Minimize Litigation Risk With The Government So In House ... · Previously Dr. Baker served as the Assistant Inspector General for Audit at the National ... GAO’s Forensic Audit

CONFIDENTIAL © 2016 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is confidential, proprietary and the property of Barnes & Thornburg LLP, which may not be

disseminated or disclosed to any person or entity other than the intended recipient(s), and may not be reproduced, in any form, without the express written consent of the author or presenter. The

information on this page is intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP. @BTLawNews

Minimize Litigation Risk With The Government So In House Counsel Can Sleep At Night

ACC National Capital Region Government Contractors Forum – July 14, 2016

Dr. Brett Baker Marc A. Nichols, Esq. Roscoe C. Howard, Jr., Esq.

Deputy Inspector General for Audit Department of Defense

Legal Counsel & Director of Compliance - Americas Rolls-Royce North America Inc.

Partner Barnes & Thornburg LLP

https://twitter.com/BTLawNews


CONFIDENTIAL © 2016 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is confidential, proprietary and the

property of Barnes & Thornburg LLP, which may not be disseminated or disclosed to any person or entity other than the intended recipient(s),

and may not be reproduced, in any form, without the express written consent of the author or presenter. The information on this page is

intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP.

@BTLawNews

Moderator Biography Roscoe C. Howard, Jr., Partner, Barnes & Thornburg LLP

2

Roscoe C. Howard, Jr., is a partner in Barnes & Thornburg’s Litigation Department in the Washington, D.C., office, where he is the Chief of Litigation and head of the White Collar and Investigations Practice Group. His practice primarily focuses on white collar criminal matters, complex litigation, and corporate compliance and ethics issues. He has extensive experience in handling investigative matters initiated by the Department of Justice, Securities and Exchange Commission, and many other law enforcement agencies. His defense experience of corporate and individual clients spans from testimony before Congress to international investigations, and matters in federal courts nationwide as well as the District of Columbia Superior Court. Mr. Howard is a former law school professor and was a six year member of the NCAA Division I Committee on Infractions.

Prior to private practice, Mr. Howard was appointed by President George W. Bush to serve as the United States Attorney for the District of Columbia from 2001 -2004. He was appointed from a tenured, full professorship at the University of Kansas School of Law. Mr. Howard has also twice served as an Associate Independent Counsel, and previously held positions as an Assistant U.S. Attorney in the District of Columbia, as well as the Eastern District of Virginia in both Richmond and Alexandria.

As a federal prosecutor he has handled criminal cases involving narcotics trafficking, homicides, fraud and public corruption, as well as dozens of trials and investigations before the District of Columbia Superior Court, and numerous grand jury investigations. He has also argued appeals before the U.S. Court of Appeals for the Fourth Circuit and served as the Organized Crime Drug Enforcement Task Force Coordinator while in Richmond and Chief of the Task Force that prosecuted cases arising from a local prison.

Mr. Howard serves on the Board of Directors of the Roger Williams University School of Law, and is a member of the Washington Lawyers Committee. Mr. Howard is a graduate of Brown University and the University of Virginia School of Law. He can be reached at [email protected] or at 202-371-6378.



mailto:[email protected]





@BTLawNews

Panelist Biographies Dr. Brett Baker, Deputy Inspector General for Audit, Department of Defense

3

Dr. Baker earned his doctorate in Information Technology and Systems Management from the University of Maryland. He holds a master’s degree in Information Systems Management from the Central Michigan University, a bachelor’s degree in Accounting from the University of Northern Iowa, and a bachelor’s degree in sociology from Iowa State University. He is also a Certified Public Accountant and a Certified Information Systems Auditor.

Dr. Baker currently chairs the Federal Audit Executive Council, and is a member of the Accounting and Auditing Policy Committee of the Federal Accounting Standards Advisory Board. In addition, he serves on Government Accountability Office’s Yellow Book Advisory Council and the Green Book Advisory Council. He has published various articles relating to auditing and data analytics, and is a frequent speaker at various audit and Council of the Inspectors General for Integrity and Efficiency conferences. Dr. Baker is also the recipient of the 2016 Joint Financial Management Improvement Program’s (JFMIP) Donald L. Scantlebury Award for Distinguished Leadership in Financial Management.

