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Tears in the fabric

August 3, 2020, The Law Society Gazette

Ian Hargreaves spoke with The Law Society Gazette about the increase of internal investigations through the COVID-19 pandemic. Mr. Hargreaves says “If you want to retain privilege over a document mark it ‘Privileged and Confidential’. It may not ultimately be treated by a court of law as such, but it will help to carve out what the team regard as covered by privilege and can buy you time if you have to have a fight in court as to whether a document is privileged or not.”

He observes that investigations rarely commence as a result of competitors’ complaints. “However, tip-offs and investigative journalists can lead to competitors or commercial customers putting companies under financial pressure to act, leading to internal investigations,” he adds. “See the Boohoo investigation and the pressure it is now under as a consequence of customers, such as Next and Asos, dropping it.”

He notes that this is “particularly prevalent in the area of ‘modern slavery’ which is becoming a significant issue for many companies, especially in the retail and manufacturing sectors.”

Mr. Hargreaves goes on to say it should include a “trusted internal team of experts” encompassing IT, HR, data security, finance, compliance, media and PR, corporate governance, and legal. “Have a clear chain of command and ensure the leader of the investigation has room to consider the issues, options, and strategies,” he says.

As firms seek outside help, he says, “Consider the very serious consequences of not making a disclosure,” citing the Proceeds of Crime Act 2002. “Certain offences offer leniency where you are the first mover and therefore it is important to decide from a strategic point of view how quickly you make an announcement and whether you should be the first affected company to make a report.”

If it is about a data breach or a product liability issue the earlier the better; but if the matter relates to a fraud or a serious employment complaint, early communication “may prejudice the whole investigation as the suspect destroys evidence, hides assets, manipulates evidence, and puts pressure on potential witnesses,” he says.

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