Six Basic Steps for Investigating Allegations of …

1 Six Basic Steps for ItitiAllti fInvestigating Allegations ofFraud and MisconductABA Sifb& ElABA Section of Labor & Employment Law2008 Annual CLE ConferenceDenver, COJeff Heller, Assistant General CounselBP America Winfield Road4101 Winfield RoadWarrenville, IL 605556 Investigation Steps for Internal Investigations Concerning Fraud, Compliance Matters and g,pInternal RisksInitial Analysis and Role AllocationInitial Analysis Fact Finding InterviewingPlanning and LeadingInitial Analysis and Role AllocationFact Finding, Interviewing and ReinterviewingPlanning and Leading Investigation analysisTaking immediate Steps if The Investigation PlanThe Comm nication Plan Planning Ta k i n g immediate Steps if necessary Selecting an investigation team The Communication Plan Timetable Case File Leading & Advising Planning Arranging Opening Conducting/questioning ClosingFollowing UpReportingAnalysing the Evidence Who was interviewed?

2 What documents & evidence were considered? Facts found? Examine each piece ofevidence What is missing? Regulatory reporting Concerns about retaliationIs discipline necessary?2 Any expert opinions or analysis? Any precedents?g Conflicts of evidence Reliability of evidence Is discipline necessary? Other stepsStep 1 Initial AnalysisInitial AnalysisKey Questions for Initial Analysis Upon Notification of a Compliance Breach, Fraud, pSOX Issue, etc. Who is alleged to have acted wrongly? What is the alleged violation? Is an investigation necessary?investigation necessary? Are there any particular internal or external timing/deadline or reporting considerations ( government or regulator)? Stated differently, is the matter subject to immediate reporting to government officials? Is there a need for immediate action e g Is there a need for immediate action, Stop/minimize future injury/hazard to people?

3 Separate employees? Or appoint a different supervisor? Remove someone from the workplace during the investigation?Cdth? Conduct a search? Does the matter need to be escalated within the corporation? , a special committee of the Board of Directors concerned with SOX compliance, fraud or ethics? Who will have single point of accountability (SPA) to oversee the investigation? Who will have single point of accountability (SPA) to oversee the investigation? Who will lead the investigation? Who are the potential decision-makers? Are there special considerations, union issues, anonymity of the complainant or whistleblower, government or law enforcement involvement? Are there documents electronic material or other evidence which must be4 Are there documents, electronic material or other evidence which must be preserved immediately? Are there any related or ongoing investigations? How will confidentiality be protected in this early stage?

4 Appointing an Investigator(s) Will the investigation be done under legal ggprivilege (assuming it might be available)? With potential SOX, serious fraud or related lltiitbd i bl tt t thallegations, it may be advisable to start the investigation under privilege and decide to waive it later if necessaryy Outside counsel is recommended for serious fraud Allegations with SOX or criminal ili tihld lfili ilfimplications; you should also familiarize yourself with any whistleblower protections that might be applicable5applicable Competent, experienced investigation specialists should always be used. Remember, step 2 Planning & LeadingPlanning & LeadingStep 2 Planning and LeadingPlanning and LeadingCommunication Planning Establish a need to know list of those entitled to know about the investigation and related activities Who needs to know about Allegations and/or need for/status of investigation? Management?

5 External Affairs? Security? CFO? Legal? HR? Board of Directors? What method of communication will be used for dt ?7updates? Who will be responsible for each communication?Wh t ill bid t th Cl it (iStep 2 Planning and Leadingag a d ead gInvestigation Planninggg Create an Investigation Plan; this is a flexible g;document, fit for purpose. DO NOT SKIP THIS step ! Prepare a chronology of facts known and Allegations made Assess - what are the issues? Who may have relevant 8information/documents? Who should be interviewed and in what order? step 2 Planning and LeadingPlanning and LeadingInvestigation Planning (cont )Investigation Planning (cont.)Order of InterviewsIssues &Order of Interviews Issues & Considerations Investigation Subject vs other Investigation Subject vs. other Interviewees Putting Investigation Subject on notice, if Putting Investigation Subject on notice, if that person will not be immediately interviewed9 Logical development of the facts Desire to avoid or defeat collusion among step 2 Planning and LeadingPlanning and LeadingSetting up a Case FileCase FileChronologyCommunication Investigation Chronologyplanplan(ultimately) Your final reportInterview notesOther notes(conversations with mgt.))