Dr. Baker is an Army veteran, having served in the U.S. Army Signal Corps. He can be reached at 703-604-8900.

Dr. Brett Baker is the Deputy Inspector General for Auditing for the Department of Defense Office of Inspector General. He joined the DoD OIG on May 2, 2016.

Previously Dr. Baker served as the Assistant Inspector General for Audit at the National Science Foundation Office of Inspector General. He has also worked as the Assistant Inspector General for Audit for the U.S Department of Commerce; the Director for Internal Review and as the Director for Systems Audit at the Defense Finance and Accounting Service. He also served as the Director for Systems Internal Audit at the Department of Education OIG.







@BTLawNews

Panelist Biographies Marc A. Nichols, Esquire, Legal Counsel & Director of Compliance – Americas Rolls-Royce North America Inc.

4

Prior to his current position with Rolls-Royce, Marc served as COO and General Counsel for a national organization responsible for creating and administering exams for the construction industry in the U.S. and Canada. Marc also served as Inspector General of the U.S. Government Printing Office. Marc serves on the boards of the following organizations: The Indianapolis Zoo, The Indianapolis Symphony Orchestra, the Boys and Girls Club of Indianapolis, and the Sapphire Theatre Company.

Marc has practiced law for nearly 20 years, is a member of the U.S. Supreme Court, U.S. 10th Circuit, U.S. District Courts of Colorado, D.C., and the Southern District of Indiana, as well as the Indiana, Colorado and District of Columbia State Bars. Marc received his AB from Wabash College and his JD from Washington and Lee University. He can be reached at [email protected] or 317-230-5088.

Marc is Legal Counsel & Director of Compliance – Americas for Rolls-Royce North America Inc., the Americas subsidiary for the British-based aviation and power systems company. Marc primarily helps lead Rolls-Royce’s Defense Aerospace legal matters, providing counsel to a multi-billion dollar business by managing government investigations, litigation, aviation and advanced research and development legal issues. Marc also counsels all Rolls-Royce North America business sectors related to compliance programming within the Americas, stretching from Canada to Brazil.

Marc has led or co-led investigations by various government agencies around the world (e.g., the U.K.’s Serious Fraud Office; the U.S. Justice Department; the Pentagon’s Inspector General Suspension and Debarment Office; the Defense Advanced Research Projects Agency; the FAA; the US State Department Export Control; Brazil’s CENIPA; etc.).






TOP TEN ACTIONS FOR A GOOD NIGHT’S REST

1. Keep in Mind How Government Investigations Get Started 2. Understand What the Government’s Guidelines Are 3. Look Closely at Compliance and Take It Seriously 4. Establish the Duties of Compliance 5. The Tone at the Top 6. Preparing for Government Visits: Don’t Panic When They

Knock 7. Consider an Internal Investigation 8. Know the Rules Before You Need to Use Them 9. Steps to Take After the Government Leaves 10. The Press

5

WHAT IS AN OFFICE OF INSPECTOR GENERAL?

• 72 Federal agencies have Offices of Inspector General

• Independent office at each federal agency for: Promoting economy, efficiency, and effectiveness.

Preventing and detecting fraud, waste, and abuse in agency programs and operations.

Has subpoena power and full access to all documents, files, and records.

Reports to head of agency and Congress.

• Mission provides taxpayers with greater assurance:

Programs are working.

Funds are being used properly.

Financial reporting is fairly stated. 6

AUDITS AND INVESTIGATIONS

Audit Performance audits of agency

programs and operations to determine program compliance and efficiency of operations.

Financial audits to provide assurance that systems and processes support financial reporting.

Audit resolution and followup to ensure recommendations are put into place to improve agency operations.

Report findings to Congress and agency.

Investigations • Civil and Criminal

Cases of Fraud, Theft, Conspiracy, Embezzlement, False Statements, etc.

Consequences: Restitution, Fines, Prison, Compliance Plans.

• Administrative Non-criminal cases, but where

accountability and integrity have been compromised.

Consequences: Debarment, Administrative action, Remedial Training, etc.

