In March 2021, a Government white paper was published entitled “Restoring trust in audit and corporate governance”. This report was a direct response to issues of corporate mismanagement; specifically, failures in audit practices by the seven largest audit firms and major corporate collapses.
There have been several recent profile cases where corporate organisations have been investigated due to alleged internal illegal activities; employee misconduct, or as a result of threats by competitors, such as the Wood Group and Amec case or Activision Blizzard. Currently, the professionalism of the big four accounting firms is under scrutiny and Credit Suisse is on trial over alleged failings relating to a money laundering case.
It is with this background that more light has been shed on the role and prominence of corporate investigators. These individuals are employed by bodies such as legal firms, banks and multinationals, to navigate the criminal complexities of the business world.
Effective corporate investigators can and have helped uncover numerous wrongdoings; think of Bernie Madoff, or Enron. They are however not limited to big business, no matter the size of an organisation, their vulnerability to internal and external threats can be very real, making their need for a corporate investigation essential.
What is a corporate investigator?
A corporate investigator undertakes an extensive examination of an organisation, business or corporation, when an unlawful act is deemed to have been, or is currently being committed, either by the business in question, its employees, or competitors.
When hired by a business, the investigator is often employed at a time when serious reputational or financial damage could be done to the institution if the act is left to continue.
Their role is to scrutinise both internal and external evidence, either as part of an investigation being carried out solely by the organisation, or as part of a third-party professional team.
They will recover evidence to determine whether any wrongdoings have taken place and help the client form the basis for internal or legal proceedings going forward.
Whilst legal, yet unregulated in the UK, there are many countries such as Indonesia; China or Saudi Arabia, which have banned or do not recognise the profession, whereas others such as Canada and the US recognise them, but under strict guidelines.
What do corporate investigators investigate?
The evolution in the sophistication of crime, as a result of online, cyber and technological advances, along with the complexity of the business environment in general, means that organisations today face a myriad of both internal and external threats.
With this in mind, a corporate investigator will be brought in to examine a vast array of incidences happening both within and external to an institution, that if left unchecked may have serious consequences:
- Data Violations: theft; loss of data or hacking.
- Intellectual property infringement: unauthorised use or sale of material classed as intellectual property.
- Corruption: bribes; issues around improper payments.
- Fraud and financial issues: embezzlement; money laundering; accounting anomalies.
- Staffing issues: harassment; bullying; misconduct; absenteeism; dishonesty.
- Due diligence: when entering into a partnership with another business or senior employee.
- Libel and defamation: false statements relating to reputation.
What investigative methods do corporate investigators utilise?
The complex and thorough nature of corporate investigation means that the methods used to uncover any illegal activities must be multi-disciplinary, with extensive knowledge required across research techniques including surveillance, interviewing and more.
The methods employed must be carried out in a structured form, quickly, legally and confidentially, to achieve the best outcome and minimise business risk.
A corporate investigator, such as those utilised by Matrix Intelligence, will ordinarily utilise two main methodologies; HUMINT and OSINT. Not all investigators have the skill or resources to employ both.
OSINT: Research and efficient document collection is a vital aspect of a corporate investigation and forms a significant part of OSINT.
This relates primarily to hard-copy documents, or electronic data (computer/digital forensics), and open-source and proprietary databases, such as financial and criminal records, property holdings and court documents. It is important that legislation relating to data protection is followed.
Accessing electronic data such as emails and other computer based or telecommunications activity can certainly only be carried out in the UK in line with the Regulation of Investigatory Powers Act 2000 and The Telecommunications (Lawful Business Practice) (Interception of Communications) Act 2000.
HUMINT: Conducting investigative interviews can shed considerable light on a case, especially at the start; providing valuable background information, detail and context as to what has taken place and why.
It will depend on the nature of the case as to how these interviews are carried out and recorded, and it requires a diligent and experienced individual. It is imperative that interviews are carried out and recorded in a way which makes them admissible in court.
Investigators can also use their own local network of contacts and resources to gather intelligence on an individual, again through discreet and confidential conversations.
Physical surveillance to document a person’s movements and business relationships, as well as technical surveillance, utilising photography and videography, are both effective means of capturing evidence. GPS tracking of vehicles is also permissible under law in the UK.
Are corporate investigators regulated?
The regulation of corporate and private investigators, and the industry as a whole, has been up for a debate within the UK Government for a considerable period. Lack of regulation has meant anyone can work in the industry regardless of experience, skill or convictions. This differs from say the U.S., where all investigators require a license.
Following the phone hacking scandal and the collapse of News International in 2011, which put the spotlight on the often unscrupulous world of private investigations, a Parliamentary Home Affairs Select Committee report on the industry was published in 2012.
This included 14 recommendations about the future of the UK investigation industry and regulations within, as well as the risks if left unchecked. These included a two-tier system of licensing and regulation for private investigators and companies, as well as increased penalties for the unlawful acquisition of private data.
As a result, the then Home Secretary, Theresa May, announced in July 2013 that operating as an unlicensed private investigator would become a criminal offence, however; despite this they are still unregulated and are under no legal requirement to carry a license.
When a corporate investigation crosses the legal line?
Once it has been agreed that a corporate investigation is warranted, it is vital that it is carried out within the confines of the law and that the client is aware of this, no matter which jurisdiction the work falls in. Any errors or failings to do so can lead to criminal prosecution or legal proceedings against the company and investigator in question.
It is only by employing an ethically sound agency such as Matrix Intelligence, with a robust investigative strategy, clear parameters, and legally obtained evidence, that a successful outcome and actionable result can be reached.
Having examined some of the legal means by which intelligence can be gained, it is also worth mentioning what is not permissible by law in a corporate investigation:
- Phone and computer hacking – as demonstrated in the News International scandal, this is illegal. The Computer Misuse Act of 1999 sets out that it is unlawful to access a computer to steal data or to bug a phone for similar reasons.
- Trespassing – you can follow someone in a public place, but you cannot go onto private property or enter a home.
- Accessing of certain bank or financial records – this is not possible without the permission of the account holder.
It is imperative that careful consideration is given to every aspect of an investigation to ensure that it stays within the confines of the law. If ignored, it can lead to serious reputational and legal repercussions, as we have seen with the Credit Suisse scandal.
UK corporate investigators remain an unregulated profession. In order to conduct an investigation which effectively contributes to legal action but does so within the realms of the law, choosing a professional and ethical agency that you can rely on to deliver is of the utmost importance.
We pride ourselves on being that agency, achieving credible, timely and legally sound results that help our clients maintain their reputation, business continuity, and security, no matter the threat.
For more information on our corporate investigative capabilities, contact us at: info@matrix-intelligence.com or online at www.matrix-intelligence.com
