20150814_154034 The Impact of Korea’s New Anti –Corrution Laws On Internal Investigations

Korean companies are now faced with issues that they have not had to deal with before- namely anti-corruption domestic laws ( the  Kim Young-Ran Act or the “Act”) that provides criminal penalties for bribery, vicarious liability extending criminal penalties not only to the employee but the  employer as well and expanding bribes to also include the exchange of monetary interest without a duty relation component.  This puts Korean companies in a difficult position domestically as not only do Korean companies have to worry about prosecution under the new Act, but they also should worry about how this relates to the FCPA and UK Anti-Bribery Act.  If found guilty under the Foreign Corrupt Practices Act (FCPA) or the UK Anti-Bribery Act, there is now the distinct possibility that Korean companies could also face domestic prosecution under the Act.  As Korean companies did not have to worry about prosecution at home in Korea if convicted of FCPA violations in the US, Korean companies never had to take international corruption or anti-bribery laws that seriously.  Now, faced not only with expanded and more rigorous corruption laws domestically (besides increased enforcement of anti-trust and competition laws), companies operating in the Korean domestic marketplace have renewed concerns concerning corruption and bribery issues and the potential criminal liability resulting from the enforcement of anti-corruption and anti-bribery laws. What to do?

1.  How Should One Prepare for the New Corruption Laws In Korea?

It is clear there will be an increased focus on abolishing corruption in Korea and efforts to implement and enforce the Act will continue unabated. Moreover, with the adoption of the vicarious liability provision, there will be greater pressure upon companies to secure the compliance of their employees.  Thus, companies operating in Korea will have to take actions to mitigate the risks associated with violation of the Act.

What should companies do? Of course they need to establish a robust corporate compliance program as well as revise the ones already established, if any, to meet the high standard of conduct required by the new Act.   However, besides considering compliance guidelines or a code of conduct, companies are now under great pressure to implement guidelines and procedures covering internal investigations as well.  Early identification of wrongdoers within a company or organization may help limit a company’s criminal and civil liability under the Act but also the FCPA and Anti-Bribery act. 

2.  What Should Companies Consider When Contemplating Internal Investigations?

Conducting an investigation can be  an emotion-charged, time-consuming process that requires expertise and effective planning. Managers and other staff who investigate sexual claims in an organization including corruption or bribes, harassment, discrimination, employee fraud  and other allegations should be prepared to conduct interviews and document the investigation in a proper and thorough manner.

Of course, the ultimate goal of an investigation is to enable the company’s decision-makers to resolve matters fairly and effectively. The immediate goal of an investigation is to obtain the facts. Therefore, to be effective, an investigation must be:

    1. Thorough and accurate.
    2.  Fair and impartial.
    3.  In compliance with the requirements of law and the company’s ethics program.
    4.  Commenced and competed in a timely manner.The investigators must establish a good rapport with those individuals involved in the investigation (whether it be the individual making the report, an interviewee or other individual).
    5. The investigators should:
    6.  Determine if there is any reason an interviewee thinks the investigator or the investigation cannot be fair or objective.
    7. Explain the Company’s anti-retaliation policy and reassure the individual that the Company will not tolerate retaliation.
    8. Remind the individual that he or she must report any suspicion they have of retaliation.
    9. Establish WHO, WHAT, WHEN, WHERE, HOW, WHY, and any other data that might be relevant to the report.
    10. Be flexible in the approach to the investigation, interview, meeting or other aspect to the investigation.
    11. Follow fact trails to the end and ask follow up questions. For example, if the witness states that her supervisor makes inappropriate remarks, ask: who is the supervisor; what were the remarks; were they said in the presence of anyone, who; when were they said; where were you when the remarks were said; etc.

3.  The company must also consider the various rights of the employee inlcuding:

  1. Contractual rights.
  2.  Protection of whistle-blowing activity
  3.  Employee rights of privacy.
  4.  Employee rights under  Data Privacy Laws, etc.

Below are other important reminders for investigators when conducting internal interviews or  when interviewing an individual in connection with an investigation.

When Conducting An Internal Investigation Here Are Several  Dos and Donts to Keep in Mind:

DO 

  •  Ask for guidance, especially from  the Company’s  General Counsel and other designated attorneys.
  • Limit discussions about the matter to individuals who need to know.
  • Remind all interviewees of the anti-retaliation policy and need for confidentiality.
  • Document all interviews and phone conversations.
  • Secure all files, reports and other documents.
  • Keep Upper Management and the General Counsel (or its designated attorneys) updated on all important developments in the investigation.
  • Use extreme care in controlling communications related to the investigation.

DON’T

  • 1. .Discuss disciplinary action with the source, the subject or anyone interviewed.
  • 2.  Make speculative remarks in your work papers or Investigation Report.
  • 3.   Allow anyone to tape record an interview.
  • 4.  Allow anyone (except attorneys assigned to the matter) to make copies of interview notes.As corruption and anti-bribery laws take effect, not only should companies worry about compliance but the companies should also realize that internal investigations will now become very important.  It is vital therefore that proper internal mechanisms are in place to properly handle internal investigations.

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