What is an Internal Investigation?
It is important to note that internal investigation is a dynamic and multidimensional concept that has been defined many times, although there is no single and precise definition.
Internal investigations can be defined as;
"In the geographies where companies operate;
- Determining whether there are actions and behaviors defined as compliance violations in binding national and international legislation and internal regulations,
- determining the extent of the breach, if any,
- taking appropriate measures to address the violation,
- identifying losses and damages incurred or likely to be incurred,
- identifying ways to remedy these damages and losses are investigations with the objectives of the investigation."
In other words, the company conducts an internal investigation to determine whether legal regulations and internal ethical principles, values, and policies have been violated and, if so, recommend corrective actions.
When Can Internal Investigations Be Conducted?
Internal investigations may be conducted by companies upon i) notifications sent by company employees and/or ii) third parties, or iii) ex officio determinations regarding situations that constitute a violation of national and international binding legislation, company policies, procedures and regulations, company ethical principles and values, or conflict of interest.
How to Obtain Information about the Event Subject to Internal Investigation?
It is possible to gather information about the incident subject to internal investigation from internal and external sources. Examples of internal sources include i) ethics reporting channels (hotline or weblink), ii) reporting directly to the manager or the relevant department, iii) reporting to the relevant board of the company (disciplinary, ethics, compliance, etc.), iv) company internal audit reports, v) company compliance reports, ex officio review request of the legal or compliance department, etc.
External sources can be exemplified as i) notifications made by customers, suppliers, or other third parties, ii) provisions of laws and other legislation, iii) requests for information and/or documents by regulatory and supervisory bodies, iv) precedent cases and judicial decisions, v) official letters from public institutions and organizations, and sources from press and media organizations.
Internal Investigation Processes
First, it is worth mentioning some crucial processes essential to conducting a credible and defensible internal investigation. The procedures listed below provide a standardized methodology for anyone wishing to conduct such an investigation, following five main basic steps:
- Initiation of the investigation,
- Collection and evaluation of evidence,
- Conducting interviews,
- Analysis of the results,
- Reporting of results.
The steps followed during an internal investigation must be company-specific to ensure the process is healthy and solution-oriented. By using these basic steps, it will be easier to establish a standard system that can be developed and adapted to situations and circumstances that can help anyone authorized to conduct an internal investigation, including senior employees and partners, to conduct a reliable internal investigation when necessary and/or in the event of a possible internal investigation.
In order to make internal investigation processes more systematic and faster, companies may prepare internal written regulations under titles such as "internal investigations manual/policy/guideline/procedure," where basic steps are regulated. Here, having a written regulation as a guideline during the internal investigation prevents key details from being overlooked during planning. While investigating the problems that caused the incident subject to the investigation, taking quick action to solve the problem as soon as possible may cause mistakes that will deepen the crisis in some cases. For this reason, it may be healthier to proceed from a guideline text that includes steps written in the internal investigation process, in accordance with current legislation, considering company dynamics and sector-specific basic regulations.
Dynamics of Internal Investigation
By their nature, internal investigations involve accusations or allegations against employees or managers within the company. Therefore, it is essential to conduct them in a measured, diligent, and planned manner, taking into account essential principles such as confidentiality and equality.
If these investigations are not conducted with utmost care and diligence, they can lead to:
- Damage to the employees' sense of trust in the company and disruption of working peace,
- Employees initiating a complaint process against the company to the competent bodies of state institutions,
- Employees filing lawsuits against the company under Criminal Law, Labor Law, Personal Data Protection Law, and other relevant legislation regarding certain sanctions and compensation liability,
- Damage to the company's brand value, and
- Loss of the company's reputation.
Therefore, to mitigate the risks listed above, it is necessary to pay close attention to some critical aspects of the internal investigation process.
At all stages of internal investigation:
- Observing fundamental principles and standards including, but not limited to, i) confidentiality, ii) proportionality, iii) equality and consistency, iv) transparency, and v) prevention of double punishment,
- Complying with binding national and international legislation in the geographies where the company operates,
- Taking into consideration regulatory and supervisory bodies specific to the sector in which the company operates, and
- Complying with the basic principles and principles set out in all internal regulations of the company, are essential.
It should not be forgotten that only a well-executed internal investigation can identify the sources of the company's current losses, eliminate the losses incurred, and prevent future losses by paving the way for eliminating internal control, audit, and management weaknesses that cause misconduct/violations. It also helps the company defend itself against legal proceedings initiated by employees whose employment is terminated based on objective and impartial findings based on an internal investigation report.
In addition to the above, it is also essential to assess the critical dynamics of i) whether the investigation is conducted at the international level, ii) whether the rules of international law are taken into account, iii) whether it is linked to third parties, iv) whether it goes beyond the scope of the company's investigation, v) whether it violates the privacy of employees' private life during the investigation process, vi) whether the attitudes and behaviors during the investigation process are offensive to employees' freedom of expression and personal rights.
