identification of communication and travel patterns of a
subject; surveillance of the subject; the use of
'black-forest runs' (or the collection of
rubbish left out for collection); foreign country immigration
record searches; civil and criminal litigation record
searches; the possible use of a pretext approach, or
'sting,' to approach the subject to solicit
damning admissions or information; and the like);
- a projection of the man-hours and make-up of the
multi-disciplinary team required to implement the
model;
- an inventory of legal and professional ethical restraints
and obligations that shall govern the carriage of the inquiry
in the places where it is to be carried-out (i.e., privacy
laws; data-protection statutes; the criminal law governing
the interception of private communications; the law of
trespass insofar as it may affect the collection of abandoned
rubbish of a subject; the law of defamation of character in
the places where the results of the inquiry may be published;
and the laws imposing duties on the managers of the inquiry,
or on the professionals involved, to report the fact of or
results deriving from the same to senior officers, the board,
an audit committee, shareholders, regulators – or
the public at large);
- the financial resources available to conduct the inquiry
as efficaciously as possible;
- the results of an initial critical review of all
immediately available documentary and testimonial evidence of
the wrong to be investigated;
- an inventory of jurisdictions and persons indicating
where the inquiry will probably need to be taken to
– thus showing its anticipated geographic and
person-specific scope and breadth; and
- a comprehensive analysis of the law of privilege as it
can be anticipated to apply to the prosecution of the inquiry
– leading to a plan of protection of the
confidential and privileged nature of all documents and other
communications generated by the inquiry, to the extent that
applicable law will permit.
Once the raw inputs have been assembled, it is time to start to piece together the rudiments of the model. This is the most critical part of the process – for if the model is flawed, so will be the investigation and its results.
We start by looking at the various steps that must be taken at the beginning.
Traveling to the Scene of the Crime.
The scene of the crime is always, in criminal justice terms, the first port of call. It is where potentially time-sensitive evidence may be collected or observed, and where the investigating authority commences the process of discovery of the how, why and when of the crime. Professionals involved in a concealed asset recovery exercise, excluding investigative professionals, rarely if ever have occasion, or indeed the inclination, to experience on a physical level the scene of a crime. While in most cases the task of evidence collection may be left to investigators, the desirability of all members of the asset recovery team becoming intimately acquainted with the setting for the crime, cannot be underestimated.
The scene of the crime holds valuable clues for those who are willing and able to see them. In abstract terms it may not always be possible to anticipate who the most appropriate witnesses might be, whereas a careful analysis of the scene of the crime will suggest real and tangible lines of inquiry.
Critical Review.
To restate, in any concealed asset recovery project, the initial planning phase is the most critical. The first and most important consideration must be to identify and prioritize objectives calculated to achieve the over-arching goal of recovery. A number of key questions must be considered: Do you have a strong case either for damages or against misappropriated assets? Which jurisdictions are involved and are they favorable to you? And, finally, where are the most exposed assets, and where are they located in relation to your legal action?
The jurisdictions involved can be separated into two broad categories – (a) those where the assets are currently situate or through which they have passed, and (b) those where the misappropriation or wrongs were committed. In considering the most appropriate jurisdiction to institute the main or 'spearhead' proceedings, critical consideration must be given to the availability of extraordinary relief and remedies within such jurisdiction, and to the speed, reliability and cost of the local judicial process. While many jurisdictions have made inroads in recent years to address the cause of reputations damaged as a result of consistently poor financial regulation and monitoring, there are yet many jurisdictions which merit the nomenclature "non-cooperative countries and territories".2 The current list of non-cooperative countries and territories includes the Cook Islands; Dominica; Egypt; Grenada; Guatemala; Indonesia; Marshall Islands; Myanmar; Nauru; Nigeria; Niue; Philippines; Russia; St. Vincent & the Grenadines; and the Ukraine. Moreover, the options available for the location of the principal proceedings leading to a final money judgment are restricted to the place or places which enjoy an internationally and judicially cognizable form of in personam jurisdiction over the principal defendants. In the absence of this, any judgment obtained might not be recognized or enforced in the place (or places) where the obligor's assets are situate.
