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KPMG Report: More Than 50 Percent Of Executives Surveyed Say Companies Have Limited Or No Protocols For Cross Border Investigations

Investigating White Collar Crime across the Globe: Tips, Strategies and Missteps

NEW YORK, Jan. 6, 2014 /PRNewswire/ -- Despite the fact that an inadequate or poorly conducted inquiry can cause a company to run afoul of the law, damage corporate reputations, or unravel a case, more than fifty percent of the executives surveyed in the new KPMG report, Cross Border Investigations – Are You Prepared for the Challenge?, stated they have limited protocols in place and insufficient resources to conduct cross-border investigations. 

This revelation comes at a time when data and employee privacy issues, often triggered by investigations, are dominating the headlines and major corporations are facing increased regulatory scrutiny around anti-bribery and corruption legislation such as the foreign corrupt practices act, anti-money laundering and other compliance matters that often trigger cross border investigations.  

"Conducting cross-border investigations requires careful planning and precise execution, but the reality is many companies don't have adequate procedures in place to deal with these complex investigations," said Phil Ostwalt, U.S. Forensic Network Leader for Investigations, KPMG LLP.  "Couple the absence of planning with legal and cultural differences and you can have one of the biggest challenges facing global corporations."

The KPMG cross border report outlines several, often counterintuitive, tips to help compliance professionals, corporate investigators and board members keep their investigations on track.   Key insights include:

Language is important: In some countries using words such as "investigation," "whistleblower," "informant" or "witness" may elicit unexpected or unwarranted responses that can have a chilling effect on the process.

More generic words such as "review," "analysis" or "discussion" can be used in place of investigation, while words such as "employee" or "colleague" are often more effective than whistleblower or informant.

In some jurisdictions, it can be illegal for companies to investigate alleged employee misconduct because the local government is considered the exclusive investigator.

Don't find yourself on the wrong side of the law: Foreign data privacy laws and regulations often prevent investigators from removing data out of the jurisdiction.   In some Asian countries, many businesses are state owned or controlled, which may trigger states secrets laws and greatly impact the kind of data that can be collected and reviewed.

Crossing the border with data required to conduct the investigation can trigger an investigation of the investigator.

Anticipate lots of sealed lips: Loyalties differ by culture and some employees may be hesitant to speak out against a countryman for the benefit of a foreign company.  Additionally, in some nations it is against cultural norms for employees to say something negative about a person with a senior position in their company.

Cultural differences remain one of the top three challenges in conducting cross-border investigations, which is up from twenty six percent in 2007, to thirty seven percent in 2013.

Don't get lost in translation:  Work with people who understand the local language and cultural nuances.  Investigation teams who do not have local language skills may miss critical aspects of key documents or interviews conducted in local language.

More than a third of the respondents in KPMG's survey stated that language differences present a challenge in cross border investigations.

Top 3 Cross Border Investigation Challenges (Respondents selected up to 3):

  • Privacy or information issues (46 percent)
  • Lack of internal investigation resources (42 percent)
  • Cultural differences (37 percent)
  • The legal or regulatory environment (35 percent)
  • Language differences (32 percent)
  • Lack of robust publicly available information (23 percent)
  • Lack of cooperation from others in their organization (19 percent)
  • Identification and retention of competent external resources (14 percent)
  • Personal security of those involved in investigations (9 percent)
  • Lack of cooperation from government agencies (5 percent)

"The challenges and importance of an effective investigation, particularly in a global setting, are often not fully appreciated," said Richard Girgenti, U.S. Forensic Network Leader, KPMG LLP. "The failure to get it right can only serve to exacerbate the underlying problem."

About the Report
Data for Cross Border Investigations – Are You Prepared for the Challenge? was gathered by KPMG International member firms' forensic specialists in Africa, Asia, Australia, New Zealand, North America and Western Europe and sixty corporate executives responsible for their organization's cross border investigations.

KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 155,000 professionals, including more than 8,600 partners, in 155 countries.

About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 155,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

Anayo Afolabi
[email protected]


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