Semiannual

Reports

to Congress 7

AUTOMATED OVERSIGHT

• Greater use of automated tools for oversight. Audits look for financial misconduct, abusive or wasteful activity.

Close coordination with investigators.

• Forensic audit is growing in the Federal government. GAO’s Forensic Audit and Special Investigations (FSI)

Recovery Board’s Recovery Operations Center (ROC)

• Federal outlays are $3 trillion annually. OMB estimates Federal improper payments at $125B.

• GAGAS requires tests for fraud in audit work. • 100% review vs statistical sampling – there is a place for

both. • Automated Oversight

8

Dat

a D

ow

nlo

ad

PAYMENT PROCESS AND DATA ANALYTICS

Federal Reserve System

Disbursing Systems

Commercial Bank

Award Systems

Data Analytics

Payment Systems

Federal Audit Clearinghouse

Master Death File (SSA)

Oversight Review by • Auditors • Investigators • Agencies

CPARS, FPDS SAM

(CCR, EPLS) GuideStar

(non-profits)

Dat

a D

ow

nlo

ad

Transaction-level Data Payee, Contract No, CLINs, Payment Amount, Date

Examples of systems that can help verify integrity of payment transactions

Award-level Data Grants, Contracts

Dat

a D

ow

nlo

ad

Dat

a D

ow

nlo

ad

Dat

a D

ow

nlo

ad

Dat

a D

ow

nlo

ad

Dat

a D

ow

nlo

ad

Dat

a D

ow

nlo

ad

Dat

a D

ow

nlo

ad

Contract

Invoices

Grant Pmt

Req’s

Join databases

Apply risk indicators

Risk score transactions

Identify anomalies for testing

9

GRANTS DIFFER FROM CONTRACTS

GRANTS Promote services for the

Public Good • Merit review (competitive) • Multiple awardees • Award budget • No government ownership • Grant payments

Summary drawdowns No invoices for claims Expenditures not easily visible

• Salary percentages

CONTRACTS Specified deliverables (Goods and Services) • Competitive process • One awardee • Contract Price • Government ownership • Contract payments

Itemized payment requests Invoices to support claims Detailed costs

Salary hourly rates

Dr. Brett Baker, AIGA, NSF OIG 10

CONTRACT AUDIT TESTS

Dr. Brett Baker, AIGA, NSF OIG

Payments to vendors not registered in vendor files Vendor file may not fully update payment system vendor table. Too great of focus on avoiding prompt payment penalty interest.

EFT/Bank Account information changes for vendor Changes are made in vendor file, but may not be made by an authorized person. EFT/Bank Account information in payment system may not equal vendor file.

Excessive shipping charges Test reasonability of claims. Shipping costs can be paid from an open allotment – may not be system edits.

Duplicate payments Same invoice no. (almost the same), invoice date, contract no. Too great of focus on avoiding prompt payment penalty interest.

Summarize disbursing or payment file Vendors with just a few invoices would be of interest. Vendors with several bank account changes.

11

1. Keep in Mind How Government Investigations Get Started

12

THE START OF GOVERNMENT INVESTIGATIONS

• The Government will start an investigation

because of information obtained from inside the organization, knowledge gained through another investigation or agency, a published media report or some other manner.

• The Government will not start an investigation based on “random selection.”

• A business organization only acts through its agents and employees. It is imperative to find out which agents and employees are responsible for any government investigated activity.

13


• The business organization must obtain the answers to Two Questions to meet a government investigation head on:

– Were the employees acting within the scope of their authority?

– Is there an effective compliance system in place and was it deliberately avoided by the employees in question?

14


• Search Warrants

• Grand Jury Subpoenas

• Civil, Administrative or Investigative Demands

• Requests for Informal Interviews

15


The Government will focus on a business entity not only because of information brought to its attention by an individual, but also information from the media or through another investigation. These factors, among many, may start a government investigation: • Political themes – TARP funds, health care fraud, mortgage fraud • News Articles • Whistleblowers • Anonymous and Non-Anonymous “Tips” • Competitors • Former Employees

16


The FCPA has become a “popular” criminal charge: • Anti-bribery provision – makes it unlawful for certain classes of

persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.