Having prepared a chart of the relevant jurisdictions, noting the pros and cons of each location, a separate chart or map should be prepared which identifies those jurisdictions at which assets are suspected to be housed. Again, a similar exercise should be conducted in relation to the asset holding jurisdictions, for the purposes of identifying the strengths and weaknesses of each. While ultimately, some form of proceeding will need to be instituted in each jurisdiction in order to recover the assets situate there, the route of reaching such a conclusion is not always straightforward. For example, where assets are situate in a jurisdiction which is renowned for its resistance to discovery and/or asset tracing litigation, it may well be possible to make such asset subject to an international freezing order which has been obtained elsewhere, or to compel the repatriation of the asset through civil contempt proceedings in the place where the obligor is to be found.
Next, the analysts employed by an apparent victim or creditor must critically and methodically review all of the available evidence showing how assets were misappropriated and/or 'protected'.
This evidence should enable a comprehensive picture of wrongdoing to be drawn and the bones of the 'spearhead' pleadings to be drafted. Such pleadings should, subject to supplementation from additional evidence gleaned, in part, from the available records, reports and witnesses, present a framework upon which pre-emptive and emergency applications for extraordinary and interim measures will rest. Ultimately, such pleadings can be expanded to include any additional material that could be obtained from friendly witnesses and third parties such as financial institutions. All these factors must be assessed as you assemble a team of professionals covering the relevant jurisdictions.
Invariably, a strategy of harmonization of all actions taken multi-jurisdictionally must be followed. All pleadings and evidence to be filed in one locale must be carefully compared with drafts of papers to be filed elsewhere – to ensure that all representations made to disparate courts are accurate, complete and consistent. The satellite asset preservation litigations should, if possible, be stayed pending final outcome of the principal proceedings to conserve resources on both sides and to avoid the risk of inconsistent judicial findings or determinations.
Procurement and Analysis of Initial Intelligence.
In any concealed asset recovery project of substantial value, the obligor's secreted assets will ordinarily be held in the names of nominee individuals or companies. Proof of the ultimate beneficial ownership trail – or evidence demonstrating that certain assets represent the proceeds of a fraud or other crime; or are under the dominion of an obligor – is fundamentally important. However, the procurement of such proof involves the expenditure of considerable human and financial capital. To the extent possible, all seemingly promising avenues of concealment must be investigated. The paper trail must be unraveled. This will necessarily involve some or all of the following searches: (a) company searches, (b) personal searches including, where necessary, surveillance reports; and (c) real and personal property searches and criminal record searches. While much of the basic information needed is available in the public domain, the speed with which that information can be accessed can often be critical. Thus, links with skilled operators in the field who have ready access to raw data, or who can call upon valuable sources to provide information with alacrity, are invaluable. In more complex cases, it may be necessary to undertake twenty-four-hour surveillance of subjects of the inquiry, the collection of discarded rubbish, and even pretext operations – where skilled professionals infiltrate the target's environment in order to glean sensitive and useful information, either from the principal target themselves or from their close accomplices.
In formulating the initial plan of inquiry, the importance of completing a critical review of existing documents and raw intelligence cannot be understated. A picture should emerge which informs the analyst instantly in relation to the whereabouts of wealth, or its route, and whether relevant jurisdictions are amenable to investigation and asset recovery. Having gathered, developed and analysed intelligence from internal and external sources, (which may include relevant financial institutions, law enforcement officials and intelligence sources), a well synthesized initial report and set of recommendations should be prepared which enable decision makers to see the way forward with clarity.
Grading the Quality of Information.
The value of compiling maps, diagrams and other schematic representations which enable the evolving global picture of fact to be appreciated at a glance, should not be minimized by any expectation that such practice is overly simplistic or trite. It is often the case that the optimal way forward emerges from a well-thought out and represented picture which captures and exploits data in a much more meaningful and immediate way than pages of linear figures, statistics and facts in text form. Once all relevant personal, company, property and other information regarding the target of the inquiry is to hand, it should be assembled in a medium which enables it to be assimilated in comprehensive fashion by all those members of the professional team who need immediate access to the facts and figures involved. In order to make meaningful decisions, a comprehensive pre-litigation advice and plan of action must be drawn. Such plan of action will invariably involve a proposal for multi-jurisdictional pre-emptive litigation to seize assets and documents.
