Internal Misconduct Investigations Seven Steps to Success. December 8, 2017

Transcription

1 Internal Misconduct Investigations Seven Steps to Success December 8, 2017 Jeffrey Klink Klink & Co., Inc. President/CEO Tel: (412) Klink & Co., Inc. Global risk management consultancy Works in over 100 countries every year Supports large organizations: Identifying and managing risk Establishing and improving compliance programs Performing misconduct investigations Professionals are former: Federal prosecutors Law enforcement veterans from the FBI Interpol, and police forces around the world Compliance experts Research analysts 2 1

2 Jeffrey Klink Former Assistant United States Attorney, U.S. DOJ Former Managing Director and Office Head, Kroll, Inc. Founder & CEO of Klink & Co. Created and teaches a class on organizational compliance for the University of Pittsburgh Katz Graduate School of Business 3 Today s Agenda Organizations of all sizes confront issues of misconduct hotline disclosures, internal audit findings, or otherwise Can be resolved efficiently, properly with an investigative plan Where to start understand, follow the rule of law and all applicable company policies and procedures 4 2

3 Today s Agenda Implement a thoughtful, step by step internal investigation methodology Reduce risk and liability Maximize the opportunity to stop misconduct and improve controls Deter future wrongdoing Reward good behavior Punish bad behavior 5 Before You Do Anything Setting aside allegations that must be investigated in a very specific way under state and federal labor and employment laws Sexual harassment or claims of bias Investigations should follow a clear path to determine if misconduct allegations have merit Never impugn the reputation of anyone 6 3

4 Steps to Success Steps to conduct a successful investigation Investigative plan drives action: it must be thoughtful and sequential Successful investigations can be resolved more quickly when based on a plan that is time-sensitive, orderly and protects the reputations of those under suspicion 7 Step 1 Assess the allegation Analyze the issues carefully and discreetly including the credibility and integrity of the complainant Are these new concerns or repeats of troubling concerns? Are the allegations specific and credible? 8 4

5 Step 2 Assign and use appropriate personnel, other resources Determine: Who will be performing the investigation Are they qualified, experienced, and able to understand the consequences of their actions? How and when will the investigators communicate their progress, case status? 9 Step 3 Write investigative plan Write a flexible, written overview of how to proceed 10 5

6 Step 4 Identify the subjects Identify the subjects, that is those whose conduct will be under review Always perform background checks on the subjects to assess conflicts of interests and obtain relevant public records Example: Bob Bobson allegedly is receiving kickbacks of $10,000 per month from Vendor A. Determine Bobson s financial status. 11 Step 5 Documents, site visits & interviews Start with document and retention, review those documents before talking to people You should know a lot before interviews this is probably where most investigations go bad Consider site visits to assess facts, if appropriate, and then conduct interviews of knowledgeable people Last, interview the subjects once you understand the facts 12 6

7 Step 6 Review Do you need to perform additional investigative acts? If there is a legitimate problem that needs to be addressed Coordinate your activities with supervisors, management, and/or the Board 13 Step 7 Conclude & controls Finish the investigation in a timely and effective manner, including removing bad actors Institute internal controls to prevent future misconduct 14 7

8 Caveats Understand that multiple parties (often employees colluding with vendors) might be involved in misconduct, many problems are bigger than they appear Keep the flow of information to a limited group and be discreet to avoid compromising your efforts Employees and vendors will absolutely talk about things they were asked to keep secret Rumors fly fast and hamper employee morale and productivity 15 Caveats In fraud matters where material funds are at issue, determine whether your organization has fidelity insurance to cover losses attributable to crime and if so, make a timely notice of a possible claim 16 8

9 Example 1 I am an employee at a company factory. My supervisor has had lunch with the vendor who provides us with goods. Please investigate. 17 Example 2 My supervisor Mr. Rosario just awarded a contract to ABC vendor, which his wife owns. The bids were faked. Rosario s wife is not the named owner, but she does run ABC. 18 9

10 Tips Assign and utilize appropriate resources If the allegation poses a potential violation of the law rather than a company policy it may pose significantly more risk and liability to the company, its employees, and management Potential violations of the law should be investigated with appropriate tools and personnel, experts able to understand the risks Bribery or recordkeeping case Fraud Conflicts of interest Counterfeiting 19 Tips Assign and utilize appropriate resources When an allegation involves only a policy violation perhaps travel or entertainment abuse human resources or in-house management resources might be sufficient to resolve the case Where data needs to be retrieved, secured, and analyzed, or finances need to be reviewed use a forensic expert If the safety of an employee or third-party is at risk law enforcement authorities should be consulted as soon as possible and security measures should be put in place 20 10

11 Tips Assign and utilize appropriate resources As referenced above, when investigating allegations of sexual harassment or claims of bias, the government has put forth specific guidelines regarding how and when the investigation should be performed Follow these guidelines to the letter! EEOC.gov is a great place to start to understand these issues 21 Tips Conduct appropriate research on the complainant/subject(s) of the allegation Conduct research which may include a review of: Personnel records Criminal and civil litigation histories Media research Social media Business ownership Real estate 22 11

12 Tips Obtain and review available documents This can be designed in a way that will not alert the subject Evidentiary documents may reside on/in: Company server Company-owned laptops s Text messages Social media Telephone records The cloud Video recordings Photographs Other public and internal records 23 Tips Obtain and review available documents Regardless of where the information resides, follow company data privacy policies and other rules of the road Be especially wary of privacy in places like the EU In cases where there might be potential violations of the law, document a chain of custody and secure original data and documents This is important if you should decide to bring a civil action or refer the case to a prosecutor 24 12

13 Tips Interviews of knowledgeable persons Keep the circle of those with knowledge as small and tight as possible. If you aren t sure whether someone is safe then talk to others first As noted above, do not show bias, but take into consideration the relationships between the subjects and others 25 Tips Interviews of knowledgeable persons A good investigator will always ask several questions where the answers are already known to you This will assist in determining the reliability of those who are being interviewed Interviews that you deem to be important should always be conducted by two investigators in a comfortable and non-confrontational setting 26 13

14 Tips Interviewing the subject(s) Confront the alleged wrongdoers only when all the evidence is in Prior to interviews of subjects, perform a thorough analysis of all the evidence and double and triple check your findings Use available documents, s, and other evidence to question the subjects 27 Tips Interviewing the subject(s) Prior to the interview: Determine who will lead the interview Have a detailed outline of key questions based on the evidence When looking at more than one subject consider interviewing everyone at or about the same time to avoid lies and deceit 28 14

15 Tips Concluding If you are considering termination, follow company termination policy and procedures Cancel subject access to the IT network and building Secure company assets Use company security staff if needed 29 Tips Concluding Evaluate the case to determine what policy, procedures, and/or controls could be improved Assess which controls can be implemented to prevent the misconduct from re-occurring Draw fair conclusions without hyperbole and issue recommendations to improve processes An investigative report full of flowery language detracts from its serious purposes 30 15

16 Seven Steps to Success Utilizing a thoughtful, step by step internal investigation methodology will reduce risk and liability for your organization and maximize the opportunity to stop misconduct and improve controls. 31 Questions Jeffrey Klink Klink & Co., Inc. President/CEO Tel: (412) jklink@klink-co.com 32 16