Ten pillars to underpin a robust process
Latest trends in internal investigations
Companies regularly undertake internal investigations in order to identify and manage risk and to demonstrate good corporate governance. In the area of economic crime risk, investigations are a fact of corporate life. When concerns about corruption or other forms of business crime surface, the board will typically appoint lawyers to conduct an independent investigation and advise the company on its response to legal risks. Internal investigations are also increasingly used to examine wider issues of governance, culture and conduct, often on sensitive issues. What amounts to good investigations practice is developing all the time.
Corporate governance has gained in importance in the area of economic crime since the UK Bribery Act 2010 and the Criminal Finances Act 2017 introduced the concepts of 'adequate procedures' (in the case of bribery) and 'reasonable prevention procedures' (in the case of the failure to prevent the facilitation of tax evasion) as defences to certain crimes. An investigations process forms part of a company’s overall prevention procedures and directors exercising oversight obligations in relation to investigations should satisfy themselves that investigations are independent and appropriately robust. The adequate / prevention procedures guidance also emphasises the importance of ‘top-level commitment’ to compliance.
As regulatory pressures increase on auditors, we see them begin to focus more, in audits of larger and listed corporates, on governance around the accounting and audit process. The press coverage of institutional shareholders becoming more activist has similarly led to governance and culture in some larger corporates coming under greater scrutiny. Individual conduct and wider company culture has risen up the agenda following movements such as #MeToo and BLM, leading in some cases to an increase in whistleblowing. These factors have led corporates to look further at how to understand, measure, address and report on these issues through internal investigations.
Here we pool our experience of conducting and supporting internal investigations of all different kinds to list the ten key issues that directors should think about when providing oversight of an investigation.
