No ethics and compliance programme, however robust, will ever guarantee a total absence of misconduct. But it is precisely one of the key functions of your company’s programme to appropriately respond to allegations of wrongdoing. This Chapter outlines practical steps to conduct an effective workplace investigation in the event of an alleged breach of law or corporate policies by one of your co-workers. Planning an investigation, searching and gathering relevant information, assessing the facts, preparing an investigation report, and taking remedial action are all measures which require special care, as detailed in the following pages.

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There may be many valid reasons for conducting an internal investigation. When it comes to misconduct by one of your fellow employees, the duty to investigate arises for you as soon as allegations of unlawful conduct or policy violation become known to your company. The purpose of an internal investigation is to determine what actually happened and decide which remedial action is needed. As these are sensitive matters, that may have severe consequences for your company and your co-workers, the internal investigation process should be handled with a balance of rigor and sensitivity.

AND NOW WHAT?

The investigation of employee misconduct begins with an allegation or initial concern. It could be that management observes such conduct or that the allegedly improper conduct is reported by another employee. It might also be a customer or vendor who reports suspicious or allegedly improper behaviour. In every case, you should make an initial assessment of the allegation to ascertain whether it justifies further investigation or not, as the company may be held liable for failing to investigate and stop misconduct or fraud that it knew (or should have known) about.

What if the matter at hand does not justify any further investigation? If after an initial assessment the matter is dismissed, a good practice is to attach a note to the complaint, stating the decision taken and why no further action was deemed necessary. But you should not dismiss a complaint just because it does not look serious at first sight.

Once it is clear than an investigation is warranted, you will need to decide who is to conduct the investigation. It is critical that the person designated as the investigator approaches the matter objectively and is perceived as
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doing so. As each and every situation is different, the same person may not be suitable to conduct every kind of investigation. You should consider the subject matter, the respective positions of the complainant and of the suspected person, the potential impact of the investigation, the outcome on your business operations, and any perception of bias a potential investigator might generate.

Depending on the circumstances, it is sometimes advisable to bring in an external investigator. In complex situations, it could be convenient to appoint a sophisticated multifunctional investigation team.

Investigators should conduct a fast yet thorough examination of the facts and circumstances, without violating the legal rights of any person involved.

PLAN THE INVESTIGATION

One of the most important components of an effective internal investigation is preparation.

You should know what you are investigating and develop a plan for achieving your objectives. Careful planning of the investigation is important to reach a fair outcome. Planning is a step which should not be neglected, no matter how urgent the situation may be.

Some of the questions to be considered before beginning the investigation include:

  • Do applicable national laws or industry branch collective agreements subject your company to obligations that you should be aware of, before starting or during the investigation?
    • Consider for example matters like the statute of limitations; meaning in practice: “Is the alleged infringement already time barred or is it going to be time barred very soon?”
    • Special care must also be taken not to breach relevant privacy or personal data protection laws and laws governing an employer’s right to monitor employees’ communications. Consequently, it is crucial to have a plan to address these potential legal issues from the earliest stages of the investigation.
  • You should also consider if you first should obtain specialized assistance from internal or external legal counsel or from a human resources specialist to ensure that you are taking the right course of action. Ensure that you are sufficiently familiar with relevant company policies and, especially, with the rules for searching an employee’s workspace, computer, and personal belongings.
  • Which persons, if any, have to be interviewed? Which order should you follow for conducting interviews?
  • What documents should you look for?
  • Should any interim actions be undertaken? Consider if such interim actions may be appropriate and necessary based on the situation. One of the interim actions may be removing the suspected person from the workplace and placing this person on paid leave pending the investigation. Likewise, you should consider restricting the person’s access to computers, files, or certain areas of the workplace.

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It is important that your company demonstrates that it takes alleged misconduct in good faith or fraud complaints seriously. Waiting too long to conduct an investigation could be perceived as not taking complaints seriously and may prompt the complainant to pursue a formal complaint through the authorities or the courts. Likewise, while you leave the alleged misconduct unaddressed, it could continue to occur, worsening the situation. Another risk of waiting too long to investigate is that the outcome of the investigation can be negatively impacted either because evidence may be destroyed or altered or because, as time goes by, it becomes more difficult to get facts straight, as people may forget the details of the matter.

SEARCH FOR AND GATHER INFORMATION

What, when, who, where, why, and how?

Once an investigator is designated and goals are set, the next step will be to conduct a thorough review of relevant documents.