At this stage a clear picture of the value of independent strands of information and their respective degree of apparent reliability should emerge. It is ideal that only the highest quality of direct evidence be presented to a court. However, it is often the case that the victim's team has fragments of fact to work with. Most fraud involving the concealment of wealth occurs secretly. Very few creditors or victims have direct, personal knowledge of what has occurred. To address these problems, it is important to start with what we know, and what we can establish. Missing elements can be inferred provisionally from the objective circumstances surrounding the protagonist and his narrative.
Once sufficient information has been obtained, ex parte, to enable the claimant and his team to establish with reasonable certainty the location of assets; the next step, provided that sufficient assets have been identified, is to proceed to preserve those assets by restraining or freezing the ability to transfer their title. The need for such extraordinary relief should be supported by the now comprehensive factual record which establishes the wrongdoing, the provenance of the funds which have been misappropriated, and the current location of those assets – all linked together by a framework of evidence which has been secured by legitimate means and which amply supports the case for the relief sought.
The Obligation to be Enforced.
There are many legal claims which may provide the necessary platform from which to launch an asset recovery exercise. Ideally, the recovery of assets should be based upon a sound money judgment or determination of liability. However, the absence of a final judgment is not fatal to an asset recovery plan where there exists strong evidence of wrongdoing which a court can latch onto. The basis for the relief will depend very much on the facts which present themselves, although a number of legal theories of liability permit broad interpretation and therefore flexibility in framing a claim, effectively encompassing a large number of fact patterns. For example, under U.S. and Canadian law, the theory of unjust enrichment focuses on gain in the hands of the recipient of value – where that receipt is unjust. There are many misappropriation fact patterns that can be framed so as to fit such broad criteria.
To build the model efficaciously, it is important that the most viable causes of action (or theories of liability) be identified and used as inputs to drive the plan. Such theories set-out the elements of fact that must be established to obtain an adjudication of liability. These 'core' facts need to be listed – so that the inquiry is directed to procure proof of the same. Here are three examples of claims that might ground an inquiry.
Money Had and Received.
The claim for money had and received is a common law action. It is a personal claim for restitution. This claim has the advantage that a plaintiff does not have to prove any form of dishonesty on the part of the target defendant. Subject to their being no defence, such as for example that of a bona fide purchaser for value without notice, if the defendant has received a claimant's money in exchange for no value (or inadequate value), he arguably must make reparations for same. It is possible to bring such a claim in conjunction with a claim in equity, however it is necessary to be able to show that the defendant received money which can be identified as that belonging to the plaintiff. A problem arises once the money has become mixed with other funds and is passed through several hands, as will obviously be the case in more complex frauds. In such circumstances, the common law right of action collapses and an equitable tracing remedy, or an "in rem" remedy must be sought.
Investment Scam.
In investment scams, broadly speaking, a claim may be framed in monies had and received or based on applicable statutory provisions designed to deal with such scenarios, such as for example the U.S. Securities and Exchange Acts. Section 2(1) of the Securities Act and Section 3(a)(10) of the Exchange Act define security to include investment contract and notes, these definitions permit of wide interpretation so as to cover most investment schemes.
Fraudulent Transfer.
One of the oldest tricks in the book involves transferring wealth to nominees or family members in an attempt to evade a pre-existing legal obligation. However, this is not a fool-proof way to avoid creditors provided the path of transfer can be uncovered so as to locate the current whereabouts of the assets. Creditors can successfully recover a debtor's assets by proving the transaction was fraudulent because it hinders or delays their rights as creditors to obtain the debtor's property. To overturn a fraudulent transfer, a creditor may invoke either common law or statutory rules. Most developed countries now provide statutory mechanisms for avoiding such transfers. For example in the United States the Uniform Fraudulent Conveyance Act (the "UFCA" – which is followed in most states), or the comparable Uniform Fraudulent Transfers Act (the "UFTA" – found in eight states), provide detailed rules governing such a scenario. Several states still observe English common law, which closely parallels the American fraudulent transfer statutes.
Dramatis Personae.
