Conducting Internal Investigations
A Step-by-Step Guide

When Do You Need an Internal Investigation, and Who Should Do It?

Steven I. Sofer
Partner, Gowling Lafleur Henderson LLP

Tamara Vanmeggelen
Senior Counsel, Royal Bank of Canada

When do you need an internal investigation?

• Investigations required by regulators or statute
• Investigations that may be part of a due-diligence defense
• Investigations that may lead to the laying of criminal charges or commencement of a civil action
• Responding to whistle-blower complaints and associated complaints of reprisals
• Investigations associated with a claim under fidelity insurance or bonds
  
  • deductibles
• HR investigations
• Distinguishing complaints that require investigation from other types of situations, e.g. personality clashes in the workplace
• Investigations mandated by internal policies
• Conducting a risk assessment
• The risks of not doing an investigation well or at all
  
  • civil actions, including defamation
  • human rights complaints
  • risks to individuals

Who should be involved, and to what extent?

• What types of investigations should be directed by the board of directors?
• What types of investigations should be directed by a CEO or CFO?
• The role of management/audit committee/special committee in directing the investigation: how much involvement is appropriate?
• The role of the compliance officer
• Should in-house counsel do the investigation?
• When should the investigation be contracted out to a neutral third party?
  
  • do you have the necessary skills in house?
  • identifying potential conflicts of interest (e.g. investigator reports to target) whether real or perceived
  • independence criteria under Sarbanes-Oxley
  • nature of the investigation
• Defining the scope the contract
  
  • what elements should be included in the contract?
• Considerations when choosing an outside investigator
  
  • assessing capabilities
  • identifying conflicts of interest
• Documenting the retainer
• The role of the employer if an outside investigator has been retained
  
  • briefing the investigator properly: what information will they require on day 1?
• The role of counsel in advising investigators
  
  • during the investigation
  • “post mortems” after the matter has been disposed of
• The role of unions in the conduct of the investigation
  
  • how much is a union entitled to intervene?
• Risks to avoid in commencing an investigation internally then turning it over to an outside contractor

Preserving Privilege and Other Legal Considerations

Maureen Ward
Partner, Bennett Jones LLP

• Will this investigation lead to litigation or charges being laid?
• Preserving solicitor-client privilege and litigation privilege
  
  • special privilege concerns for companies operating in Europe
  • steps to take in engaging an outside investigator
  • the role of in-house counsel in preserving privilege
  • what changes when the investigation is done by a special committee?
  • understanding implied waiver
• Will you need to involve in outside counsel, and what will their role be?
• Will any of the persons investigated require independent counsel?
• Can findings and recommendations be used for general business purposes without undermining privilege?
• Special considerations for Crown corporations and others operating under a statutory scheme
• Investigation privilege: recent case law
• Factors affecting multinational corporations

Planning and Preparing for the Investigation

Sandy Boucher
Senior Manager
Specialist Advisory Services, Grant Thornton LLP

• Determining the objectives of the investigation
  
  • who sets the goals?
  • will you want to prosecute or sue? – if so, how much will it cost?
  • do you just want to get rid of a rogue employee?
  • paying for an investigation vs. reasonable notice
• Delimiting the scope of the investigation
• Timing of the investigation
  
  • when to act at once and when to watch and wait
  • what things have to be done immediately?
  • what not to do before you contact an investigator
  • statutory timelines
  • preserving assets and evidence
  • setting appropriate time frames and deadlines
  • are there cases where deadlines may not be appropriate?
• Identifying the issues to be investigated
  
  • who decides what the issues are?
  • focusing what may be a rambling complaint
  • eliminating irrelevant issues
  • the dangers of framing issues too broadly
  • avoiding “issue creep”
  • keeping it relevant
• Preparing an investigation plan
• Useful forms and templates
• Checklists
• Identifying the individuals and organizations who have the evidence you will need, and the devices on which evidence may be stored
  
  • what if some of the potential sources of information are suppliers or other third parties?
• Allocating resources
  
  • what form will the investigation take, e.g. will you require surveillance?
  • what tools, forensic or otherwise, will you require?
• Will the investigator need expert support?
• Planning considerations for complex multinational investigations
• Planning for a fair process that will give your investigation legitimacy and encourage employee participation
• What’s different about planning an investigation that may end up in criminal courts?
  
