How can companies make the most of the time, money and manpower invested in an investigation after the case at hand is closed? FRA Founding Partner Frances McLeod and Partner Jenna Voss contributed a chapter to GIR’s Investigations Review of the Americas 2019, about the sometimes missed opportunity to use lessons learnt from investigations to strengthen a company’s resilience and culture of compliance.
A thorough investigation can be grueling, time-consuming, expensive and damaging to a company’s reputation and morale, but companies who think strategically can find a way to learn and move forward instead of simply moving on. This chapter outlines the factors that companies should consider as an investigation draws to a close and practical suggestions for designing effective remediation plans and a strong control environment. Frances and Jenna suggest best practices for companies positioning themselves to better detect and investigate future fraudulent or non-compliant behavior. The examples and case studies used in the article are specific to companies based or operating in the Americas, with particular focus on bribery and corruption given the current relevance of these issues in the region today.
Closing an Investigation
Instead of rushing to move on from an investigation, it is important that pertinent information be identified, captured and communicated in a form and time frame that enables employees to best carry out their responsibilities in establishing, enhancing and monitoring controls. Companies should consult counsel and carefully evaluate and map out applicable regulatory requirements arising from the investigation – including from various jurisdictions, if applicable. Disciplinary actions must be enforced consistently across the company’s global locations with the right tone from the top. Counsel should be involved in reviewing such communications as well as the documentation of all remediation actions. Debriefs from the internal or external investigators are strongly encouraged, to feed into the remediation plan.
Developing and Executing a Remediation Plan
A remediation plan should, at a minimum, incorporate the investigator’s observations and suggested recommendations regarding specific control deficiencies. Companies can take this a step further by seizing the opportunity to conduct a broader assessment of the company’s compliance environment to illuminate other aspects of the corporate culture that may have failed in preventing, detecting or deterring the misconduct. The testing and tracking of remediation plans through to completion should also be considered from the outset, including provisions for when management should be alerted if measures have not been implemented within a stated time frame and what the consequences would be.
Surging Forward and Strengthening the Organization
For forward-thinking companies keen to maximize their organization’s resilience after an investigation, a number of additional steps can be taken:
- A full review of a company’s compliance program helps an organization ensure that all areas of compliance operate in a holistic, integrated manner for true effectiveness. This includes an assessment of tone at the top, a gap analysis of policies and procedures in place, and understanding how training and communications are used to educate employees of key risks.
- It is important to consider whether internal audit should have identified the misconduct that triggered the investigation, especially if the misconduct was pervasive throughout the organization, occurred over a long period of time or followed predictable fraud patterns or “red flags”.
- Ongoing monitoring mechanisms should be put in place to ensure deficiencies are adequately and promptly remediated, leveraging data analytics to allow the monitoring team to quickly and consistently focus on the highest areas of risk.
- Complaint reporting and investigation channels should be established (e.g. 24/7 ethics hotlines) to ensure that any allegations are considered thoroughly and promptly. A well-designed investigations process should complement other key compliance processes.
- Cultural drivers and country dynamics – including mentalities, preferences, tendencies and preconceived notions – should be layered into a compliance evaluation for multi-national organizations. Tools that can be tapped on include Transparency International’s Corruption Perceptions Index and Hofstede’s Cultural Dimensions Model.