Many companies have an investigation protocol in place when a potential Foreign Corruption Practices Act (FCPA) or other legal issue arises. However, many Boards of Directors do not have the same rigor when it comes to an investigation, which should be conducted or led by the Board itself. The consequences of this lack of foresight can be problematic because if a Board of Directors does not get an investigation, which it handles right, the consequences to the company, its reputation, and value can all be quite severe.
In an article in the Corporate Board magazine, entitled “Successful Board Investigations”; David Bayless and Tammy Albarrán, wrote about five key goals that any investigation led by a Board of Directors must meet.
- Consider whether you need independent outside counsel.
- Consider hiring an experienced investigator to lead the internal investigation.
- Consider the need to retain outside experts.
- Analyze potential conflicts of interest at the outset and during the investigation.
- Carefully evaluate whistleblower allegations.
- Request regular updates from outside counsel, without limiting the investigation.
- Consider whether an oral report at the conclusion of the investigation is sufficient.
The authors conclude their piece by stating, “By keeping in mind the issues addressed above, the Board will be better prepared for the investigation and readily able to exercise good judgment throughout the review. A well-conducted investigation by the Board may spare the company further disruption and costs associated with follow-on investigations by the regulators, or at the very least minimize the company’s exposure.”
Three key takeaways:
- Retain the right counsel. Consider conflicts and appearance.
- Carefully evaluate all whistleblower allegations and reject retaliation.
- Consider receiving oral reports on an ongoing basis and one lengthy oral report at the end of the investigation.
For more information, check out The Compliance Handbook, 4th edition, available here.
