10 October 2016
With investigations into alleged bribery and corruption becoming more prominent globally, it is increasingly important for organisations (no matter where they are based) to have in place robust procedures to respond to the emergence of allegations and to react to regulators and prosecuting agencies when they engage in such investigations. Dubai-based law firm Winston & Strawn examines how UAE companies should remain compliant when faced with potential corruption investigations.
Bribery in the UAE
In recent years, a number of international surveys and reports have benchmarked countries on the basis of their perceived levels of corruption. The United Arab Emirate (UAE)’s position - 23rd lowest of 168 countries - suggests that combating bribery and corruption are key areas on which organisations should focus. Globally, increased perceived levels of bribery and corruption, coupled with emboldened prosecuting agencies using established (e.g. the US’s Foreign and Corrupt Practices Act 1977) and newer (the UK’s Bribery Act 2010) legislation have raised the importance of being properly prepared. In the UAE, enforcement of its established anti-corruption laws received a boost with the Abu Dhabi Executive Council announcing the establishment of a new Anti-Corruption Unit in May 2015.
The investigation process
It is not possible to map out every individual component of an investigation as each will have its own features depending on the nature, scope and jurisdictional spread of the alleged behaviour. However, it is possible to identify the key phases for any investigation and to highlight some of the important issues to bear in mind.
Resources
Notification of the bribery offence having been committed by an organisation in the UAE may take a number of forms, including contact from the Abu Dhabi Accountability Authority (ADAA) and/or the Ministry of Justice (MOJ), or from an internal process e.g. internal whistleblowing, internal audit work or routine accounting checks.
Once notified, the UAE organisation should establish an internal management team tasked with the responsibility for managing the investigation. That team should be small, separate, senior and independent (from the matters giving rise to the bribery allegations) to ensure the team has the authority to get things done quickly and efficiently. Depending on the size of the investigation, the team typically includes: legal; the head of the relevant business unit; a representative from the IT function; and a representative from human resources.
At this stage consideration should be given to engaging external specialists, including forensic accountants, IT experts or even public relations teams (if necessary, in multiple jurisdictions). Complex factual investigations and legal analysis may need to be conducted quickly, making it likely that the organisation will engage external legal advisors.
The internal team and external advisors will need to focus on obtaining answers to the following pivotal questions:
At the first meeting of the management team, an internal team should be set up to investigate the alleged behaviour. This team will develop an investigation plan, building in flexibility to accommodate challenges to resources and timings as the work progresses. The key tasks and issues for the investigative team, which should be included in the plan, will include:
Gathering and securing evidence – preserving all relevant, or potentially relevant, evidence relating to the alleged behaviour will be crucial, and is likely to be requested by the ADAA and/or the MOJ. Any gaps in evidence, either because the data was lost or destroyed, may impede the organisation’s own ability to understand what happened and could cause significant problems in subsequent associated litigation, or in further investigations by the regulators or prosecuting agencies;
Data review – the management of the review process can be assisted using document management platforms to allow a proportionate, targeted and prioritised review;
Interviews – conducting interviews with relevant (both current and ex) employees and (possibly) external third parties should be planned. The timing of interviews should be considered carefully as, where the internal investigation is being conducted in parallel with investigations by regulators or prosecuting agencies, those regulators or agencies may object to certain witnesses being interviewed in the course of an internal investigation. Interviews should be conducted by experienced interviewers and accurately recorded in a note, with the privileged status of that note made clear;
Employees – a challenging issue in any investigation is whether, and at what stage, to suspend employees who may have engaged in the bribery or corruption. Much will depend on the information available when the management team makes this decision and whether a suspension (or suspensions) would be deemed compliant with the disciplinary rules of the UAE Labor Law, Federal Law No. 8 of 1980, as amended.
Written report – it may be appropriate for the investigative team to prepare a written report which would typically include: a description of the nature and extent of the internal investigation; an overview of the factual findings; the conclusions reached; and the steps taken as a result of the factual findings together with a list of future intended actions. However, a report is not without risks and care should be taken in reaching any conclusions regarding any criminal or regulatory infringements.
