Internal investigations – working alongside investigating authorities
Executive Education / 30 July 2021
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Rainer Franosch war 17 Jahre als Staatsanwalt und Oberstaatsanwalt tätig und ist seit 2017 stellvertretender Leiter der Strafrechtsabteilung im Hessischen Ministerium der Justiz. Daneben ist er als Prüfer für das Zweite Juristische Staatsexamen sowie in der Fortbildung von Justiz- und Polizeiangehörigen tätig. Er war mehrfach Sachverständiger für den Deutschen Bundestag, u.a. im Ausschuss für Recht und Verbraucherschutz sowie in der Enquete-Kommission „Internet und digitale Gesellschaft“.

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The business section of German daily newspaper FAZ dated 22 July 2021 states that: “More than five years on: Internal investigation ends in compensation settlement with former top managers. Following the revelation of misconduct, the investigation into the causes of and responsibility for the fraud, commissioned by the Supervisory Board, was by far the most extensive and costly in-house investigation in German business history.”

Even without the Corporate Liability Act

Germany’s federal Parliament recently failed to adopt the draft of a proposed Corporate Liability Act. The act aimed to put the sanctioning of corporations established for the purpose of running business operations on an independent legal footing. It would have been subject to the principle of legality, enabling the creation of an enhanced set of instruments for the appropriate sanctioning of corporate activities. At the same time, it was intended to promote compliance measures and provide companies with incentives to help solve criminal offences by conducting their own internal investigations.

Whether due to fraud, corruption or compliance failures, internal investigations are becoming increasingly important – even if not all instances of corporate misconduct achieve the same scale as the highly publicised case mentioned above.

Legally compliant internal investigations that stand up in court may pursue various goals, such as obtaining evidence in support of disciplinary actions that is admissible in court, improving organisational structures for preventive purposes, or conforming to legal and regulatory compliance requirements. Regardless of the ultimate objective, investigations must adhere to a multitude of legal standards, not least so that the results may be used without constraint while avoiding any claims for damages or compensation. Data protection regulations, the individual rights of any employees affected, case law disallowing certain kinds of evidence, and of course the risks of interfering with any official investigations being conducted in parallel, all impose boundaries of which internal investigators must be keenly aware. At the same time, it is important to use the available instruments effectively – not all undercover methods for uncovering the facts are forbidden to internal investigators.

Companies are not public prosecutors, and official investigators are not required to take corporate interests into consideration. This makes it all the more important to be familiar not only with the options available to and limits imposed on internal investigations, but also with the cardinal rules for dealing with the public prosecutor’s office, the courts and the police, as well as the powers of these bodies in relation to the company.

Questions requiring clear answers

How does the public prosecutor think and work? What are the objectives of an official investigation? How are the different agencies structured; where do the various decision-makers fit in? How might the company benefit by collaborating with the official investigators? What are the duties and obligations incumbent on the management board – and on employees? Where are the pitfalls, and when should companies reconsider active cooperation? The module “Dealing with investigating agencies and investigative methods” covers these and other questions. As well as covering the legal framework for conducting internal investigations, the module also imparts practical knowledge of the investigative tactics and techniques used by law-enforcement agencies. Course participants learn at first hand just how professional investigators shed light on obscure issues and convict perpetrators. They are introduced to typical perpetrators’ latest modi operandi, and the curriculum also covers fraud in the context of cybercrime, as well as methods of securing digital evidence (e-evidence).

Fraud managers uncover and prevent all kinds of white-collar crime. Consequently, a career in internal investigations, for example as a fraud manager, requires a whole raft of skills. These skills can be acquired conveniently and by direct reference to real-world scenarios by enrolling in our Certified Fraud Manager certification course.