Importance of the Internal Investigation Report
Internal investigation reports should generally be written in an objective structure that includes all rational explanations for each allegation and sets out all findings. Companies can adopt a flexible approach to preparing internal investigation reports according to their specific needs.
In line with the global characteristics expected from a good investigation report, investigators should not act as decision-makers in the internal investigation report in any way except for the determination or possibility of a compliance violation based on the available evidence. The report should not comment on or assess the consequences of a breach of compliance, nor should it provide a definitive opinion on the actions that can be taken regarding labor and criminal law.
Internal investigation reports containing such statements may cast a shadow on the principles of impartiality and objectivity and may lead to a deterioration of trust in the company's management and operational processes, particularly in worsening labor peace.
Suppose it is determined that the subject of the investigation is due to a deficiency in the company's compliance, control, and monitoring processes. In that case, the remedial and corrective action plan created under the leadership of the Legal, Compliance, and Internal Audit departments with the support of the relevant unit (e.g., Human Resources, IT, OHS, Finance and Financial Resources, Corporate Communications, etc.) should also be attached to the investigation report.
The investigator should consider that the internal investigation report will not only be read within the company but may also be read by the audit bodies of state institutions or courts in the event of a possible complaint or judicialization of the incident. For this reason, the content and how to protect the confidentiality of the report are significant for the investigator and, naturally, for the company's senior management.
Some Basic Considerations in the Preparation of the Internal Investigation Report
First of all, it should be remembered that preparing an investigation report requires case-specific and meticulous planning. Even if the subject and the incident are the same, the conditions at the time of the violation, the relevant legal regulations, the position, and character of the person(s) who committed the breach, and the root causes of the incident may differ in each investigation.
Basic principles such as accuracy, clarity, impartiality, relevance, and the chronological narrative method should be observed during the internal investigation reporting phase. Some fundamental issues to be considered in the preparation of the internal investigation report include, but are not limited to, the following:
- In order to ensure a clear understanding of the allegations, the report should be designed in a structure that includes the content of the report and all rational explanations for each allegation.
- If there is more than one person subject to the investigation, each allegation, basis, and evidence should be evaluated separately for each person, taking into account the whole incident.
- Minutes of the interviews subject to the report should be taken in a timely manner, the necessary information should be provided to employees before the interviews, and consent texts should be obtained.
- The text of the report should be sufficient to answer the facts such as "who, what, when, where, why, and how."
- All information relevant to the subject matter of the allegation should be included in the report, regardless of which side it benefits or what it proves or disproves; in other words, in line with the principle of impartiality, it should be reflected in the report that the subject matter of the investigation has been evaluated in all aspects in the report.
- The report should contain all the facts, avoid vague, hearsay, and opinionated findings and comments, and include unbiased evidence that is not influenced by prejudices.
- No judgment should be made in the report; the investigator should not make personal comments, and the internal investigation report should not be written in accusatory and unofficial language.
- While preparing the report, ethical principles and rules of compliance with the law should be observed, issues that are not related to the subject of the investigation, which may interfere with the private life of employees, should not be included in the report, and issues such as Personal Data Protection legislation and privacy of private life should be meticulously and diligently taken into account in internal investigations.
Internal investigations are critical processes that should be emphasized meticulously for companies. In order to conduct a good internal investigation, completing all procedures in accordance with legal regulations and in a complete manner will provide many benefits to companies both in terms of reducing the effects of the violation and taking preventive actions. However, failure to reflect an effective and successfully conducted investigation process with all its stages in the reports will cause such benefits to be unrecognized. For this reason, it is of utmost importance that reporting, which is one of the critical processes of internal investigations, is designed by taking into account basic principles such as accuracy, clarity, impartiality, relevance, and the chronological narrative method.
A good investigation report should conclude the investigation clearly. It should include all stages of the investigation, interviewee statements, findings, and evidence obtained, the investigation process, and the rational conclusions reached. The internal investigation report should clearly and concisely answer the investigation's root causes, how the investigation was conducted, the evidence collected, and how each finding was concluded. The preparation of internal investigation reports should aim to reflect only the truth, presenting the facts, evidence, and conclusions clearly and objectively, without prejudice or presumption.
However, it should be kept in mind that companies may need to prepare transparent, objective, and compliant reports, taking into account that these reports may be requested by courts or government agencies in legal processes or official audit procedures. In this context, since it may be possible that the investigation reports may be presented as evidence in a potential trial phase - considering that it is a public trial - special attention should be paid to the language and content used in order not to create a breach of confidentiality and not to cause severe moral and moral damages to the company. For this reason, investigators should prepare their reports meticulously, taking into account that topics such as the disclosure of company secrets, attacks on personal rights, and/or interferences with the privacy of private life may be subject to litigation before judicial authorities.
Zeynep İnceer Üçgül
Ayşe Gönen Anaeli