Learning from Experience: How General Counsel Can Get the Most out of Investigators

Richard Blaksley is a Senior Advisor to S-RM with 30 years’ experience in the investigations and corporate intelligence sector. Here, he shares case studies from his international career to highlight important lessons when selecting and working with external investigators. 

Richard Blaksley: To borrow a quote, ‘An investigation is like open-heart surgery; you do not want to need it, but if you do need it, you really do not want to do it yourself.’ The mandate of general counsel is wide, ranging from regulatory investigations, dark PR, IP theft and adverse employee cases through to confidentiality breaches and senior management indiscretions.

An unlucky general counsel may face two or three major investigations in a year, and the chances of them replicating each other are slim. An experienced investigations firm will likely manage 30 or 40 per year and will have learnt lessons from every single one. That experience and the wisdom gained – from successes as well as mistakes – is there for the asking.

Every wise business builds its defences and rehearses its response to damaging events or individual attacks. As a result, it should be very rare that those defences are breached. But when they are, the business may lack the experience to respond to a really tricky and unfamiliar situation. Where that experience exists and continues to grow is with organisations that do nothing but conduct investigations. It is better to learn from other people’s mistakes and experience than from your own.

Student pilots are taught one inviolate set of priorities when faced with a problem: aviate, navigate, communicate. In other words, ‘fly the plane – everything else is secondary.’ The same rule applies to a company; in a time of difficulty, every sinew of executive experience and effort must be put into managing the business and calming the stakeholders.

It is not the time for executives to try their hand at an investigation. However, it is essential that the general counsel remains well informed as a bridge between the investigators, stakeholders, and the board. And first and foremost, if you are bringing in an investigations firm, you need to choose wisely. Everyone wants results, and over-enthusiastic, ill-disciplined investigators can sometimes be desperate to show their worth. Every step, every action and every fact in an investigation must withstand legal scrutiny. Careless handling of personal data, improper access, or misrepresentation to third parties can all be fatal to the positive outcome of an investigation.

"If you do not understand the motives of those you investigate, you will struggle to unravel their actions."

I would advise trying to get inside the head of a bad actor and seeing things from their perspective. The general counsel reading this, and the people they work for and whose interests they represent, will (for the most part) be on the ‘good’ side; investigators and general counsel tend to share standards, policies, compliance rules, morals and ethics.

The subjects of an investigation are likely to know those rules yet believe they do not apply; they are there to be broken or simply provide a reverse template from which to act. If you do not understand the motives of those you investigate, you will struggle to unravel their actions. But in unravelling them, do not get drawn into acts that could compromise the investigation. You will have started this process from the moral high ground; do not allow others to drag you off it.   

Remain inquisitive, challenge the obvious and suspect the worst; some people will say a glass is half full, others will say it is half empty. A good investigator will assume that it is a theft in progress.

In 1998 my life had become consumed by a search for Pakistani national assets believed to have been stolen by Benazir Bhutto and her family. The hints were legion, but the trail was cold and the evidence lacking. As our frustrating work inched on, it became known that we were looking. One evening a call came into the office and a strange man asked for a meeting. He looked untrustworthy and sounded like a fantasist.

But over time it transpired that he had served for many years as Benazir’s private consigliere, carefully maintaining duplicate records of each ‘consulting’ contract, every personal transfer, offshore bank account and holding company. It would have been so easy to have dismissed him, judging him on initial appearances, but the experience reinforced one golden rule: never ignore a ‘walk in.’

Secrets need custodians, and a common flaw of those who most need their secrets maintained is to overlook the custodian. Another example involved a successful investigation into a privatisation fraud by an investment house in Baku, which ultimately hinged on the witness testimony of a young intern who had worked innocently yet diligently for the chief protagonist. He was dismissed without notice when it suited his boss to hire someone else. The intern repaid the investigators’ attention and courtesy with a perfect recall of events.

Never overlook the obvious explanation. General counsel and senior executives are used to solving complex problems, but sometimes in an investigation the least sophisticated answer is the right one.

In 2004 I was instructed by a leading bank in Hong Kong, a division of which provided financial administrative support to the managers of large commercial buildings. Fraud was suspected – stolen cheques had been presented drawn on accounts linked to various of the buildings, each of which was served by a single purpose company with its own account and chequebook. Internal investigators had interviewed multiple employees and interrogated all those with access to the safe that held the chequebooks. All had convincingly pled innocence and ignorance.

Mistrust was running high across a formerly close-knit department. The office atmosphere had become toxic, and thought was being given to polygraphs and summary dismissals. Prior to seeing the whole business torn apart, we checked the various administrative protocols, and learnt that the keys to both the office and the safe were kept in a flowerpot by reception so that the cleaners could let themselves in at night!

Choose any outside investigators carefully, based upon what you need and what they know. The firm that was so successful in helping resolve a European supply chain fraud last year may not be the best choice to investigate an IP abuse in India this year.

Ask demanding questions of any firm about its relevant experience in the specific, narrow field of your current requirement and ruthlessly push it to explain its approach and its methodology. If those charged with addressing your problem cannot clearly explain how they will go about it, the methods they will adopt, the budget rationale, the timeline and the outcomes to expect – then consider engaging someone else.

Organisations typically only get one shot at resolving a problem; do not allow anyone to make it worse.

"Choose any outside investigators carefully, based upon what you need and what they know. The firm that was so successful in helping resolve a European supply chain fraud last year may not be the best choice to investigate an IP abuse in India this year."

THIS ARTICLE IS PART OF S-RM’S LATEST REPORT ‘IN THE EYE OF THE STORM: INTELLIGENCE AND THE CHANGING ROLE OF THE GENERAL COUNSEL’.

DOWNLOAD THE FULL REPORT HERE.