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Former UK prosecutor: Six ways to prepare for the coming surge in internal investigations

Governments everywhere are opening the taps with economic stimulus, and that’s creating tempting opportunities for fraud, corruption, and other financial crimes. Those complicit in criminal activity today may stay put, or move on to different companies tomorrow. The immediate impact for compliance professionals will be a surge in investigations, and what may be uncovered once the dust settles.

How to get ready? Here are six principles to keep in mind about the Covid-19 investigations aftermath:

What happens at the start matters. Once a potential issue has been uncovered, take swift and decisive action. The situation may need to be referred to law enforcement or the regulators in due course. Therefore the urgency with which action is taken will be important.

Understand the context in which the issue has arisen. Is there a whistleblower? What about a disgruntled employee? Or has there been a systemic accounting or governance failing?  Examine and scrutinize the context as that can provide a steer for the critical early decisions to be taken.

Who is steering the ship? Be careful when deciding who should have oversight responsibility for the investigation. Should it be management or the Audit Committee? While both are motivated to protect the company, how they do that may have significant implications for the thoroughness of the investigation and the best outcome for the company.

Have a plan that fits the circumstances. Keep a record of the actions taken from the initial discovery to the commencement of the investigation. One size doesn’t fit all. An investigation that is tailored to fit the circumstances is likely to be more focused and effective. It may be helpful to divide the investigation into manageable phases with clear objectives and timescales for each phase.

Help wanted! Consider whether you have the right skillset within the company to manage the investigation. Do you need additional resources or third-party assistance? Does the investigation require the independence that instructing an external party may bring?

Remember relationships. The investigator, whether internal or external, should be mindful of relationships that are likely to continue should the allegations prove to be unfounded. If an investigation is badly managed, those relationships could be irreparably damaged. Consider the role of HR or others in providing to investigators valuable insight about the individuals that are the subject of the allegations and their relationships that could be impacted.

Be focused, but flexible. The facts that are uncovered during the investigation are likely to mean that the scope of the investigation should expand in some directions and possibly contract in others. The temptation is to ignore new information that doesn’t fit into an established narrative. Be prepared to be flexible. Start with the process in mind, not the end result. Rinse and repeat as the facts emerge, and the status of the investigation changes.

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