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How Internal Investigations Can Save You Money

Smoking out corruption before the authorities do puts you ahead before the trial begins

Posted by Dawn Lomer on August 30th, 2011

If you suspect corruption in your organization, it’s in your best interest to launch an internal investigation before the police come knocking on your door. That’s the message that writer Jennifer Brown made clear in her article “The Payoff of the Internal Investigation”, published on last week. And this applies to companies all over the world, not just in Canada. Brown quotes Kristine Robidoux, a foreign corruption specialist with Gowling Lafleur Henderson LLP in Calgary, who spoke at the Canadian Bar Association Conference in Halifax earlier this month.

Niko Gets Off Lightly

“Transnational crime issues are becoming a bigger threat for Canadian companies as a tighter market means competitors are getting more vocal about the business practices of their competitors,” said Robidoux, who acted as external counsel for Niko Resources Ltd., which was fined $9.5-million in June for bribing a junior energy minister in Bangladesh.

Niko was Canada’s first significant prosecution under the Corruption of Foreign Public Officials Act (CFPOA), at a time when the country has come under criticism for its lax approach to foreign bribery. Instead of waiting for the Canadian authorities to investigate and file charges, Niko hired Robidoux’s company to conduct an internal investigation. As a result, Niko received fewer sanctions and lower fines.

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“When we were faced with the Crown’s disclosure we were able to respond to it very quickly and ended up making a very good deal for the company. I can’t speak highly enough of the value of an internal investigation,” said Robidoux.

Investigate to Prevent Bribery

But it’s not just the Canadian authorities who look kindly on companies that conduct their own investigations and self-report. The UK authorities also value internal investigations and expect companies to monitor their overseas personnel, going so far as to expect companies to “prevent” bribery.

“The UK Bribery Act is exceptionally far-reaching in several respects,” says Anthony Cole, aUKlawyer practicing inCalgarywith Christine Silverberg, retired Chief of Police and lawyer of the firm Wolch, Hursh, deWit, Silverberg & Watts. “First, its extra-territorial reach is extensive. Second, it applies to purely private sector bribery, rather than being confined to the bribery of foreign public officials. Third, it includes a strict liability offence for corporations for failing to prevent bribery by ‘associated persons’ of the corporation,” he says. Internal investigations into suspicions of corruption can be part of a robust bribery prevention initiative.

Saving Face Through Self-Disclosure

And then there’s the US Foreign Corrupt Practices Act, another powerful piece of legislation that also extends beyond the country’s borders.

“The US has a remarkable track record in handling overseas anti-corruption cases and is, at present, the unquestioned global champion in the fight against corruption,” says Cole.

The good news is that companies who take the initiative to investigate and self report face less onerous sanctions under the FCPA too.

“The favoured approach of US law enforcement agencies dealing with corporate overseas corruption cases seems to be to encourage self-reporting and an early plea by the corporation, resulting in a huge fine, but often allowing the corporation the opportunity to issue a face-saving joint press-release with the relevant law enforcement agency,” says Cole.

No matter which jurisdiction you operate in, monitoring and investigating internal corruption before it comes to light simply makes good business sense.

Dawn Lomer
Dawn Lomer

Manager of Communications

Dawn Lomer is the Manager of Communications at i-Sight Software and a Certified Fraud Examiner (CFE). She writes about topics related to workplace investigations, ethics and compliance, data security and e-discovery, and hosts i-Sight webinars.

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