Protecting Against Misconduct When Investigators Are Homebound

By DirectorCorps

May 11, 2020 All Industries Corporate Governance

Misconduct, both internally and externally, hasn’t taken a break due to Covid-19. Neither can compliance.

Even in a time when investigators can’t travel and in-person interviews have halted, organizations still face liability if they don’t properly investigate concerns related to harassment and fraud.

It’s on the board to ensure that compliance and employee protection issues stay in place, even if teams can’t meet in-person. Directors should understand how internal investigators have adapted their efforts, so concerns around harassment and fraud receive the proper responses, limiting the potential legal backlash.

According to employee misconduct reporting tool Vault Platform, the number of incidences of racial discrimination submitted by organizations have increased since the implementation of shelter-in-place orders.

How an organization responds to complaints could play a role in what liability they face if the accuser turns to the courts, writes Joseph Toris, a counsel at the New Jersey based law firm Jackson Lewis, for the National Law Review. Tactics like delaying an investigation, dragging on an inquiry or failing to take corrective action could create greater liability risk, even with coronavirus circulating.

It’s important for boards to understand the new protocols that their investigation team has put in place, keeping in mind the fact they can’t travel to sites to meet with the concerned parties. This goes for internal investigations into misconduct and fraud as well, according to the law firm Jones Day. How investigators communicate, interact and adjust investigations “should solicit the perspectives of other internal stakeholders (including relevant officers, directors, and Board committees),” writes Jones Day.

It’s also the responsibility of the board’s compliance committee to ensure that investigators and compliance officers aren’t using the stresses of the moment to cut into investigative efforts.

“The bigger risk of the coronavirus crisis is the gatekeepers: compliance officers and senior leaders, who fall prey to the sense of a crisis and the need to cut corners or forego their usual compliance controls,” Michael Ward, a partner at the law firm Vinson & Elkins LLP, told The Wall Street Journal. “Those actions will be judged in hindsight, and no one will care that there was a crisis when you decided to forgo your usual compliance controls.”

Ward suggests utilizing data analytics programs to aid in current and future investigations, particularly when evaluating potential fraud conducted by employees. The board should question what tools are available, what investments are needed and how data can be utilized under this unusual backdrop.

“Often the most time-consuming part of an investigation is the gathering and analyzing of evidence, particularly the transactional evidence,” Ward adds. “If you have a data analytics capability, you basically start on second base in that regard.”