• January 2010 – DOJ indicted 22 executives and employees of companies in the military and law enforcement products industry (largest FCPA investigation in the history of the department).

• FCPA investigations centering on bribery as related to military contracts in Iraq, Afghanistan, India and other countries around the globe as well as rebuilding and infrastructure projects in African countries and other impoverished countries.

17


The U.S. is not the only place that can cause you problems. The 2010 Bribery Act overhauled criminal bribery law in the United Kingdom. • Main provisions in the act include:

– Bribery of a foreign public official is criminal offence. – An offence for failure to prevent bribery by a commercial organisation. – Maximum imprisonment of 10 years for individuals and unlimited

fines for commercial organisations.

• Covers any company doing business in the UK: – “‘relevant commercial organisation’ means—any other body corporate

(wherever incorporated) which carries on a business, or part of a business, in any part of the United Kingdom”

• The alleged violation need not occur in the United Kingdom for a non-UK company to be investigated and charged by UK law enforcement authorities.

• Source: http://www.legislation.gov.uk/ukpga/2010/23/contents

18

2. Understand What the Government’s Guidelines Are

19

UNDERSTANDING GOVERNMENT GUIDELINES

Government’s Focus was on Cooperation

Filip Memorandum (August 2008) – in determining whether to charge a corporation, the government looks for: • Disclosure of “relevant facts,” whether privileged or not. • No request for waiver of “core” attorney-client communications or work product or “credit” for corporations that do waive privilege. • Corporate counsel should raise attorney-client privilege protections issues with the appropriate U.S. Attorney or Assistant Attorney General. • Remediation efforts by the company after discovery of problem. • Participation in joint defense agreements, to the extent it prevents a company from disclosing relevant facts. • Prosecutors can no longer take into consideration promises to indemnify employees and agents. However, this memorandum has been superseded . . .

20


September 9, 2015, Yates Memorandum now refocuses on individuals • To be eligible for any cooperation credit, corporation must provide all

relevant facts about individuals involved in corporate misconduct. • Criminal and civil corporate investigations should focus on individuals from

the inception of the investigation. • Civil and Criminal attorneys handling corporate investigations should be in

routine communication. • Absent extraordinary circumstances, no corporate resolution will provide

protection form criminal or civil liability for individuals. • Corporate cases should not be resolved without a clear plan to resolve

related individual cases before the statutory limitations expires and declinations as to individuals must be memorialized.

• Civil attorneys should consistently focus on individual as well as the company and evaluate whether to bring suit against an individual based on consideration beyond that individual’s ability to pay.

21


How to Advise Clients in Parallel Investigations • When responding to regulatory or law enforcement

demands for materials and information, assume that the information will be provided to other government agencies, including prosecutors.

• Consider contacting prosecutors early and often. . . – ask questions – make a record of all contact with DOJ and any other agency – advise prosecutors that the company and/or its employees are

represented by counsel, and offer to discuss issues – ensure that all subsequent contacts are through counsel

22


Principles of Cooperation for Individuals that can be gleaned from government investigations • The assistance provided by the cooperating individual

in connection with the enforcement action. • The importance of the underlying matter in which the

individual cooperated. • The societal interest in ensuring that the cooperating

individual is held accountable for his or her misconduct.

• The appropriateness of cooperation credit based upon the profile of the cooperating individual.

23

3. Look Closely at Compliance and Take It Seriously

24

TAKING COMPLIANCE SERIOUSLY

• Look closely at compliance.

– Law Enforcement will give you a break if you have an effective compliance program-but it has to be EFFECTIVE.

– Enron had a compliance program; Arthur Andersen had a compliance program.

– You’ve got to have one that works. Law Enforcement is looking for what you are doing to keep your house in order.

25


Compliance program must be meaningful:

• Adequately funded and staffed. • Clearly communicated to employees. • Apply to all employees and all situations (no

special exceptions). • Enforced. • Periodic assessment to ensure still effective. • Executives and employees actually know the

policies.

26


Principles of Cooperation for Companies: • Self-policing prior to discovery of misconduct.

– Effective compliance procedures. – Appropriate “tone at the top.”

• Self-reporting misconduct upon discovery. – Thorough review of nature, extent, origins and consequences. – Disclosure to public regulators.

