Guilt by Investigation and Other Pitfalls: Follow These Tips to Ensure That Investigations Are Conducted Properly

Article excerpt

The CEO of a large corporation received an anonymous telephone call informing him of a problem in the purchasing department. The caller suggested that a buyer of uniforms for the company was directing all business to one vendor without considering other bids and contractors. The CEO immediately asked the security director to look into the matter. The security director, who had recently transferred from another department, had never encountered anything like this and wasn't sure what to do. Because she sensed that the issue was a priority for the CEO, she decided to investigate the situation quickly. Without hesitating, she called the suspected buyer on the telephone and asked if she could meet with him about a possible fraud she was investigating.

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A few minutes later, she was sitting across the desk from the suspect. "Let me get right to the point," she said. "We received a telephone call this morning implicating you in a vendor fraud involving collusion. Is there anything you want to tell me about any fraud you might be committing before I have you handcuffed and arrested?" The suspect quickly took out a note pad and started writing down her questions and allegations. After finishing, he looked at the security director and responded, "If you want to talk to me, you will have to do it with my attorney present. In the meantime, I have nothing to tell you except that I don't appreciate you barging into my office and accusing me of a crime I didn't commit."

The company eventually identified the real culprit, fired her, and ceased doing business with the suspected vendor, but it paid for its initial missteps. By documenting the threats made against him, the falsely accused employee was able to threaten the company with retaliatory litigation. Realizing that proper investigation protocols weren't followed, the company agreed to transfer the employee. The employee eventually left the company with a generous severance package.

SECURITY DIRECTORS ARE often asked to be involved in investigations like the one just described Such investigations, which probe what are collectively described here as "ethics violations," may arise from suspected drug dealing, safety violations, conflicts of interest, fraud, discrimination, harassment, or other incidents. Whatever the nature of the suspected activities, it is, of course, critical for the investigation to conform to corporate policy and the law. If the company uses poor investigative practices or does not exercise care, perpetrators may get more from a court judgment they receive after filing a lawsuit against the company than they could ever get illegally.

Six factors are critical to conducting a good investigation. They include: keeping management informed, being objective, exercising discretion in discussing investigations, independently corroborating the facts, using the right investigative tools, and avoiding ineffective, unproven, or illegal investigative techniques.

Management awareness. It is typically inappropriate to conduct an investigation into alleged misconduct without the approval of management. Therefore, investigators should make sure that management and others with a need to know are aware of and agree to the investigation and the techniques employed. As simple as this sounds, security personnel, auditors, and other investigators sometimes scoff at the idea of having management as a client at all, believing instead that the "corporation" is their client. In some cases, almost no one is aware that an investigation is underway.

Involving management early ensures accountability for the investigation, thus helping the investigator gain credibility and protection from allegations of unsupervised, possibly inappropriate, actions. Investigations clearly benefit from positive relationships with managers who are organizationally above the subject of the investigation. If the security department is charged with conducting an investigation, the security manager should be responsible for ensuring that the investigation is conducted appropriately and that the appropriate management is informed. …