Feature Article | Do You Have a Whistleblowing Policy?

In the current environment, companies should ensure that they have a clear policy on how to deal with serious allegations made against its staff or officers. A good whistleblowing policy will allow for varied modes of reporting (including anonymous reports) and outline how allegations will be handled and what steps will be taken to protect the person making the allegation.

Often, companies will wish to conduct their own internal investigations before deciding on how to proceed. These may involve hiring external professionals. If well run, an internal investigation is part of a good defence strategy for the company when dealing with regulators and will protect its reputation. However, an internal investigation also has the potential of increasing risk for the company by creating ancillary offences such as tampering with evidence.

While the benefits are clear, there is a significant risk in undertaking an internal investigation as opposed to briefing an expert external organisation. Having spent a career doing investigations there are some things you should and shouldn’t do.

To do a good internal investigation you must:

  1. Identify the nature and scope of the allegations. This will allow your team to investigate the right issue and not be side tracked.
  2. Quickly and efficiently collect and protect the evidence. A lot of cases fail due to gaps in the chain of control for crucial evidence or the tainting of evidence through incorrect handling. This is where it is important to have experienced investigators. Inexperienced investigators can inadvertently destroy, corrupt or fail to adequately secure critical evidence.
  3. Delineate roles through the creation of a dedicated team to run the internal investigation.
  4. Dedicate resources and ensure that the investigation is supervised by an appropriate person – ensuring that person is divorced from the allegations.
  5. Preserve documents including by suspending the normal archive/deletion policy and notify all staff in writing to preserve all documents and records in whatever format they exist. Instruct the IT department to preserve electronic records.
  6. Identify any external regulators as multiple regulators may lead to multiple investigations.
  7. Take local legal advice as each jurisdiction will have its own issues and complexities. Knowing this up front will save time, money and potential embarrassment down the line. Where there are several jurisdictions, an overall strategic view will need to be taken as to issues such as legal professional privilege and differing disclosure obligations. Staff and officers named in the allegations are likely to need independent legal advice and must be carefully handled in accordance with the applicable employment laws.
  8. Consider PR issues as the court of public opinion is sometimes harsher than the actual court of law. Businesses that have otherwise been cleared of wrongdoing have been significantly affected by the PR fallout of a whistle blower coming forward.
  9. Consider security and the political landscape as the key individuals involved in the investigation or implicated in the allegations may require personal protection. This is another reason for taking local advice.

There are some pitfalls to avoid though. You need to ensure that:

  1. No relevant documents are destroyed. The destruction of documents in these contexts is often a crime in itself, but more importantly, it is usually the cover up of an event that leads to the worst outcomes for firms and individuals involved. Ensure your company is not at risk of this by having the right process up front.
  2. You don’t assume everything in the investigation is of equal importance. A good investigator has a triage system to identify issues to be investigated to ensure that only the important issues are dealt with.
  3. The investigation is not taken captive or biased by senior executives. You need a strong and clear policy and executive sponsor to keep the objectivity of the investigation. If your policy or investigation process allows too much management override or exceptions to the investigation process then this will often lead to biased outcomes and lost objectivity.
  4. You don’t quickly rush into a blanket denial. You should be careful about releasing an official statement denying all of the allegations, especially where there are specific facts that need to be verified. A blanket denial followed by “clarifications” later will be more damaging than simply confirming that the matter is under investigation. Again, PR advice should be obtained.
  5. You don’t rely on old investigations or cut corners. You should not seek shortcuts in relation to these issues as each allegation that is made has its own background and context. This background and context is crucial when evaluating what to look into when investigating. There is also likely to have been new facts arising since the end of the previous investigation.
  6. You don’t assume the same laws apply. If you run a multijurisdictional organisation then you will need to separately address each jurisdiction. The legal landscape in relation to corruption and criminal offences differs markedly around the world and compliance with reporting requirements and obligations is extremely important when these sorts of issues arise.
  7. You should not ignore local regulators. Some allegations that you will receive are subject to mandatory reporting obligations. It may be tempting to focus on the parent company’s “home territory” at the expense of engagement with local regulators in the other operating countries. Compliance only in the home territory is not a defence to a failure to comply with local obligations.
  8. You should not have inflexible procedures. While it is important to have a standard operating process for investigations, your company’s methodology will also need to deal with the unexpected – like the head of internal audit, the CEO or Chairman being the subject of the allegation. In these sorts of situations, the investigation will need to be structured creatively to ensure its integrity and objectivity. A failure to do this will taint the outcome in the eyes of regulators, shareholders and other stakeholders.

The first week in any new investigation is the crucial time to set the scene for a successful outcome. It is also the most common time for mistakes to be made. Getting on the right track is important and will add significant value later on for stakeholders. Failing to plan is planning to fail. Good luck!


This article has been extracted from ALN Legal Notes


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