Internal company investigations are becoming increasingly relevant!

Perpetrators and managers in the focus of investigating authorities

In recent years, companies have increasingly found themselves in the sights of investigating authorities. While public prosecutors used to prosecute almost exclusively the actual "internal offenders" in cases of initial criminal suspicion, they are now increasingly examining the extent to which company managers have reacted adequately to possible suspicions of criminal offenses in their company.

Inadequate measures often lead to accusations of criminal liability for failure to act or at least a breach of the duty of supervision. If the transaction triggers tax consequences, the authorities also check whether the correction obligation has been breached and, accordingly, whether the management is liable to prosecution for tax evasion.

Further explosive effects of the Whistleblower Protection Act and the Supply Chain Due Diligence Act

The mandatory implementation of new and secure channels for reporting potential grievances following the Whistleblower Protection Act or the Supply Chain Due Diligence Act will lead to an increase in reported incidents, which must be assessed by the company management and contain documented information on any compliance-relevant processes. It is therefore very important for those responsible to investigate possible suspicious situations immediately and not to make any mistakes - an almost impossible task for a legal layperson.

Internal company investigations - but how?

Carrying out the necessary investigations poses major challenges, especially for medium-sized companies, as - unlike many large corporations - they do not have specialized departments or employees for this purpose due to their size. Due to the objective independence and neutrality required in the investigation of any wrongdoing, conflicts of interest can also arise due to overlaps in the areas of responsibility and competence.

Wide range of criminal offences in companies

In addition to the "classics" of corporate offenses such as corruption, breach of trust, balance sheet manipulation, or embezzlement, harassment incidents can also be relevant under criminal law.

Irrespective of the specific allegation, numerous legal and organisational pitfalls must be taken into account in the course of the investigation, which may require the involvement of further expertise, e.g. from employment law, antitrust law, or data protection law, in addition to criminal law know-how. Accounting and tax issues often also need to be clarified promptly.

Document the process precisely, observe deadlines

The first step in any internal investigation should be to check which specific offenses may be involved. This should be documented accordingly. Without such measures, no meaningful and targeted investigation can take place.

Note: The initial categorisation may need to be adjusted over time due to additional or other findings obtained in the course of the internal investigation.

This classification not only determines the legal framework of the investigation but must also be ensured at an early stage that any reporting and notification deadlines that may arise from criminal law, tax law, or labour law are observed. In practice, company managers are often held accountable for errors in this regard.

Offences such as corruption or breach of trust in particular are extremely complex, meaning that an examination of the facts is necessary at an early stage. It is not uncommon for poorly focused investigations to result in unnecessary costs that ultimately require extensive follow-up work.

Labour law measures against a potential offender must be taken with caution. Even if there may be a strong desire to terminate the employment contract as soon as possible, mistakes in the investigation can be very expensive and even jeopardise the results of the investigation completely.

Means of internal investigations

Investigative measures within the scope of an internal company investigation usually include process recordings, employee interviews, questioning/hearing the possible "perpetrator" (so-called forensic interviews), background research on natural and legal persons, evaluating and analysing structured and unstructured data, conducting e-mail reviews, inspecting the workplace and, of course, reviewing documents. The type and structure of the specific investigative activities must be individually designed for a successful internal company investigation and depend in particular on the potentially relevant offenses, the availability of information sources, legal framework conditions and time requirements.

The numerous legal requirements should be observed in all steps - for example, an unauthorised review of an employee's email account can quickly lead to criminal liability.

An internal company investigation "state of the art" follows a structured investigation strategy that harmonises and coordinates the investigative measures adapted to the individual case and takes into account the legal and time frame. Only in this way can the investigative measures lead to success and (legal) pitfalls be avoided

Involvement of investigating authorities

In addition to the internal clarification measures, it must be checked throughout whether, and if so, at what point in time, the investigating authorities should be informed of the events. If there is an obligation to report, the relevant authorities should certainly be contacted at an early stage. It may also be advisable for the compliance culture in the company to report certain matters. A decision must be made on a case-by-case basis.

In any case, surprise visits by the authorities should be avoided wherever possible. Searches are certainly one of the most unpleasant events that a company can encounter. However, such measures can often be avoided by conducting a comprehensive internal investigation into possible criminal offenses and cooperating with the investigating authorities in this context.