Chapter 1: Three Triggers for an Internal Investigation

The key, however, is to know when an internal investigation is necessary, and this isn’t as easy as it sounds. Misconduct often goes unreported until something drastic happens, and by then it may be too late to pre-empt law enforcement and start your own investigation.

Most misconduct is revealed through complaints, anonymous tips or discovered by accident. The remainder comes to light during audits and reviews. A comprehensive investigation policy includes mechanisms to capture information from as many sources as possible.

Employee Complaints

In most organizations, employees are aware of misconduct before it comes to the attention of management. It’s in your best interest, therefore, to encourage employees to speak up and to investigate any complaints thoroughly. It can be tempting to sweep what look like minor employee complaints under the rug, avoiding the headache of an internal investigation for each one, but there’s good reason to pay close attention, even to chronic complainers.

Claims that may appear insignificant could lead to larger discoveries once the complaint is examined. Failing to investigate can get you into trouble if it turns out that a claim was legitimate.

Whistleblower Tips

Anonymous tips can be a rich source of information for management but, unfortunately, reports show that anonymous tips are often given less credibility than those with a name attached to them. Every company should have a whistleblower hotline and encourage employees to use it.

Ignore whistleblower complaints at your peril. According to a study by the National Whistleblowers Center, 89.7 per cent of employees who filed a lawsuit against their employer had originally raised the concern internally.

Audits and Compliance Reviews

Although audits and reviews are not among the top methods for uncovering misconduct, they are valuable from an operational perspective and they often do point to anomalies in the organization that could indicate issues requiring an internal investigation. Audits and reviews also help a company to evaluate and improve the effectiveness of risk management, control, and governance processes.

Wal-Mart launched an internal investigation based on the information gathered after conducting a voluntary internal compliance review. The company disclosed the incident to the SEC and the US Department of Justice.
“The identification of its genesis being ‘a voluntary review of its global anti-corruption practices this year’ seems significant,” wrote James McGrath, Managing Partner of law firm McGrath & Grace, in a blog post entitled Thoughts on Wal-Mart’s Internal FCPA Probe. “It strongly implies two things: that the company has an FCPA-oriented audit program in place, and that its checks occur on a regular basis in given years, if not annually… it would be expected to entitle Wal-Mart to sentencing credits, were the Department of Justice to pick up this ball and run with it as a criminal prosecution somewhere down the road,” he wrote.

Chapter 2: Internal Investigations Save You Money

Chapter 3: Weighing the Costs of Investigations

Chapter 4: Cooperation, Self-disclosure and Reputation

Chapter 5: How Case Management Software Helps