Self-investigation: possibilities and preconditions

Self-investigation in fraud and corruption can add much value to an organization. However, there is a discussion about the independence of the party conducting the investigation. Peter van Leusden, based on his years of experience in investigative cases at the Dutch Fiscal Information and Investigation Service (Fiscale inlichtingen- en opsporingsdienst or FIOD), explains the nuances needed for self-investigation.

What is self-investigation?

Research into the facts and circumstances surrounding an incident carried out on behalf of the organization concerned. In fact, it is the composition of the scenes for the complete film about an incident. Without value judgments. With the aim of establishing the truth.

Why is there self-investigation?

When an incident occurs, you want to know what happened and what is the extent of the financial and reputational damage as an organization. Do you want to be in charge of the investigation yourself? Then self-investigation is a useful tool. The self-investigation results can be used to substantiate or report the case to the Public Prosecutor’s Service (Openbaar Ministerie or OM) and the FIOD.

When does an organization commission self-investigation?

There are two situations in which organizations commission self-investigation:

• You find out about a fraud or corruption incident yourself. For example, based on rumors or vague suspicions. Your organization wants to gain insight into the scope and the issue.
• You are directly confronted with the suspicion of fraud or corruption. By having a self-investigation carried out, you show as an organization that your intention to cooperate is serious. During the self-investigation, the party conducting the investigation agrees on matters not only with the organization itself but preferably also with the investigating officers and the Public Prosecution Service.

What is the benefit of self-investigation?

For your organization
With self-investigation, you as an organization are in control, it is less stressful for your organization, and there is a faster solution. You are sooner able to implement adequate management measures and regain control. As a result, it reduces possible reputation damage and concerns among stakeholders. The Public Prosecution Service also takes into account a cooperative attitude in a potential prosecution or penalty.

For the FIOD and police
Self-investigation allows working more efficiently. Parties such as the FIOD and some police sections can use self-investigation data to investigate fraud and corruption if this is an issue at your organization. Each in their field of duty. You can think of the National Criminal Investigation Department (Rijksrecherche) and the Financial Economic Crime Team (FINEC) in the police case. All these parties naturally verify the self-investigation and test it for usability. They also pay attention to completeness, openness, and integrity.

Nuance of self-investigation

In the public debate, the independence of self-investigation is often being questioned. The concern is about self-investigation performed by one’s own lawyer or accountant – after all, he represents his client’s interests. The question that arises is whether he provides all the information. In the end, it is something like ‘the butcher inspecting his own meat.’

Only when the following preconditions are met, self-investigation can be used properly:

• If the tone at the top is right. In other words, if the organization is benevolent and the top clearly states: we don’t want this (meaning everything surrounding the incident).
• If the investigation does not focus on current or permanent managers. If this is the case, then the investigation must be held by the FIOD.
• If an independent party conducts the self-investigation. Think of a specialized company, such as Partner in Compliance. When we perform a self-investigation, we connect with our client and other parties involved, such as the lawyer. The lawyer fulfils the role of representative of the organization to be investigated. He interprets the legal facts and supervises the legal process in the event of a case.

The importance of truth-telling, transparency and verifiability in self-investigation are crucial to its usefulness. For both your own organization and the government, which can use the self-investigation as a reason for follow-up research.

Conclusion

Self-investigation only has value if your organization is fully forthcoming. Cooperating for ‘a little’ is not an option. Various parties can conduct a self-investigation. Choose a specialized and independent party that ensures good cooperation with other parties involved, such as the lawyer, the Public Prosecution Service, and the investigating officers. A party that makes the whole film and has the expertise to look at the follow-up: preventing another incident.

Has your organization set up the compliance function correctly, and are you nevertheless confronted with corruption or fraud? Then you can surely count on a helping hand and a listening ear from the Public Prosecution Service and the FIOD.

More information

For a detailed explanation of our standpoint, read the entire article by Peter van Leusden ‘Self-investigation: some nuance’ (in Dutch). The article was published in the Dutch Journal of Sanctions Law & Enterprise (Tijdschrift voor Sanctierecht & Onderneming), criminal and administrative enforcement of financial-economic law, 2020 No. 3/4. You can download the article here:

See also other articles on this topic with Peter van Leusden as a contributor in the FD and Mr. Online.

Do you have questions about self-investigation? Then contact us for advice. We are also your Partner in Compliance in this matter.