H.Investigations  

When a potential FCPA violation is brought to light within the company, the prudent course is to investigate the alleged conduct to determine whether a violation has in fact occurred and to inform decisions regarding remedial action.  The FCPA is a complex law, with little publicly available official enforcement guidance or history to inform the uninitiated.  Thus, when approaching a potential violation, companies should consider retaining outside counsel who specialize in the FCPA to conduct the investigation.  This course of action will also serve to preserve attorney-client privilege for the investigation, which could be very important should a potential violation become the subject of an enforcement inquiry or prosecution.   FCPA internal investigations are often particularly complex because the activities in question typically occur at least in part outside the United States, where different laws, business customs, and rules of privilege govern.  Thus, again, the expertise and international contacts offered by outside law firms and the law components of public accounting firms can be vitally important to the conduct of the investigation.

Upjohn Co. v. United States, 449 U.S. 383, provides guidance on the scope of the attorney-client privilege for conduct of internal investigations by company counsel, whether or not assisted by outside counsel.  The court emphasized three considerations:

1. “The communications at issue were made by Upjohn employees to counsel for Upjohn acting as such, at the direction of corporate superiors in order to secure legal advice from counsel.”
   
   
2. “The communications concerned matters within the scope of the employees’ corporate duties, and the employees themselves were sufficiently aware that they were being questioned in order that the corporation could obtain legal advice.”
   
   
3. “Pursuant to explicit instructions from the Chairman of the Board, the communications were considered ‘highly confidential’ when made … and have been kept confidential by the company.”
   
   

See Sample CEO Letter for an example of a “direction of corporate superiors” and Sample General Counsel Letter commencing an investigation.

2.  Remedial Actions

If during or on completion of an investigation, it becomes clear that issues exist, some steps to consider include:

· ascertaining any reporting requirements to public authorities (specialized legal counsel or consultants can be helpful)

· deciding whether or not to inform public authorities, even if not legally required

· deciding whether or not to issue a public announcement, or inform constituencies such as customers, vendors, employees, etc.

· formulating a communication plan, even if only a “holding statement” to respond to any inquiries

· analyzing the root cause(s) of the issues; e.g., is this likely to reoccur or was it attributable to a rare combination of circumstances?

· if likely to reoccur, determine the procedures, processes, training, instructions, or communications that need to be changed or enhanced

· appropriate discipline for those responsible, which is consistent and meaningful

· reinforcing a compliance culture by aligning adherence with performance appraisals, bonuses, raises and promotions.

Sources on how to conduct internal investigations:

·  "Internal Investigations," 17th Annual Corporate and Banking Law Institute, (October 1998),

Homer E. Moyer, Jr., Josephine Aiello LeBeau, and Beth H. Tyler

(available at www.millerchevalier.com).

·  Brian & McNeil, ed., Internal Corporate Investigations (ABA 1992) (book)

·  Webb, Tarun, Molo, Corporate Internal Investigations (2000) (book)