The Power of Intelligence: A Valuable Asset in Investigations

While legal and compliance concerns generally take center stage, assessing the credibility of internal complaints to prioritise investigative efforts, as well as the outside perception of the organisation, the people involved, and the impact of an investigation, are equally important considerations.

Intelligence — comprising focused research leveraging publicly available sources and information gathered from well-established networks of human sources — provides a means to accomplish these objectives.

The Investigations Climate

In-house and external counsel have many more variables to consider when conducting internal investigations, particularly after the impact of COVID-19 caused a shift in the way these types of issues are handled. For the most part, investigations are now conducted remotely, which can impact the quality of information and timeliness in gathering information. The inability to “walk the halls” and elicit facts in real time has proved to be problematic as well. Many companies appeared to take a ‘“wait and see” approach at the very beginning of the global pandemic, hoping it would be possible to conduct in-person interviews after a short delay. Limited resources combined with the increase in reports and a backlog of claims has left both in-house and external counsel to grapple with prioritisation of efforts.

Not only has the pandemic presented more opportunity for misconduct, but employees at all levels appear to have felt more empowered to report it. Investments in “speak up” culture, whistleblower hotlines, corporate compliance policies and training, combined with remote work, increasing employment options and more emphasis on employee rights, are contributing factors that have led to an increase in reports of wrongdoing. 

The types of claims are evolving too. Traditionally, internal reports focused on theft, bribery and corruption, money laundering and the like, but now also include cybersecurity threats, workplace harassment and safety matters, and discrimination issues.

The Intelligence Advantage

Information is more readily available than ever before, yet so much of it is questionable due to unsanctioned and potentially unreliable sources. The use of intelligence —or information gathered through careful research, analysis, vetting and corroboration — allows counsel to:

• Prioritise complaints to be investigated.

Thorough research of corporate records and media coverage, connectivity analysis, and inquiries, for example, provide a detailed understanding of the facts related to an allegation. This intelligence can be used to assess whether there is any publicly available information to support the claim, and it provides a view into the professional conduct, corporate footprint, and profile of any individuals involved.

• Gather and assess outside perceptions of the organisation, people involved, and the investigation impact.

Conducting on-the-ground interviews with independent sources to establish factual leads to corroborate research are often necessary in complex and sensitive situations. These conversations typically reveal the perception of the company, executive leadership, and key stakeholders, and sentiments around the company and those involved can determine the impact and ripple effect of an internal investigation.

• Mitigate reputational risk

Confidential interactions with a range of independent sources on the ground in the relevant jurisdiction and an analysis of those findings allows internal stakeholders to gain an independent perspective as to the perception of the company, its leadership, and stakeholders, and to obtain insight into whether internal problems are becoming common knowledge within the local environment and assess potential reputational risk.

Tips for Counsel to Consider

When allegations of wrongdoing surface internally, it’s important for in-house and external counsel to keep in mind:

1. Most reports are filed digitally and, therefore, greater scrutiny into the information surrounding the claims is required. Do the allegations appear to be plausible?  
2. Stress test the underlying allegations before investing additional resources in wider investigations. Is there any indication that sources outside the organisation make unprompted reference to / are aware of the issues described in the allegations? Are there similar issues that affect other organisations within that jurisdiction or market? Is the problem endemic in the wider sector?
3. If the intelligence obtained suggests that an internal issue is already more widely known in the public domain or within a particular sector or market, the in-house team will need to coordinate swiftly and effectively with key stakeholders to ensure clear and consistent messaging.
4. Understand the profile and reputation of any employees who are allegedly involved in wrongdoing. At what level of seniority are the individuals? How are they perceived on the ground in that market? Is there any evidence that individuals have a significant corporate footprint (for example, directorships or shareholdings in entities other than their employer) in their own right? Do there appear to be connections between employees and third parties outside the organisation that could present a conflict of interest or a cause for concern?
5. Depending on the nature and seriousness of the allegations, it may ultimately trigger a disclosure requirement or self-reporting process to a regulator. External counsel is best placed to advise on the relevant legal position, but demonstrating the organisation has engaged an independent firm to investigate the issues at an early stage could be an important factor in any subsequent reporting or regulatory dialogue. 

Conclusion

The global pandemic has increased not only the opportunity for, and incidents of, misconduct in a corporate setting, but also the way in which in-house and external counsel approach investigations into these issues. By leveraging intelligence and information gleaned from both publicly available sources and extensive networks on the ground in the jurisdictions in question, organisations can prioritise efforts, mitigate risks, and ensure they understand the issues in the context of the external environment, beyond the traditional parameters of an internal investigation.  

This article was first published in National Law Journal.

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