• Remediation. – Dismissing or appropriately disciplining wrongdoers. – Ramping up internal controls and procedures to prevent recurrence. – Compensating those adversely affected.

• Cooperation with law enforcement authorities.

27


Chapter 8 of the U.S. Sentencing Guidelines emphasizes: • Impact of a corporation’s crime on the community.

– Restitution to victims. – Remedy the harm caused. – Utilize corporate knowledge, facilities or skills that are unique to the

company that can address any harm to the community.

• Effective corporate monitoring. – All executives and employees must know of and abide by document

retention policy. – Effective containment once a problem is detected. – Corporate monitors.

• There is an emphasis on individual culpability. – The Yates Memorandum.

28

4. Establish the Duties of Compliance

29

DUTIES OF COMPLIANCE

What you should do Before the Government Knocks:

• Establish an effective compliance and ethics program. • Establish standards and procedures to prevent and detect criminal

conduct. • Designate a compliance officer. • Be a good corporate citizen. • Designate a point person for government investigations. • Prepare contact information for counsel and senior management. • Ensure employees understand their rights. • Prepare a list of pre-qualified attorneys. • Prepare handouts to employees regarding handling government

interviews/requests. • Consider establishing corporate committees to review issues.

30


Maintain Corporate Governance Structure

• Effective board process.

• Actual allocation of responsibility to committees.

• Thorough committee process.

• Thoughtful use of experts.

• Board objectivity as to management.

• Independence as to management.

31


Divide the duties: • For larger companies, try not to have the compliance officer be

your in-house counsel, which is not to say the CCO can’t be a lawyer and knowledgeable about applicable laws.

• If you ask me about my kids, I’m going to tell you they are beautiful and they are great people, but I’m invested in them.

• If your in-house counsel is also your compliance officer, he may say, “Hell yeah, it’s an effective program. I’ve looked at it.”

• You want somebody who isn’t invested “kicking the tires” of your compliance program.

• Have your compliance and ethics program audited every two or three years by your internal audit team (or an external audit team, if necessary).

32


Think before you act – Red Flags:

– Washington Post Test

– Don’t discount the obvious – ethical rules and professional responsibilities

– When legal representation begins to become business advice, issues will arise – seek advice from an independent source

– Due diligence – don’t cut corners

33

5. The Tone at the Top

34

THE TONE AT THE TOP

Watch the tone at the top • People at the top of an organization send the message

of what is important. • Know what you are telling your employees about what

is important. • Make sure your employees are prepared. • Require continual management reassessment of

controls (financial and disclosure) and regulatory compliance procedures.

• Look for best practices in your industry.

35

THE TONE AT THE TOP

Lessons from recent corporate scandals: • The consequences of noncompliance can be very harsh for

companies and their executives. • Internal investigations of alleged corporate misconduct must be

solid. • Don’t count on the attorney-client privilege, especially for in-house

counsel leading the investigations. • It’s important to pay strict attention to code of ethics and other

corporate policy provisions (even for seemingly minor issues). • A “head in the sand” approach to compliance is unacceptable. • Organizations have many “tops.”

36

6. Preparing for Government Visits: Don’t Panic When They Knock

37

DON’T PANIC WHEN THEY KNOCK

• It’s all about pressure.

• Investigators will send in uniformed law enforcement officers just for effect.

• None of us think as well when we are under pressure.

• One of the ways to handle the pressure is to prepare for it now.

38


• Search Warrant • Call attorneys. • Get identification – agents and government attorney. • Review the warrant and affidavit. • Dismiss non-essential employees for the day. • Do not consent to search. • Do not consent to interviews. • Do not agree to expand the scope of the search. • Carefully monitor search – make sure to preserve privilege. • Cooperate with the agents during the search but don’t make the government’s

case for it. • Ask to obtain copies of documents that are seized. • Obtain agent’s inventory of records seized. • Create a detailed list of items seized. • Do not sign any document without prior review by counsel.

39

DON’T PANIC WHEN THEY KNOCK: COMPANY OFFICIALS Searches • When government agents appear at the company with a search warrant, the

responsible company official should retain a copy of the warrant and the identity of the supervising agent.

