Anatomy of a potential scandal: conducting effective internal investigations

The first consideration is usually whether an investigation is needed and what type of investigation is needed. To answer this requires thinking about two key aspects:

1. What's the trigger of the investigation?
2. How serious is the allegation/how significant is the potential risk to the organisation?

Examples of when an investigation may be required include:

• Significant breaches of policy or code of conduct
• In response to alleged fraudulent or other criminal activity
• Related to threatened or actual litigation
• In response to a whistleblower issue or a formal complaint

It will not always be necessary to carry out a formal internal investigation. Key factors to consider are whether the alleged activity represents a potential risk to the organisation, whether criminal, regulatory, financial, reputational or other, and what is the significance of that risk?

Once you've identified that an internal investigation needs to take place, the next stage is establishing who will carry out the investigation, including who will lead it.

Thinking carefully about who forms the investigation team and what additional expertise you might need is essential to an effective investigation, and avoids the conclusions drawn by the investigation being undermined at a later date.

Key questions include:

• Does the investigation team have relevant expertise to the subject matter? Is an external expert required (eg, accountants, legal, technical)?
• Is there a particular team that should be involved, ie, the people team, compliance, legal etc?
• Are there any conflicts of interest?
• Does the investigation team have the capacity to carry out the investigation? Would this leave a significant gap in resourcing for the organisation?
• Is the investigation team sufficiently independent?
• Does the investigation team have sufficient seniority to carry out the tasks required?

It's often advisable to include a legal advisor (whether in house or external) in the investigation team, with the aim of ensuring aspects of the investigation are covered by legal professional privilege (noting that the rules regarding privilege will depend on the jurisdictions involved in the investigation).

Confidentiality is often a requirement in an internal investigation - this is not only to assist with preserving privilege, but also to protect the integrity of the investigation as it is being carried out. The need for confidentiality may influence who forms the investigation team.

Before the investigation starts, you'll need to assess whether there are any immediate or urgent concerns, for instance:

• Is there any evidence that requires preservation immediately, or is at risk of being lost or destroyed?
• Should any employees involved be suspended while the investigation takes place?
• Are there any health or wellbeing concerns of persons involved?
• Is it necessary to intervene with regard to payments or activities under a contract?
• Do you need to notify insurers or auditors?
• Do you need to report to a regulator or other external authority?
• Has the issue been discussed in the press and do you need a communications strategy?

Other notifications that should be considered are requirements to stakeholders (eg, shareholders, markets etc) and whether other jurisdictions involved have additional notification requirements.

If it's necessary to notify external regulators or authorities, you'll need to consider when this should be done and what sequence the investigation should take. The timing of notifications will depend on the third party being notified, the allegation involved, what evidence there is to support the allegation, and if there's an obligation or benefit to early notification.

A common issue that arises during an investigation is ensuring that an investigation stays within its scope and achieves its aims.

A well-considered investigation plan is an essential tool for ensuring that an investigation is carried out proportionately and effectively.

Key considerations for an investigation plan include:

• What is the aim of the investigation and what question are you answering?
• Is the investigation team required to make recommendations?
• Who is the investigation team reporting to and how is the outcome of the investigation going to be reported?
• What types of evidence are needed and how are these being collected?
• Will interviews be required and how are these being carried out?
• Are there any timeframes or deadlines that need to be met?

The investigation plan is a document that can and should be revisited as the investigation develops. However, setting out a clear structure to the investigation at the outset helps to focus activities and resources, and establishes expectations.