Fraud analysts know, or at least should strongly suspect, who the primary protagonist is, from the outset. However, in nearly all complex asset recovery cases, the principal wrongdoer does not act alone. He is regularly assisted in hiding the proceeds of crime. Such assistants or 'facilitators,' innocent or not, ordinarily have valuable information regarding the apparent crime and the routes of transfer or the whereabouts of the proceeds. In some cases they may be in possession of the illicit proceeds. It is thus important at as early a stage as possible to compile a list of all parties who are suspected of being involved with the apparent criminal, however tangential they may be or seem. As time and the investigative process move on, such a list can be supplemented and amended as appropriate, adding or deleting names, and adding details such as addresses, occupations, financial status and relationships to the primary obligor. This 'Dramatis Personae' can provide a better understanding of how the apparent wrongdoer operates, and in what circles and where his areas of weakness may be. It may also provide a source of potential witnesses.
The Universe of Primary and Secondary Obligors.
The Dramatis Personae will provide a good 'snapshot' of the universe within which the primary obligor interacts with the secondary obligors – his assistants or facilitators. These may be family members who have received gifts or are holding assets in their name, they may be lawyers, accountants, bankers or other manner of advisor who assist the fraudster, whether wittingly or not, in hiding the fruits of the fraud.
Understanding this universe and being able to navigate through it, and picking up valuable items of information where possible, are key elements of any successful asset recovery campaign. Knowing when, where, how and most crucially with whom to conduct "no-footprints" type interviews within that universe is a skill, borne of an understanding as to what motivates human conduct and key characteristics of different personality types. In-depth familiarity with the universe of obligors and the Dramatis Personae can not only provide a concrete bedrock from which investigations can be launched, but can impact upon the type of proceedings ultimately employed to bring the obligor and his entourage to some meaningful form of justice.
Prioritising - The Importance of Identification of the Jurisdictions Involved.
Simply locating assets and obtaining judgments can be futile. Recovery is the key. It must be the goal which drives the machine. This demands a coordinated strategy that links locating and securing assets for enforceable judgments and execution. It is not meaningful to obtain a judgment in a 'friendly' jurisdiction that cannot be enforced in the crucial jurisdiction – where the assets are located. Issues of legal reciprocity, personal jurisdiction and mutual assistance between jurisdictions must be taken into account and oftentimes will dictate the most suitable forum for a recovery action. Any litigation plan which fails to take account of the idiosyncrasies of crucial jurisdictions is destined to fail on the first attempt at securing assets and information in circumstances where a second attempt may prove too late, assets or information having moved meanwhile.
Plan of Investigation and Pre-emptive Litigation.
Where available, gagging and sealing orders ought to be sought and obtained as an integral part of any judicially assisted secret asset search. When the creditor or victim is ready to move to pre-emptorily preserve wealth, rapid asset freezing is crucial, as the creditor will almost certainly be faced with a multitude of defences. As soon as the first strike to preserve wealth is made, legal challenges may be forthcoming in other jurisdictions and assets may be moved. Anticipate challenges to the forum as the defendant seeks to shift litigation to a more favorable location. When selecting jurisdictions, you should also bear in mind that some will demand a bond or security for damages before you can commence litigation or freeze assets. In complex, multi-jurisdictional litigation, mutual trust and cooperation with criminal investigating authorities can play a significant role in a successful recovery strategy. Increasingly, civil claimants and law enforcement personnel are working in partnership for the return of assets to the victims of fraud.
Ultimately, a thorough understanding of international money transmission systems and asset protection schemes – together with an appreciation of the legal restrictions and aids available in the relevant jurisdiction – will improve the chances of success. A well-conceived plan, which aims to tie down the assets while obtaining a judgment, is the ideal basis for effective asset recovery.
Anticipate a Ferocious Counter-Attack.
When a serious economic criminal learns that his concealed assets have been successfully located and frozen, he may launch a ferocious counter-attack – asserting that the investigation (and related ex parte, pre-emptive litigation), was unlawfully conceived and prosecuted. A civil action motivated by animus and by the desire to intimidate, and sounded in defamation of character and breach of privacy, may also be launched against the victims and the members of their investigative team – regardless of its probable lack of merit. The model of the inquiry must be cognizant of this risk. Certainly, if a mistake is made or a technical violation occurs in the prosecution of an investigation involving tens of millions of dollars of concealed wealth, the defendant will seek to discover and exploit it.