  • admissibility, disclosure, Charter considerations
  • who is an agent of the police, and why does it matter?
• privacy and confidentiality considerations: what are the employees’ rights?
  
  • what’s allowed in terms of surveillance?
  • recent guidance from case law and the Privacy Commissioner of Canada
  • consents and when you should get them
  • privacy and pre-employment background checks
• Internal and external communication strategies
  
  • protecting the organization’s reputation
  • maintaining morale

The Nuts and Bolts of Conducting an Investigation

Garry Clement, CFE CAMS AMLP
President & CEO
Clement Advisory Group

Maria McDonald
Dykeman Dewhirst O'Brien LLP

• Parts of a complete investigation
• Managing the critical early stages of the investigation:
  
  • where to get started
  • securing evidence such as books and records
• What constitutes good evidence?
• Illegal practices to avoid
• Observation skills
• Maintaining focus
  
  • the risks of sympathy for a complainant
• Keeping track of evidence that may end up in court
  
  • document handling and retrieval
  • logging evidence
  • protecting the integrity of evidence
  • securing electronic evidence
• Managing expectations
  
  • of the complainant if any
  • of management
  • who if anyone has a right to disclosure of evidence?
• Limits on collateral uses of information gathered in an investigation
  
  • what rights do witnesses have in the evidence provided?
• What if there are or may be concurrent regulatory, criminal or civil proceedings arising from the same events?
  
  • should the investigation wait until criminal proceedings are complete?
  • what if the police request that you hold off?
  • should your investigation assist the police or regulatory investigators? How can you prevent that?
  • understanding the deemed undertaking
• What rights does the person being investigated have, and how do you protect them? – recent case law
• How much investigation is enough? When can you stop and still have a fair investigation?
• Quality control
• Wrapping up your investigation

Reaching Conclusions

Robert McMillan
President, Trillium Group Corporation, Ottawa
Former Program Manager, RCMP Truth Verification Section

• Making credibility findings
  
  • how to determine witness credibility
  • describing credibility issues while appearing unbiased
• Drawing conclusions
  
  • ensuring that conclusions are grounded in the evidence
  • avoiding conclusions that may be successfully challenged
  • considering potential systemic issues that affect outcome
• Making recommendations
  
  • when is it appropriate?
  • specific and systemic measures

Effective Report Writing

Sarah E. MacGregor, CA, CFE
Director, Investigations & Forensic Services Group
PricewaterhouseCoopers LLP

• Who are the audiences for your report?
  
  • should the complainant if any get a copy?
  • how will that affect your style and approach?
  • who gets to respond?
  • considering internal policies
• Style tips and appropriate use of language
• Parts of a report
  
  • creating an outline
  • what information should be included and what should be omitted? – tips for concise yet thorough writing
  • should some material be in appendices?
• Use of charts and other tools to convey information
• Common mistakes in report writing
• Ensuring that your report is useful to the reader

Follow up: Using the Results of Your Investigation

Christa Wessel
Chief Legal Officer
McCain Foods Limited

• The importance of following through
  
  • sharing investigative results, internally and externally
  • voluntary disclosure to regulators including criminal reporting
  • enforcement of internal policies, including disciplinary actions
• Turning a loss into an asset: improving controls to prevent recurrence of the problem
• Disclosure requirements for public companies
• Civil suits, settlements and recovery
  
  • recovering assets in Canada and elsewhere

Case Studies: Handling Harassment and Related Investigations

Mary Porjes
Porjes Walsh

Through illustrations based on actual situations, learn how one experienced investigator has addressed some of the issues that commonly arise in sensitive matters of this kind. You’ll also gain an appreciation of the standards of procedural fairness that apply to harassment investigations. Some of the real-life case studies that will be discussed involve:

• Complaints that span incidents occurring over many years
• Complaints that involve multiple complainants
• New complaints that come forward in the course of the investigation
• Issues that arise when one or more of the parties or witnesses are senior managers
• Assessing credibility when there are no other witnesses
• Addressing confidentiality leaks
• Criminal activity and overlapping investigations

In the final afternoon of the course, participants will be presented with a complex series of allegations to be investigated, and will discuss how to plan and carry out the investigation.

Exercise leaders:

Linda Fuerst
Partner, Lenczner Slaght Royce Smith Griffin LLP
Former Senior Investigation Counsel, OSC

Roddy Allan, CA•IFA, Partner, Financial Advisory, Forensic & Dispute Services, Deloitte