Corporate Investigations: Objectives and Method

An internal investigation rarely begins with a report. It begins with an anomaly: an invoice matching no service, a supplier sharing an address with an employee, a contract signed in conditions nobody can explain. The company knows that it does not know, and that is precisely where the work starts.

The difficulty specific to this kind of file lies in the context. The enquiry runs inside an organisation that keeps operating, with people who meet daily, rumours that circulate and alliances that re-form. Method has to account for that reality rather than deny it.

Start from a fact, not a conviction

The first mistake is to hand the investigation a conclusion already written. When a mandate opens with « we know that », the enquiry becomes a search for confirmation: it collects what accuses, ignores what qualifies, and produces a document that will not survive the first serious challenge.

The useful formulation is both more modest and more demanding: which facts are established, which are alleged, which are verifiable. Stated in writing at the outset, that distinction protects the company itself, which will one day have to explain its decision to an employee, a partner, an insurer or a court.

The familiar categories

Four configurations recur most often in corporate mandates. Suspected misappropriation of assets or fictitious invoicing. An undeclared conflict of interest, particularly in purchasing or business development roles. The leakage of sensitive information to a competitor. And pre-contractual verification, when a company is about to commit to a partner whose profile remains unclear.

• Indicators of internal fraud and unusual financial flows
• Conflicts of interest and undeclared links to third parties
• Disclosure of confidential information
• Checks before signing a structural contract
• Disputed facts in employment or commercial litigation

Each category calls for different sources. Suspected fraud is worked through documents and flows; a conflict of interest often shows up in registers and corporate links; a leak requires understanding internal circuits before looking for responsibility.

Chronology is an underused instrument. Placing each fact at its date, in sequence, often reveals patterns no single document shows: a signature preceded by a change of address, a payment followed by a resignation, a register amendment filed the day before a tender.

That requirement of fact shapes how the report is written. An internal investigation is judged by the quality of its findings, not the volume of its pages. Every finding must be dated, attributed to an identifiable source and tied to the document that supports it. Inferences are useful, but they must be presented as such and never blended with established facts.

That discipline has a practical consequence: a well-built internal report often contains fewer assertions than the client hoped for, and more resolved questions. A document that asserts a great deal and proves little weakens the company instead of protecting it.

Internal interviews and their safeguards

Interviews with employees are often the most delicate stage. They touch reputation, careers and sometimes the private lives of those questioned. They must be conducted with clear safeguards: information about the framework of the interview, the possible presence of a representative, a record submitted for review, and no promise that cannot be kept.

An investigator who tells an employee that nothing will follow, or implies that the conversation is informal when it will be added to a file, creates a legal and ethical problem far beyond the mandate. The rule is simple: what is said must be repeatable in the same terms before a third party.

What the company must decide itself

An investigation establishes facts. It does not impose a sanction, does not legally characterise misconduct, does not decide on terminating a contract. Those decisions belong to the company, to its advisers and, where relevant, to the competent authorities. Confusing the roles creates two symmetrical risks: a disciplinary measure poorly founded, or inaction on the grounds that the enquiry did not « conclude ».

The report should therefore state its limits clearly: what it establishes, what it cannot establish, and what it was never mandated to decide. That reserve does not weaken the document; it makes it usable.

It is also prudent to plan at the outset how the report will be retained and to whom it may be communicated. A document prepared for a restricted committee and later circulated without control changes nature, and sometimes legal effect.

When to bring in outside eyes

Three situations justify an external view. When those to be checked sit in senior management and no credible internal control is possible. When the required skills — reading foreign registers, sensitive interviews, tracing financial flows — are not available in-house. And when the independence of the finding will have to be demonstrated, for instance to a board, an acquirer or an authority.

In other cases an internal enquiry can suffice, provided it is run with the same documentary rigour. The criterion is not the size of the company but the credibility of the result in the eyes of those who must accept it.

An initial confidential consultation qualifies the situation, identifies what can be established and by which means, and states plainly what belongs to another profession. It commits you to nothing. These pages are editorial information and do not constitute legal advice.