6 , Legal)Documents10 step 3 Fact Finding & InterviewingFact Finding & InterviewingStep 3 Fact Finding, Interviewing and Re-interviewingFact Finding, Interviewing and ReinterviewingConducting the effective interviewWhat is the goal? Developing the factsElt ?Elements? Planning Arranging Arranging Opening Conductingg Note taking Closing12 Note: A good primer on protections for whistleblowers (particularly in SOXStep 3 Fact Finding, Interviewing and Re-interviewingg,ggInterview planningInterview planning Think about the big picture; the issues, the Think about the big picture; the issues, the documents, the parties, the implications ( , government reporting, regulators, fii ltilftfinancial reporting law enforcement, press and publicity, etc.) Familiarize yourself with all relevant Familiarize yourself with all relevant information/documents gathered to date Know about your interviewee: background, 13yg,personal interest in the matter, reputation Know what information you want him/her tiStep 3 Fact Finding, Interviewing and Re-interviewingFact Finding, Interviewing and ReinterviewingInterview arrangementsInterview arrangements 2-1 rule of thumb1I t i1N ttk 1It i 1 Interviewer, 1 Note-taker, 1 Interviewee Union environment or other local requirements may mean interviewee isrequirements may mean interviewee is accompanied by person of his or her choice Private location free from distractions; away Private location free from distractions.

7 Away from workplace if appropriate 1 interviewee at a time with little time in 14between for interviewees to discuss/collude No taping of interviews or lawyers for step 3 Fact Finding, Interviewing and Re-interviewingFact Finding, Interviewing and ReinterviewingInterview opening Consider need for Upjohnstatement as well as noting privileged nature of the investigation if applicable; state the corporation s policy toapplicable; state the corporation s policy to protect whistleblowers from retaliation Dress appropriately for the situation. ConveyDress appropriately for the situation. Convey calm, serious nature of discussion and orderliness Turn all electronic devices off and ask interviewee to as well Explain the reason for the interview (i e15 Explain the reason for the interview ( , Investigating complaint of conduct in violation of code of conduct, policy, allegation of fraud or step 3 Fact Finding, Interviewing and Re-interviewingFact Finding, Interviewing and ReinterviewingConducting the interviewConducting the interview Be calm, professional and respectfulDt li t btbth Do not lie to.))

8 Berate or abuse the interviewee Li tf ll t i tid Listen carefully to interviewee and consider his/her body language Think about what is being said and how Think about what is being said and how that fits into the story as you know it Be prepared to deviate from your pre16 Be prepared to deviate from your pre-planned questions if a lead comes up If in doubt take a break and seekStep 3 Fact Finding, Interviewing and Re-interviewingFact Finding, Interviewing and ReinterviewingInterview questionsq (Usually) ask open-ended, non-leading questionsquestions (Usually) ask questions in a chronological and ordered way; break them down if y;necessary. Be alert for answers you did not anticipate ypand follow the lead Silence is golden let your interviewee fill 17the gap Explore the interviewee s attitudes; are step 3 Fact Finding, Interviewing and Re-interviewingFact Finding, Interviewing and ReinterviewingInterview questions (cont.)

9 Q() Be stubborn in obtaining the specifics Who? What? When? Where? How many? Who? What? When? Where? How many? Is knowledge firsthand or something heard from another?from another? Probe characterizations show vs tell ( he was angry ) Ask for relevant documents, physical evidence18 Leave and return to key subjects Ask about others who might know step 3 Interview Questions (cont.)Interview Questions (cont.)Complainant, whistleblower or others bringing forward Allegations : respectfulness, assurances on policy enforcement, confidentiality, no retaliationlili blt confidants: who did you speak to? who else has information? explain applicable corporate codes of conduct and policies and provide copy importance of pinning down Allegations witnesses to any prior relationship with alleged wrong-doer what effects did the alleged violation have on theallegations, witnesses to incidents, relevant documents what facts support Allegations of fraud lack ofviolation have on the business or customers?

10 Consider: do you take written statement from this witness? Allegations of fraud, lack of compliance understand what this person knows and how they know itwitness? consider asking about interim measures that could be needed to preserve idt19evidence, prevent spoliation, and stop on-going fraud, 3 Interview Questions (cont.)Interview Questions (cont.)Investigation subjectgj Provide and explain company policies and corporate codes of conductcorporate codes of conduct Review any applicable standard operating procedures or practices that might apply pp gppy(prevalent in areas of financial reporting, operations integrity, etc.) Interview early or late in process? If interviewed early, may want to re-interviewDtkittttt?20 Do you take a written statement? Investigation subject s motiveIfthittt tlitStep 3 Fact Finding, Interviewing and Re-interviewingFact Finding, Interviewing and ReinterviewingInterview closingg Clarify any points you are not sure of Ask if there is anything else you should Ask if there is anything else you should know Follow up on any documents you have pyyrequested from the interviewee Reiterate corporate policy on fidti litdtlitid iconfidentiality and non-retaliation and give interviewee a note with your contact details if the person has follow-up21details if the person has followup questions Explain the next stepsStep 3 Fact Finding, Interviewing and Re-interviewingactd g,teeg a d eteegDocument gatheringgg Do you have copies of the law/regulations, policies, internal codes of conduct or otherpolicies, internal codes of conduct or other requirements that are alleged to have been violated?