Investigative targets who are accused of having committed serious forms of economic crime are quick to detect that an investigation of the kind contemplated by this paper represents a clear and present danger to their continued lifestyle, persona and hold on power. Oftentimes, they marshal every resource within their reach to seek to suppress the danger. This can include the use of the most expensive and influential legal counsel, public relations consultants, political lobbyists and others (such as, relevantly, a platoon of aggressive private investigators and counter-intelligence consultants tasked to dig for weaknesses in the client and its investigative team). Apparent economic criminals ordinarily ignore the merits, and attack the process. They frequently mount a ferocious campaign to procure, by court order, the victims' team's confidential work product and reports. Such documents represent the oxygen for his counter-assault on process and the manner and means of the inquiry.
This risk poignantly heightens the need to manage the security and privilege over confidential information and documents generated by a major investigation.
Plan of Preservation of Privilege.
Information and documents collected, and even information and documents generated, by an investigation may be accessible by the government, regulators, private litigants and the public. Such documents may thus be used against a creditor or victim in a subsequent proceeding brought by the defendant or others. A plan of preservation of the (a) lawyer–client and (b) litigation (as it is styled in England & Wales) or attorney–work product (as it is described in America) privileges must form an important part of the fabric of the investigation. A client will only be able to refuse disclosure of investigative reports and underlying work product to the extent that they are protected by one or both of these privileges. The client will only be able to choose if, when, how, and to whom the results of an inquiry will be disclosed to the extent that the 'lawyer–client' or 'litigation' (meaning – attorney–work product) privileges apply, and only to the extent that certain conditions are met and maintained.
Accordingly, a plan of preservation of privilege and confidentiality in any communication that might be generated by an investigation needs to be formulated at the beginning of an inquiry. In the context of a global investigation, involving as it does many jurisdictions and laws, there may be conflicting results presented by the varying legal systems at play. Accordingly, an analysis needs to be conducted to resolve any anticipated conflict of laws (by applying, in the main, the applicable choice of law rules of the likely forum of the principal litigation). As one author has said:
"When one also considers other jurisdictions that increasingly play a role in internal investigations involving companies doing business multi-nationally, the complexity of analyzing the privileges used becomes mind-boggling." 3
After the legal issues concerning privilege have been comprehensively analyzed, a series of procedures should be set-out and adopted by all who are involved in the investigation, to help protect the documents and other communications generated by the inquiry from having to be disclosed, and to help to preserve security over sensitive information generally. Such a plan may entail procedures of the following kind: 4
(a) All meetings or discussions with project team members ought to be chaired by outside counsel. No meeting or discussion should occur among executives or other representatives of a client who are involved with overseeing an investigation, without legal counsel being present, chairing such discussion. Private discussions or written communications among representatives of a client are probably not privileged. They should be held to a minimum.
(b) All minutes of meetings or discussions, and all emails, memoranda, correspondence, reports, or other documents generated in respect of an inquiry ought to be endorsed with the following legend, in block capital letters and italics, at the header to same:
"THIS DOCUMENT IS IMPRESSED WITH THE LAWYER-CLIENT AND LITIGATION [OR, IN THE UNITED STATES, "ATTORNEY-WORK PRODUCT"] PRIVILEGES. IT IS STRICTLY CONFIDENTIAL AND HAS BEEN CREATED TO OBTAIN [or "TO RENDER", as appropriate] LEGAL ADVICE AND IN CONTEMPLATION OF LITIGATION."
(c) each team member involved in a major investigation (whether he be an outside professional or an employee of the client), should undertake to the client in writing to protect the confidentiality of all oral and written communications and documents associated with the matter;
(d) the size of the project team and the number of executives or representatives of the client involved in supervising an investigation, should be kept to as small a number of people as possible. Vigilant efforts should be made not to leave electronic files or hard copies of documents pertaining to an inquiry in any open or unprotected state at any time. Any drafts of any documents pertaining to a matter must be shredded;
(e) all line-investigators or other sub-contractors and professionals employed in connection with an investigation on a full or part time basis should each sign a similar undertaking of confidentiality to the investigative law firm who shall manage the inquiry – and to whom they shall each report;
(f) investigative counsel managing the inquiry should report to outside litigation counsel to the client;
(g) the client's in-house counsel should confirm in writing to the client that her involvement in the investigation is as legal counsel and in no other business or advisory capacity; 5
(h) all interviews conducted by the investigative team should be prefaced with a statement that the information sought is in connection with the rendering of legal advice to the client, and that investigative counsel acts for the client as its lawyer;
(i) each team member of the investigation ought to agree to abide by the principle of refraining to disseminate any information associated with the matter – save on a "need to know basis";
(j) to the extent that employees of the client, or its constituent parts, down-the-line, need to know about elements of, or even the fact of, the inquiry, they ought to be instructed to observe the confidential nature of the same;
(k) all forensic accountants, auditors, or other professionals who are to be involved with all or any aspect of the investigation, must be retained through outside counsel to the client (or, as to its involvement, by investigative counsel);
(l) if the make up of the client involves a number of subsidiaries or separate entities, an agreement ought to be entered into among them to acknowledge, protect and govern the common interest privilege among such entities in respect of the investigation and the communications generated by it; and
(m) more extensive protections over security of information may need to be put in place as soon as the investigation becomes public or reaches its overt stage.