• The agents should not be obstructed or interrupted. • The agents may request assistance in gaining access to electronic data via

company computers. Some assistance may be required, but it should be given only with advice of counsel.

• The search and seizure should be closely observed and noted without interfering with the agent’s actions.

• A video or audio recording is permissible, but should be used to record the search only on advice of counsel.

• If attorney-client or attorney work-product materials are within the materials being searched, the agents should be so advised; and, with advice of counsel, the company official should demand to review and withhold those documents.

• If the agents refuse, the company should keep as close a record as possible of any seizure of privileged material.

40


Investigations: International Concerns

• Keep documents in their country of origin until you have a good reason to bring them to the United States.

• Remember that the attorney-client privilege and the work product protections may not transfer to other countries (and vice versa).

41


Examples of initial questions to ask the government:

• What is the status of my client in this investigation (i.e., target, subject, witness)?

• What are the possible charges against my client?

• What other agencies are involved in this investigation?

• What charges are other agencies pursuing?

• Are the agencies cooperating with one another?

• How long has this investigation been going on?

• What are the names of other targets in this investigation?

• Who have you talked to as part of your investigation?

• Consider “Queen for a Day” Letter for initial interviews.

42

COMPANY OFFICIALS

43

On-Site Contacts Company Control • The company should control all activities related to government on- site

contacts of company personnel. • It should instruct all employees and officials:

– they must report any on-site contact with any government agent directly to the General Counsel.

– they must follow company directions in responding to such contacts.

Responsible Official • When a government contact occurs on-site – no matter how informal –

one responsible senior company official should act for the company, both as to company personnel and as to the government agents.

• That official should be, or should be closely advised by, company counsel.

COMPANY OFFICIALS

Subpoenas and Hold Notices • If there is a subpoena, the time and place of its delivery should be

recorded. • The company should immediately instruct that all relevant hard

copy and electronic documents should be removed from any disposal policy and preserved.

• The instruction should be issued to: – all people and company segments that may have engaged in

communications or writings on any of the subjects in the subpoena; – the IT department to assure that any electronic programs comply with

the hold notice.

• Over-inclusion of subject matter, people and sections is prudent; irrelevant material can later be released from the hold.

44

COMPANY OFFICIALS

Off-Site Contact • Government agents call on people off-site to

avoid company knowledge and involvement. • While the company cannot require employees or

officials to take any action in response to such off-site contacts, it can advise the individuals of their rights and of the company’s request to be notified of any company matters.

• Personnel requests for legal advice or counsel fees should be considered with company counsel.

45

EMPLOYEES

• Employees are free to speak with a government investigator but are under no obligation to do so; it is the employee’s decision whether to be interviewed.

• The company should request that employee advise the company if they are contacted by a government investigator, but employee compliance with this request is entirely up to employee.

• lf employee decides to be interviewed, employee may consider requesting that a company attorney accompany him or her so that the company’s interests will be protected and an accurate record will be made of what the government agents ask.

• lf employee decides to be interviewed, always tell the truth; employee can be prosecuted for not telling the truth to government investigators even if not under oath.

• Employee has the right to have an attorney present at the interview. • Employee should consider having a friend present for the entire interview

so there will be a witness if there is ever any dispute about what employee was asked.

46

ALL PERSONNEL

47

Unannounced interviews • It can come by telephone or in person. • Get the name of the agent, his/her agency, badge number and telephone number. • If in person, get his/her card. • Be professional. • Express willingness to cooperate. • Ask what the interview is about. The agent may, however, not tell you unless you agree to an

interview. • Do not be persuaded to answer questions. • Do not be intimidated by persistent investigators, threats of subpoenas and grand jury visits. • Ask if there is a subpoena or warrant to be served. • Whatever the agent may say, you are not required to be interviewed. The choice is yours. • Miranda – “Am I free to go?” • You have a right to consult counsel before being interviewed. • Refer investigators to counsel. • If the agent mentions anything relating to your work for the company, we ask that you contact the

company before discussing such matters.