The investigator should conduct the assignment keeping in mind that the matter may ultimately be debated in court or have to be disclosed to outside parties such as government agencies. For this reason, it is crucial to pay serious attention to documenting the process and to gathering evidence, as the manner in which evidence is obtained and retained may determine its admissibility in court.

First, the investigator should review the allegations in depth and draft a precise chronology of the most relevant facts.

Then, the investigator could continue by studying the background of the matter under investigation, review the suspected person’s professional history and the person’s position on the company’s organizational chart. This will help clarifying relationships and identifying potential biases. It could be helpful to draft a chart of key individuals along with their positions and contact details. In certain cases, it could also be useful to visit the company’s websites.

The next step will be determining which persons should be interviewed as well as establishing in which order to proceed with the interviews. Generally, the complainant should come first, followed by reliable witnesses, and then, once the investigator has gathered all reasonably available information, the suspected person. Of course, as said already, every situation is different, and the order of interviewing may vary based on the particular circumstances of each case.

Interview the complainant (unless you are investigating an anonymous complaint)

It is advisable to meet with the complainant in a private location and explain to this person the investigation process. Likewise it is important to discuss confidentiality (avoiding making far reaching promises) as well as to emphasize the no-retaliation policy of the company.

Ask the complainant if there are any relevant documents which are not yet known. The investigator will request the complainant to share additional facts or documents, if any of these come to light after the interview.

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Likewise, the complainant will be asked to identify witnesses who may support his or her allegations. Moreover, the investigator should request the complainant to inform on the existence of evidence and of other similar past and present situations.

The investigator should make sure that the questions asked are clear so that an answer can easily be given. If no answer is provided, insist (if possible) by reformulating the question.

On occasion, the complainant may be asked to provide a written statement based on his or her personal knowledge. If this is not possible, ask if the complainant is willing to sign a statement based on the notes of the interview. At a minimum, the investigator should draft the written statement during the interview and verbally recap in the complainant’s presence to make sure that the interview notes are accurate.

Interview witnesses

In this context, a ‘witness’ means any person who may have reliable information about the facts and events under investigation. The interviewees should be appraised of the purpose of the interview. It is important for the investigator to emphasize that he or she does not want to hear speculation, hearsay or the expression of opinions, but is interested in facts that witnesses know of first-hand.

Once the investigator has finished interviewing witnesses, he or she may ask them to identify other persons who may contribute additional factual knowledge, and then proceed with the interview of these persons.

As with the complainant, it may on occasion be necessary to obtain a written statement. If not, the investigator should recap the notes verbally to make sure that they accurately reflect the witnesses’ statements.

Search and gather all relevant data

Relevant data the investigator should search for and gather may, depending on the circumstances, include the following. In doing this research, the investigator should be particularly careful to comply with the legal provisions protecting personal data and their conservation:

  • Electronic documents and logs. This may include e-mails, electronic diaries, and files. To preserve the data gathered, it could be convenient to make a mirror image of the hard-disk or any other electronic storage media.
  • Paper documents. Documents to be reviewed may include company policies and procedures, expense reports, checks, invoices, personnel files, performance appraisals, correspondence, and contracts. All paper documents should be referenced with a unique number and stored securely. In certain circumstances, it is advisable to digitally scan relevant documents.
  • Telephone logs (numbers dialled and calls received).
  • Security system logs (for example, video surveillance analyses). One may need to collect the names of those who had access to certain areas of the company’s premises at a particular time.

To perform the investigation under the best possible conditions, the investigator should also bear in mind the following:
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  • When conducting a search, a designated person should be present to observe how the search is conducted and to take note of what is found. This will help you and the investigator answering, for instance, any possible complaint about non-respect of the personal data protection laws.
  • Another practical concern that may arise when conducting a cross-border internal investigation is language and communication. If the investigation requires reviewing documents drafted in local language or conducting interviews with local associates, the investigator should arrange early on for adequate translation.

Interview the suspected employee

The investigator will want to confront the employee concerned in a non-adversarial manner by sharing with this person the allegations, and allowing to offer an answer and to listen to this person’s version of the facts. Meeting with the suspected employee should take place as soon as possible after having gathered the necessary information from other sources. Note that in certain jurisdictions, a meeting with an employee that may lead to disciplinary action will require proper notice to the employee concerned and to the company’s works council representatives.

It is advisable to have another person, such as a manager or a human resources representative, present during the interview to take detailed notes and to prevent disputes about what was stated during the meeting. Also consider having a witness observe how the interview was conducted to avoid allegations that the suspected person was intimidated during the interview.

