Undertaking employee investigations into allegations of fraud and bribery

Many organisations have to take disciplinary investigations in relation to alleged staff misconduct in relation to fraud (and/or bribery and corruption).  Often the HR department is involved, working alongside Internal Audit or a Compliance Team.  However, such arrangements can often call into question HR’s advisory role and the need to be impartial.   

It is tough out there 

Employees and trade unions are increasingly sophisticated; they are fully aware of their rights and the ways in which investigations must be conducted.  In addition, there is easy online access to support and guidance, as well as a host of firms willing to challenge your decision. 

An objective, impartial and professional investigation is critical, as any advice outside the scope of procedural or legal guidance, or influence by HR in the course of the investigation could render any resultant dismissal as unfair.  It is highly improbable that all parties will agree with the outcome of an investigation so an impartial prompt, lawful and proportional response is the best way to avoid challenge, as well as build trust and moral in the workplace. 

It is easy to fail 

Given the complicated nature of many investigations, combined with those tasked with undertaking the investigation often being untrained (it is not their day job), making mistakes is a common feature. Delay, unfair treatment, inconsistency and failing to secure evidence correctly are just a few of the many pitfalls that can play into the hands of those seeking to turn a decision to dismiss into an unfair one. 

Rather than challenge the facts surfaced during the investigation; more often it is the investigation process that is challenged, and any opportunity to render evidence as inadmissible is pounced upon. 

Why is it so difficult? 

There are a variety of instances when an investigation is necessary, for example: 

  • Misuse of IT systems material contrary to your IT policy; 
  • Theft of commercially or personally sensitive data; 
  • Abuse of travel and subsistence polices; 
  • Failing to declare conflicts of interest; 
  • False absenteeism (including working elsewhere whilst sick, running a personal business whilst employed as a member of Staff, timekeeping and attendance issues); 
  • Failure to comply with procurement procedures; 
  • Theft of cash and assets. 
  • Acceptance (or giving) of gifts and hospitality and bribery. 

However, the investigation needn’t be overly complicated or difficult. Whilst the cases can vary wildly, the process should be the same. 

There can be a number of outcomes: the person can be shown to be innocent, or there could be enough evidence to pursue disciplinary, criminal, civil, and / or regulatory proceedings. It is a mistake, therefore, to make assumptions from the outset as to what the result will be – this will play into the hands of the defence.  It can also leave you with inadmissible evidence as the level and burden of proof is different in criminal proceedings (beyond reasonable doubt) to that of civil and disciplinary proceedings (on the balance of probability) and requires different standards of evidence collection and handling. 

An important, but often overlooked part of any investigation is to undertake a ‘root cause analysis’ to help you better understand any enablers (policy / control weaknesses etc) that facilitated the matter. 

How can you get it right? 

All identifiable fraud risks should be mitigated by appropriate polices and controls that are operated to the depth and frequency necessary to provide assurance, so ask yourself: 

  • When did you last undertake a fraud and / or bribery risk assessment (strategic and operational)? 
  • Do you have the expertise to respond to and undertake investigations (criminal, civil, disciplinary, regulatory) or do you require training or external support? 
  • Is your counter-fraud / bribery strategy properly designed, up to date and working… and how often are your key polices and controls evaluated for relevance and effectiveness? 
  • Would your staff know what to look for and how to respond to suspicions of fraud, and how effective are your whistleblowing arrangements? 
  • Have you undergone (or are planning) any major changes in personnel, structures and / or systems?  If so, have the fraud risks and controls been re-visited? 
  • What is your anti-fraud / bribery culture and what is the quality of the fraud awareness training (if it is) provided to your staff? 
  • How effective are your pre-employment vetting and due diligence processes? 

To avoid falling into the trap in which the impartiality of the investigator can be called into question, it is crucial to be fair, objective, lawful and proportionate and to comply with relevant legislation and guidance. Evidence should be gathered and retained across all media in a manner that ensures it remains admissible, and interviews must be conducted to standards which ensure interviewees are treated lawfully and fairly under relevant laws and organisational policies and procedures. Following best practices and keeping to the letter of the law should ensure any investigation is conducted properly, and far less open to challenge. 

Some simple ‘do’s and don’ts’ when it comes to investigations: 

  • DO take all referrals and complaints seriously.  Encourage staff (and think about how you can extend this to Clients, Suppliers and Contractors) to report concerns before they escalate, and without fear of retaliation.  We’re great at responding to fire alarms, so why not fraud?  Facilitate multiple routes to raise complaints, including their own or other Supervisors and HR, or externally as a last resort. 
  • DON’T panic.  Have a Fraud Response Plan ready so that people know what to do.  Create an Investigations Policy by identifying what issue(s) you are trying to resolve, what data / documents to review and who / when to interview.  Think about continuity of evidence so that your evidence remains admissible and be clear on what it is that you are investigating and the points to prove. 
  • DO remind staff and other parties of their roles and obligations; ensure staff are trained in fraud awareness so that they know what to look out for and how to report concerns. 
  • DON’T jump to conclusions.  As an investigator, your role is to establish the facts and gather evidence.  You must remain impartial and objective. 
  • DO treat all parties with respect.  Research has shown that employees who feel they treated unfairly during their employment (and especially when under investigation) are five times more likely to push for unfair dismissal. 
  • DO keep accurate records.  Include a chronology of events, a list of witnesses, the facts of the case, any evidence you secured. 
  • DON’T promise confidentiality.  You can however assure the involved parties that you will treat all information with the utmost sensitivity and keep the number of people involved to a minimum.  However, you should remind them of the organisation’s duty to ensure whistle-blowers suffer no detriment. 
  • DO draft a close-out report that includes allegation, applicable polices, parties interviewed, evidence reviewed, facts identified, breaches of law / policies, conclusions reached, and actions taken. 
  • DON’T do anything illegal or in breach of company polices. 
  • DO seek legal counsel

If you would like any further information on how we help clients minimise the threat of fraud 

or if you would like specific support, please contact our Advisory Team