The regulators and prosecuting agencies
It will be important from the outset of an investigation to set a co-operative but firm tone with the ADAA, the MOJ, and other regulators and/or prosecuting agencies. Where the behaviour under investigation extends across more than one jurisdiction, the management team will need to take into account the possibility of having to self-report the behavior, which raises a number of challenging issues.
As to the final outcome, there may be scope to persuade regulators and/or prosecuting agencies that insufficient evidence or public interest exists to justify action, or that early co-operation justifies a less aggressive regulatory response and/or a mitigated penalty. However, the organisation must not lose sight of the fact that any settlement which involves the admission by an organisation of criminal behaviour will very likely affect its position in civil proceedings and under its insurance policies.
Associated litigation
Litigation associated with the (alleged or admitted) bribery and corruption may come from a number of potential sources and arise across different jurisdictions. To address associated litigation risks, the management team should formulate an initial defence strategy early in the investigation following an initial internal audit of the immediately available evidence. This enables the organisation to take a preliminary view on whether there is any evidential or legal foundation for potential allegations or for the matters being investigated. The strategy should take into account preservation and gathering of documents relevant for the defence of any litigation and preserve privilege in the documents from disclosure in any litigation.
Conclusion
With the increased likelihood of bribery and corruption allegations arising, having a plan to manage the myriad issues that they generate from initial emergence of the allegation will help UAE organisations in addressing these challenges efficiently and effectively.
Bibi Sarraf-Yazdi, a solicitor advocate in the litigation department of Winston & Strawn London, also contributed to this article. She advises on general commercial litigation, banking and financial disputes and contentious regulatory matters. She has advised and represented clients across a number of sectors, including, financial services. Input was also provided from partners Robb Adkins (Los Angeles) and Derek Andreson (Washington DC) of Winston & Strawn.
Any opinions expressed here are the author’s own.
© Opinion 2016
With investigations into alleged bribery and corruption becoming more prominent globally, it is increasingly important for organisations (no matter where they are based) to have in place robust procedures to respond to the emergence of allegations and to react to regulators and prosecuting agencies when they engage in such investigations. Dubai-based law firm Winston & Strawn examines how UAE companies should remain compliant when faced with potential corruption investigations.
Bribery in the UAE
In recent years, a number of international surveys and reports have benchmarked countries on the basis of their perceived levels of corruption. The United Arab Emirate (UAE)’s position - 23rd lowest of 168 countries - suggests that combating bribery and corruption are key areas on which organisations should focus. Globally, increased perceived levels of bribery and corruption, coupled with emboldened prosecuting agencies using established (e.g. the US’s Foreign and Corrupt Practices Act 1977) and newer (the UK’s Bribery Act 2010) legislation have raised the importance of being properly prepared. In the UAE, enforcement of its established anti-corruption laws received a boost with the Abu Dhabi Executive Council announcing the establishment of a new Anti-Corruption Unit in May 2015.
The investigation process
It is not possible to map out every individual component of an investigation as each will have its own features depending on the nature, scope and jurisdictional spread of the alleged behaviour. However, it is possible to identify the key phases for any investigation and to highlight some of the important issues to bear in mind.
Resources
Notification of the bribery offence having been committed by an organisation in the UAE may take a number of forms, including contact from the Abu Dhabi Accountability Authority (ADAA) and/or the Ministry of Justice (MOJ), or from an internal process e.g. internal whistleblowing, internal audit work or routine accounting checks.
Once notified, the UAE organisation should establish an internal management team tasked with the responsibility for managing the investigation. That team should be small, separate, senior and independent (from the matters giving rise to the bribery allegations) to ensure the team has the authority to get things done quickly and efficiently. Depending on the size of the investigation, the team typically includes: legal; the head of the relevant business unit; a representative from the IT function; and a representative from human resources.
At this stage consideration should be given to engaging external specialists, including forensic accountants, IT experts or even public relations teams (if necessary, in multiple jurisdictions). Complex factual investigations and legal analysis may need to be conducted quickly, making it likely that the organisation will engage external legal advisors.