At the start of the interview, the investigator should try to create an atmosphere of mutual trust and confidence. At the same time, appropriate disclosure should be made to the person concerned about what the investigation is about. The employee should be provided a sufficiently detailed description of what the person is said to have done or what the concern is. One should explain that the interview is designed to give the employee an opportunity to relate his or her version of the facts, to respond to the allegations made, and to communicate any other information that should be considered during the investigation, as well as to reveal the possible existence of witnesses who could confirm the concerned person’s story.

If the suspected employee refuses to participate in the interview, one will try to ascertain why and remind the suspected employee that he or she has a duty to reasonably cooperate with the company, whilst employed. Advise that company management, in the absence of any cooperation in the interview, will have to base its decision on other information gathered through the investigation. On the other hand, if the suspected employee requests to leave the interview, this request should be granted and duly documented.

One will start with broad, open-ended questions (“Tell me about …”). It would be unwise to start with tough interrogations, as this may cause the person to become defensive or non-cooperative. Then, move to narrower, pointed follow-up questions, and keep unfriendly or possibly embarrassing questions for the end of the interview. Ensure the
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employee is given a reasonable opportunity to provide a full response and explanation.

If an interviewee declines to answer one or more questions, the person should be asked the reasons for such attitude and one will record that explanation. One should see, in case of refusal if it is possible to ask the same question(s) in a different way.

One will carefully observe the interviewee; nonverbal cues can be as important as verbal responses. Attention should be paid to how the suspected employee is reacting to difficult questions, and what does his or her body language tell you.

If the concerned employee denies the allegation, the investigator will ask for an explanation of the facts from his or her point of view and ask for names of witnesses who could support this version.

One should also determine if the suspected employee has knowledge of the company’s policies as, if not, it could be a mitigating circumstance.

The investigator will ask the interviewee if there is any other matter he or she wants to tell about and that should be considered. The interviewee will be told that if he or she remembers additional information after the interview, the investigator will welcome the sharing of these additional facts.

At the conclusion of the interview, the investigator should confirm the accuracy of the information gathered. To do so, the investigator will summarize the interview by repeating the most relevant points and asking the interviewee to confirm that the information is accurate and complete. If this is not the case, questions will be asked for clarification purposes.

Finally, one should inform the suspected employee that the company will be continuing the investigation in order to reach a conclusion, that the employee will be advised of the outcome, and that this process may lead, if the company reaches a negative conclusion, to disciplinary action. Moreover, one should stress the confidentiality of the investigation and request the suspected employee not to discuss the matter with other employees. Last but not least, the suspected employee will be warned that the company will not tolerate retaliation or reprisals against the complainant or anybody else involved in the investigation.

If the suspected employee asks detailed questions about the allegation under investigation that could damage the investigation, the investigator is not obliged to answer. However, one should answer reasonable questions that allow the employee to provide a full response or allow him or her to better understand the investigation process.

Confidentiality

If any of the participants in the investigation requests confidentiality, remember that one cannot promise absolute confidentiality. Depending upon the result of the investigation, disclosure may be required, and failure to uphold confidentiality may result in lawsuits or acts of retaliation against those involved in the investigation. Explain that the information will only be shared on a need-to-know basis in the interest of everyone involved.

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Record the results of the interviews

It is preferable that the investigator takes notes during the interview but if he or she feels that it may take his or her attention away and impede his or her ability to listen attentively, one will try to have the help of another person to take notes. If this is not possible, one will prepare the interview record immediately after the interview is completed, because memory recall is often at best incomplete and at worse inaccurate.

It will be necessary to always indicate the place, date, and time of the interviews as well as the names of all those present. One will not forget to date and sign the notes, and ask interviewees to review and sign them.

Compliance with law and collective agreements

It is fundamental to ensure full compliance with applicable laws and relevant collective agreement provisions along the entire investigation. Violating fundamental obligations of procedure under a collective agreement or relevant labour law during an investigation, no matter how innocent, can result in disciplinary measures being disallowed by a judge. In turn, it might raise responsibility in case the concerned employee files a complaint alleging a breach of his or her privacy rights, or raising defamation or emotional distress issues.

ASSESS THE FACTS

The investigation process is intended to provide you with a clear picture of the facts.

One of the major challenges for those in charge of conducting an investigation is to determine credibility as they are often confronted with different stories.

