Investigating from Home: Managing Whistleblower Complaints and Investigations Remotely

Compliance and ethics reporting, investigations and monitoring remain essential business functions during the pandemic as companies face increased risk of misconduct and whistleblowing.

The economic fallout created by COVID-19 may increase business, legal, compliance and regulatory risks. Pressure and anxiety from job losses and decreased revenues, reduced oversight and modified controls, and individuals’ ability to rationalize misconduct as necessary in a crisis all facilitate misconduct. Whistleblowing may also increase because of layoffs, idle time, the proliferation of social media and potential alternative streams of income from whistleblower bounty programs, such as those offered by the Ontario Securities Commission. While organizations are understandably focused on managing the ever-changing realities of the pandemic economy, it is important to ensure current reporting and investigative protocols remain effective and are adapted to current conditions.

Without effective internal reporting and investigation processes, there is enhanced risk that current or former employees will utilize external avenues to report misconduct, such as to regulatory authorities or through traditional or social media, or that misconduct will continue undetected. This risk is exacerbated if conventional compliance programs are not re-examined in the context of remote work arrangements. To ensure ethics reporting and response systems remain functional in a remote work environment, companies should:

• Ensure reporting mechanisms are operational and accessible: Confirm that all aspects of ethics reporting and investigation tracking mechanisms maintained in-house are accessible remotely. Companies that rely on third-party providers to manage their ethics hotlines should ensure those providers are still operational.

• Communicate: Consider distributing tone at the top communications to employees reminding them of internal reporting mechanisms. Where necessary, changes to compliance systems should be communicated to employees.

• Continue to investigate: Incidents where the harm is ongoing will likely require immediate response, as will serious allegations against senior corporate officers, where serious criminal or reputational issues have been raised, or where the implications arising from the allegations would be potentially material to a company’s business. Many regulators continue to operate as if it is “business as usual.” Layoffs or early retirements making witnesses uncooperative or unavailable call for advancing investigations, where possible. Additionally, a backlog of unresolved allegations could motivate whistleblowers to reach out externally or allow improper conduct to continue.

• Adapt investigations to current realities: Do not let perfection become the enemy of the good. While social distancing makes certain conventional investigation steps difficult or impossible, such as in-person interviews, companies should utilize electronic document collection and review tools and videoconference interviews to advance investigations.

• Continue to protect privilege: If interviews are conducted by videoconference, companies need to consider the complex issues of privilege relating to, for example, recording the interview and the presence of third parties in a work-from-home environment. Also, sharing documents by way of videoconference may engage data protection laws, as well as confidentiality and privacy issues. Careful consideration should be given before records are shared electronically in the context of an investigation.

In addition to examining and enhancing whistleblower processes, companies can use this remote working time to enhance their compliance programs in a number of ways, including:

• Carefully examining any changes to the supply chain for compliance risks, including conducting risk-weighted due diligence on third parties to screen for corruption, competition, sanctions and other risks.

• Finding ways to keep compliance top-of-mind for business personnel as they navigate COVID-19-related challenges through written compliance updates or videoconference calls.

• Using time usually spent on travel or daily commutes to focus on compliance projects that can be accomplished remotely, such as desktop audits, continuous monitoring projects and risk assessments.

• Considering opportunities to fill unused meeting time with videoconference compliance training or round tables, including discussions to further tailor compliance processes to business needs.

CONCLUSION

Businesses must remain vigilant as new operational realities enhance the risk of misconduct and make detection more challenging. Pre-emptively engaging in an assessment of risk management tools and continuing to investigate potential serious misconduct remains essential in these difficult times. Failing to respond to allegations of misconduct may have reputational and/or legal consequences that last far longer than the pandemic.

Blakes lawyers can assist with implementing or enhancing the reporting and investigative mechanisms and procedures set out above. We are also frequently asked to advise and assist with whistleblower complaints and conducting internal investigations.

For further information, please do not hesitate to contact a member of our Business Crimes, Investigations & Compliance or Competition, Antitrust & Foreign Investment groups, or your usual Blakes contact at any time.

Please visit our COVID-19 Resource Centre to learn more about how COVID-19 may impact your business.