The internal team and external advisors will need to focus on obtaining answers to the following pivotal questions:
- identifying what appears to have happened and when, and who was involved;
- whether the behaviour is continuing (and, if so, how to stop it);
- whether there is any foundation to the allegations;
- who is affected by the allegations (both internally and externally);
- the risks to the organisation;
- the jurisdictions affected by the bribery; and
- how the organisation can communicate its position at an appropriate time (both internally and externally).
- As the investigation evolves, these issues should be reviewed to ensure that the investigation remains properly focused.
At the first meeting of the management team, an internal team should be set up to investigate the alleged behaviour. This team will develop an investigation plan, building in flexibility to accommodate challenges to resources and timings as the work progresses. The key tasks and issues for the investigative team, which should be included in the plan, will include:
Gathering and securing evidence – preserving all relevant, or potentially relevant, evidence relating to the alleged behaviour will be crucial, and is likely to be requested by the ADAA and/or the MOJ. Any gaps in evidence, either because the data was lost or destroyed, may impede the organisation’s own ability to understand what happened and could cause significant problems in subsequent associated litigation, or in further investigations by the regulators or prosecuting agencies;
Data review – the management of the review process can be assisted using document management platforms to allow a proportionate, targeted and prioritised review;
Interviews – conducting interviews with relevant (both current and ex) employees and (possibly) external third parties should be planned. The timing of interviews should be considered carefully as, where the internal investigation is being conducted in parallel with investigations by regulators or prosecuting agencies, those regulators or agencies may object to certain witnesses being interviewed in the course of an internal investigation. Interviews should be conducted by experienced interviewers and accurately recorded in a note, with the privileged status of that note made clear;
Employees – a challenging issue in any investigation is whether, and at what stage, to suspend employees who may have engaged in the bribery or corruption. Much will depend on the information available when the management team makes this decision and whether a suspension (or suspensions) would be deemed compliant with the disciplinary rules of the UAE Labor Law, Federal Law No. 8 of 1980, as amended.
Written report – it may be appropriate for the investigative team to prepare a written report which would typically include: a description of the nature and extent of the internal investigation; an overview of the factual findings; the conclusions reached; and the steps taken as a result of the factual findings together with a list of future intended actions. However, a report is not without risks and care should be taken in reaching any conclusions regarding any criminal or regulatory infringements.
The regulators and prosecuting agencies
It will be important from the outset of an investigation to set a co-operative but firm tone with the ADAA, the MOJ, and other regulators and/or prosecuting agencies. Where the behaviour under investigation extends across more than one jurisdiction, the management team will need to take into account the possibility of having to self-report the behavior, which raises a number of challenging issues.
As to the final outcome, there may be scope to persuade regulators and/or prosecuting agencies that insufficient evidence or public interest exists to justify action, or that early co-operation justifies a less aggressive regulatory response and/or a mitigated penalty. However, the organisation must not lose sight of the fact that any settlement which involves the admission by an organisation of criminal behaviour will very likely affect its position in civil proceedings and under its insurance policies.
Associated litigation
Litigation associated with the (alleged or admitted) bribery and corruption may come from a number of potential sources and arise across different jurisdictions. To address associated litigation risks, the management team should formulate an initial defence strategy early in the investigation following an initial internal audit of the immediately available evidence. This enables the organisation to take a preliminary view on whether there is any evidential or legal foundation for potential allegations or for the matters being investigated. The strategy should take into account preservation and gathering of documents relevant for the defence of any litigation and preserve privilege in the documents from disclosure in any litigation.
Conclusion
With the increased likelihood of bribery and corruption allegations arising, having a plan to manage the myriad issues that they generate from initial emergence of the allegation will help UAE organisations in addressing these challenges efficiently and effectively.
Bibi Sarraf-Yazdi, a solicitor advocate in the litigation department of Winston & Strawn London, also contributed to this article. She advises on general commercial litigation, banking and financial disputes and contentious regulatory matters. She has advised and represented clients across a number of sectors, including, financial services. Input was also provided from partners Robb Adkins (Los Angeles) and Derek Andreson (Washington DC) of Winston & Strawn.
Any opinions expressed here are the author’s own.
© Opinion 2016
