“Conducting cross-border investigations is no simple endeavour,” says Phil Ostwalt, Global Coordinator for Investigations for the Global Forensic practice and Investigations leader at KPMG in the US. “Add the complexities of legal and cultural differences and you have one of the biggest challenges facing global corporations.”
Only 35 percent of survey respondents believe their companies conduct annual cross-border investigation training, a vast decline from 80 percent in our 2007 survey. Forty-two percent of executives think their companies lack sufficient resources to handle cross-border investigations.
“Given the velocity with which compliance happens, management can never be prepared enough when it comes to its investigation protocols and procedures and yet our findings show that many companies are underprepared to meet this challenge,” says Ostwalt.
Data privacy laws
Foreign data privacy laws and regulations pose some huge cross-border investigation challenges because of restrictions on what data that can be collected and transferred out of the jurisdiction. Many countries have enacted laws prioritizing personal data protection, including establishing a fundamental legal right on personal data privacy, even if the data is on an employer’s system. Over 46 percent of respondents reported that their greatest cross-border investigation challenge is handling data privacy issues.
Cultural differences remain one of the top three challenges in conducting cross-border investigations, up from 26 percent in 2007 to 37 percent in 2013. Companies can no longer rely on procedures and resources used for domestic investigations. Instead, they must be customised to comply with different local laws and respect diverse cultures and customs.
“You simply cannot conduct a cross-border investigation without people who know the intricacies and idiosyncrasies of certain jurisdictions,” continues Ostwalt. “What may be acceptable to say or do in one culture may totally offend someone from another culture. Loyalties also differ by culture and some employees may be hesitant to speak out against a countryman for the benefit of a foreign company.”
He advises organisations to proactively develop case management and investigative procedures that match the company’s values, standards, and principles and consider local requirements, customs, and practices. Often, one size does not fit all, and organisations should customize procedures to meet specific jurisdiction requirements.
“Taking the time to assess the matter is critically important for the sake of confidentiality and privacy, as well as the credibility of the compliance program, the integrity of the investigation progress, and the reputation of those involved. Balancing the integrity of the investigative process with the legal rights that overseas subjects enjoy under local law is both an art and a science,” says Déan Friedman, leader of KPMG’s Investigations Network in the Europe, Middle East and Africa region for the Global Forensic practice.
Bribery and corruption most common
Sixty-seven percent of respondents identified bribery and corruption as allegations they are seeing. Closely following, 65 percent selected embezzlement or misappropriation and 63 percent chose conflicts of interest.
There are obstacles at all stages of cross-border investigations and understanding where the pitfalls are and how to navigate them can help avoid critical missteps.