EMPLOYEES

Initial Investigative Checklist • Identification and Retention of Paper and Electronic Evidence

– Send document preservation memo/email to relevant employees. – Obtain control over all relevant paper documents and files. – Instruct IT to secure email of relevant employees so it cannot be deleted. – Instruct IT to make forensic images of the hard drives of relevant employees. – Instruct IT to pull backup tapes from rotation and preserve them.

• Actions Regarding Employees – Determine who has knowledge of the subject matter under investigation. – Interview relevant employees (remember to give Upjohn warning). – Retain privileged notes and/or memoranda of facts learned. – Consider whether to place employees on paid or unpaid leave of absence until the facts are known. – Consider whether to discipline culpable employees, including possible termination.

• Consider Temporary Measures – Immediate cessation of the conduct in question. – Remedial measures, if available. – Reminder to all employees regarding applicable company policies. – Temporary enhanced controls.

• Determine Who Should be Notified – Internal: CEO, CFO, General Counsel, Board Members, Audit Committee, Investor Relations, Security, Human

Resources, IT, etc. – External: outside counsel, auditors, etc.

48

7. Consider an Internal Investigation

49

CONSIDER AN INTERNAL INVESTIGATION

• If you detect a problem, an internal investigation may help to “nip the problem in the bud.”

• Determine whether it should be done in-house or outsourced, depending on allegation and who is implicated.

• Solving the problem before going to the government is a “plus.”

50


Immediate Concerns: • Determine who should conduct the investigation. • Establish the scope and the client. • Create document retention policy. • Designate a document custodian. • Notify employees of document retention policy. • Freeze IT systems. • Notify employees of their rights. • Instruct employees not to obstruct the investigation. • Keep documents in their country of origin until you have a good

reason to bring them to the United States. • Remember that the United States attorney-client privilege and the

work product protections may not transfer to other countries.

51


Implementing the internal investigation: • Collect and Preserve All Relevant Documents

– Prioritize and collect documents, including electronic data. – Create a plan for review of documents. – Maintain and organize documents. – Protect documents that were not subpoenaed or requested. – Protect proprietary information and attorney-client privileged

or work product protected materials.

• Other Investigational Tools – Forensic experts – Auditors

52


Witness Interviews: • Prioritize witnesses and conduct interviews

– Provide Upjohn warnings • The interviewer represents the company only. • The interviewer is assisting a company investigation. • The interview is privileged information of the company. • The company may decide to waive the privilege and share the information

with third parties.

• Remind the employee • Interview is a condition of employment. • Do not give advice on retention of counsel. • Have a list of counsel to provide if they want advice. • Keep the interview confidential.

• Document the Interview • Attorney Notes

53

8. Know the Rules Before You Need to Use Them

54

KNOW THE RULES BEFORE THEY KNOCK

• Know the rules before you need to use them – Understand the U.S. Department of Justice and other agencies’

policies • Policy memoranda explain the government’s practices and principles

in business prosecutions. • Know whether the investigation needs to be disclosed to the agency’s

Inspector General’s Office or DCAA/DCMA – is it a mandatory or discretionary disclosure requirement.

• Is the investigation related to a government contract? If yes, more rules come into play and the failure to adhere to these may subject the company to suspension and debarment from government contracting.

– No government agency will call and tell you they are coming. – Law Enforcement wants to catch you off guard.

• If you’re trying to get your act together during the investigation, it is too late.

55

9. Steps to Take After the Government Leaves

56

STEPS TO TAKE AFTER THE GOVERNMENT LEAVES

• Contact counsel. • Prepare narrative of what transpired. • Instruct employees on document retention. • Conduct debriefings. • Identify employees with relevant information. • Distribute information to employees regarding handling

government interviews/requests. • Contact government attorneys. • Determine which government agencies are involved. • Collect, copy and identify all relevant materials, including e-mails,

computer files and other documents. • Determine whether to conduct parallel internal investigation. • Set up a response team for the government investigation. • Set up plan for communications with the public. • Consider setting up a committee to oversee internal investigation.

57

10.The Press

58

THE PRESS

• Press can be a useful tool

• Be wary of trying cases in press

• Ethical limits on statements to press

• Audience is too broad

• Press acts only in sound bites

• Words easily taken out of context

• Nurture relations with press

59





@BTLawNews

Questions?

60