When attempting to determine whether a person is relating accurately a story, they should look to the following factors for assistance:

  • What is the interviewee’s conduct like? Did the interviewee tell the story in a convincing manner?
  • Was the story reasonable? Did the story have internal consistency? Did the different pieces fit together, or were there things out of place?
  • If the story was told more than once, did the story remain consistent?
  • Did the interviewee have a bias or self-interest which might taint the story?
  • Is the story told by the interviewee probable or not?

The more serious the offence, the more convincing must be the evidence.

Sometimes, the outcome of the investigation will be inconclusive and it will not be possible to determine whether the alleged wrongdoing occurred. When this happens, the complainant and the suspected employee should be so informed in a neutral manner and clearly advised that any kind of retaliation or reprisal will not be tolerated. Invite the complainant to report any future violation. Consider if it would be worthwhile conducting individualized or department-wide training.

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THE INVESTIGATION REPORT

Usually the findings of the investigation will be documented in writing. The investigation findings are not the investigator’s opinions, but summarize the facts that were learned during the investigation and that can be supported.

It may be worthwhile asking an in-house or external legal counsel to draft the report if this would give this document legal privilege. In any case, the investigation report should be written assuming that it may have to be disclosed to parties other than the addressee.

Bear in mind that the investigation report should only address topics that are within the scope of the internal investigation. It should be written in a clear, concise, factual, and objective manner, leaving no room for ambiguity or speculation.

TAKING REMEDIAL ACTION

“What did you do when you found out about it?”

That is a crucial question. Once the investigation is completed and the investigation report has been issued, management should determine what kind of action, if any, should be taken.

Do not take action against the suspected employee unless the outcome of the investigation is clear. In case of doubt, you should consider either investigating further or, if you deem continuing the investigation not feasible or unreasonable, bring the matter to an end.

When the allegation is substantiated, management should determine the appropriate remedial action. Disciplinary measures may include oral or written warning, suspension or even termination, as detailed in the company’s Code of Conduct. Each instance should be carefully reviewed and several factors should be considered including:

  • The severity of the proved misconduct;
  • The concurrence of aggravating or mitigating circumstances;
  • The accused employee’s employment record;
  • How similar situations have been handled in the past to ensure consistency; and
  • Whether or not there is any provision in relevant legislation, collective agreements, policies, or regulations.

Any disciplinary action should be properly documented.

It is important you provide clear guidelines for future misconduct and establish severity of future discipline in the event of repeated conduct.

If the disciplinary action does not include termination, the situation should be properly monitored to identify potential signs of retaliation as well as recurring misconduct of the disciplined employee.

Additionally to taking disciplinary measures, as part of the remedial action plan, you should consider adopting general preventive measures like re-circulating the policy that has been broken and conducting additional training.

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Notice to the parties

  • Communication with the complainant: Inform the complainant of the investigation results and that appropriate remedial action is being taken without going into unnecessary detail. Likewise, tell the complainant what to do if this person experiences retaliation or becomes aware of additional misconduct, and reiterate the message about the confidentiality of the investigation.
  • Communication with the disciplined employee: Management should inform the disciplined employee of the conclusion reached and provide this person with sufficient explanation. Inform the person concerned about the remedial action, if any. Warn him or her against any type of reprisal. If appropriate, warn that future misconduct will result in additional discipline, up to termination. Finally, reiterate once again the confidentiality of the investigation.
  • Communication with witnesses: There is no need to inform others about the details of the investigation. Remind them, if need be, that the investigation is confidential.

Additionally, you may consider communicating to colleagues and associates of the disciplined person or even, if necessary, to third parties that a compliance investigation was conducted and that, as a result of the findings, management took appropriate action to resolve the matter. Seize the opportunity to reinforce the policy in question and remind the persons concerned of the no-tolerance principle for misconduct. This will help stop rumours and set the right tone.

Bad faith reporting

If the outcome of the investigation determines that the complainant made the allegations in bad faith, management should determine what type of disciplinary action, if any, would be appropriate for the complainant.

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About the author

Juan Jorge Gili is Senior Corporate Risk Manager at Novartis International since April 2013. With global headquarters in Basel, Switzerland, Novartis is a multinational healthcare company with operations in over 140 countries. Prior to this position, Mr. Gili served as Global Compliance and Risk Management Officer for the Novartis Over-the-Counter (OTC) Division, being a member of the Novartis Compliance Leadership Team. Mr. Gili graduated in 1985 from the University of Navarra, Spain, and holds a Master in Company Law (LL.M.) from the Instituto de Empresa Business School in Madrid. He is a member of the Barcelona Bar since 1988.