International White Collar Crime and the Globalization of Internal Investigations
Dervan, Lucian E., Fordham Urban Law Journal
Much has been written about the methods by which counsel may efficiently, thoroughly, and credibly conduct internal investigations. (1) Given the globalization of such matters, however, this Article seeks to focus on the challenges present when conducting an internal investigation of potential international white-collar criminal activity. In Part I, this Article will examine the challenges of selecting counsel to perform internal investigations abroad. In particular, consideration will be given to global standards regarding the application of the attorney-client privilege and work product protections. In Part II, this Article will discuss the influence of data privacy and protection laws in various countries and analyze the challenges of attempting to conduct an American-style internal investigation in such jurisdictions. Part III of this Article will examine interactions with employees during international internal investigations and will consider the challenges of complying with varying labor laws and due process requirements around the world. Finally, in Part IV, this Article will discuss the hazards of multi-jurisdictional investigations by government agencies. In particular, consideration will be given to decisions regarding the disclosure of investigatory findings and the difficulties of engaging in settlement negotiations in an international enforcement environment.
TABLE OF CONTENTS Abstract Introduction I. Selecting the Investigators in International Matters II. Collecting, Reviewing and Transferring Investigatory Documents from Abroad III. Dealing with Employees in an International Context IV. Disclosure and Settlement After International Internal Investigations Conclusion
On April 14, 2010, Russian authorities raided Hewlett-Packard's (HP's) Moscow company offices in search of information regarding an alleged scheme by employees in Germany to bribe Russian officials. (2) HP's German subsidiary allegedly paid kickbacks in Russia to obtain a 35 million [euro] contract for the delivery and installation of an information technology network to a Russian public prosecutor's office. (3) By September 2010, HP publicly disclosed through its securities filings that the criminal investigations into the scheme had spread well beyond Germany and Russia and now included an investigation by the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC). (4) Further, HP revealed that the investigation by the United States' government had expanded to include Germany, Russia, Austria, Serbia, and the Netherlands. (5) The proliferation of an alleged bribe in Germany into subsequent government investigations in as many as twelve countries around the globe demonstrates the truly international nature of white collar crime in the twenty-first century. (6) With this internationalization of white collar crime and increase in global enforcement initiatives and cooperatives comes an inevitable byproduct: the globalization of internal corporate investigations. (7)
The historical rise of internal investigations as an important tool in the arsenals of corporate defense counsel can be traced to increasingly aggressive enforcement programs by the SEC in the 1960s. (8) During this period, the SEC staff was tasked with creating innovative enforcement mechanisms by which corporations would be required to engage in activities to restore the corporation to a "pre-violation, law-abiding condition." (9) One example of such ancillary relief was the requirement that a receiver be appointed to ensure corporate improprieties were halted. (10) Over time, however, corporations began to propose an alternative to receivership, which was a costly and intrusive form of government oversight. (11) Instead, corporations began proposing that injunctive relief orders contain a requirement that the corporation undertake an internal investigation on its own using special counsel to achieve the same ends. …