Personal Security.
Most serious fraud investigations and litigations involve the targeting of seemingly vituperative, arrogant and powerful people who have behaved in a serially dishonest and harmful fashion towards others.
One of the most disquieting aspects of our work can involve a heightened risk to the personal safety of the senior managers of the client, as well as of instructing professionals and the people who are employed to assist in the investigation.
There are a number of measures that can be put into place to manage this exceptionally important subject. A specialist consultant in the area of personal security should be retained to advise.
Communications – Media Relations – Managing Risk.
In a major investigation, a senior public relations consultant ought to be retained and briefed in anticipation of a possible leak to the media, or before the client takes action publicly regarding the investigative findings. Communications and public relations represent an important species of risk (and, conversely, an area of opportunity) to be managed. If managed effectively, the media can and will help to undermine the counter-attacks that can be expected from a dishonest obligor and his team of professionals (including, oftentimes, a communications consultant).
Footnotes
1. This quote derives from one of Finland's most well-known sportsmen and businessmen – Mr. Harry Harkimo – who uses this statement to anchor his people at the beginning of any major project.
2. This is a designation attributed by the Financial Action Task Force on Money Laundering ("FATF") which continues to monitor the progress of specific jurisdictions in combating money laundering, and more recently, terrorist financing. The FATF is an independent international body whose secretariat is housed at the OECD in Paris. The 29 member countries and governments of the FATF are Argentina; Australia; Austria; Belgium; Brazil; Canada; Denmark; Finland; France; Germany; Greece; Hong Kong; China; Iceland; Ireland; Italy; Japan; Luxembourg; Mexico; The Kingdom of the Netherlands; New Zealand; Norway; Portugal; Singapore; Spain; Sweden; Switzerland; Turkey; United Kingdom and the United States. Two international organisations are also members of the FATF, the European Commission and the Gulf Cooperation Council.
3. Per Harris, H.S., Conducting Internal Investigations Before Litigation (Committee 12, International Bar Association Annual Meeting, San Francisco, September 15, 2003), at p.4. The learned author cited, in support of this observation, Bradford, S., Conflict of Laws and the Attorney / Client Privilege: A Territorial Solution, 52 U. Pitt. L. Rev. 909 (1991); Price, D.W., comment, A Choice of Law Analysis of Evidentiary Privileges, 50 La. L. Rev. 157 (1989).
4. This is based on a procedure employed in a major investigation where the authors act as investigative counsel. The structure of the inquiry involved a multi-national client, in-house counsel, outside litigation counsel, ourselves as investigative counsel, Interclaim (Ireland) Limited as lead investigators, and a series of sub-contractors.
5. By way of illustration, in Canada, the solicitor-client and litigation-privileges ostensibly protect the work product of both in-house and external lawyers (See, IBM Canada Ltd. v. Xerox of Canada, Ltd. [1978] 1 F.C. 513 at 516). However, "as a practical matter, it may be more difficult to establish privilege where an investigation is conducted by in-house counsel." (See, B. Leon and P. Bryce, supra, at p.12). For privilege to exist it is necessary that the in-house lawyer function in a legal rather than a business or commercial capacity. (See, Toronto Dominion Bank v. Leigh Instruments Ltd. (Trustee of ) (1997) 32 O.R. (3d) 575 at 583-4 (Gen. Div.) – where a circular written by the bank's general counsel, Senior V.P and corporate secretary, advising about the bank's policy regarding business risks associated with letters of comfort; was found not to be privileged because it was a "circular from head office", rather than a formal memorandum of law from the legal department of the bank).
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.
