Overview
Once multiple agencies are engaged in a US export control or sanctions enforcement action, or you’ve determined they should be, counsel should consider how to communicate with these agencies, both individually and together. Not only will such discussions provide valuable insight to guide the conduct of the internal investigation, it could provide information about the government investigation, and could also facilitate a global resolution. Part 4 of our series on parallel proceedings discusses why counsel might seek the role of communication coordinator amongst the agencies, and how and when to do so.
Which agencies might be involved in this communication were identified in Part 1 of our series on parallel proceedings. We discussed how the involvement of multiple agencies might impact the investigation in Part 2, and we provided guidance on voluntary self-disclosures (VSDs) to those agencies in Part 3. There are opportunities to engage with the relevant agencies at various points in the investigation, all of which should be considered and carefully structured.
Points of Engagement
If a company discovers a violation through its own internal review, rather than through a government-initiated action, counsel’s first point of engagement could be an initial VSD notification to the relevant government agencies on behalf of the company, in order to obtain maximum penalty mitigation credit. In our prior post, we discussed why all potentially relevant agencies should receive initial VSD notifications simultaneously, if the company’s management decides to voluntarily disclose the violations. We also noted that VSD notification to one agency does not count as VSD notification to the other agencies, and failure to notify other agencies in a timely manner could result in the loss of VSD credit from the agencies that did not receive timely notification.
Where a company is required to report or disclose violation(s) to a particular agency, e.g., in response to a subpoena or search warrant, it may still be worthwhile to notify other relevant agencies even though VSD credit may no longer be available. This is because most agencies, as a matter of policy, may still provide significant cooperation credit for pro-active disclosure and outreach.
Beyond the initial notification, other points of early engagement (i.e., after the initial notification but prior to starting the investigation) with the agencies could include submission of an internal investigation scoping document, called a Terms of Reference (TOR), to ensure understanding, and if possible, agreement among the different agencies regarding the period of review, the geographic and operational units of concern, the transaction review methodology and scope, keyword search terms for emails and document review, and local law limitations such as data privacy, state secrets, and witness availability.
Once the investigation is under way, counsel should consider providing periodic updates and preliminary findings to the relevant government agencies, as well as notifying the agencies of any unanticipated delays and difficulties, so as to manage the agencies’ expectations, and avoid unrealistic deadlines. Additionally, through continued dialogue with the relevant agencies, counsel may get a glimpse into the scope of each agency’s investigation, their potential targets, and points of view, which can inform the counsel’s internal investigation strategy. Even if an update is requested by a single agency, the counsel’s response should be coordinated strategically, keeping in mind the priorities of the requesting agency and considering the inclusion of other agencies in an update or briefing, if appropriate.
Coordination of Communication
Whether the on-going dialogue is conducted jointly with all the agencies or undertaken separately, no assumptions should be made about whether and to what extent the agencies are sharing information among themselves. While it is necessary to assume that anything told to one agency could be shared with the others, counsel should also consider the possibility of limited interagency communication and lack of coordination among the agencies. Accordingly, counsel can also serve as the communication conduit among the agencies, which allows a degree of control over the flow of information, ensures its accuracy, and provides first-hand insight of each agency’s position on the investigation.
In cross-border matters, lead counsel will also need to work closely with counsel in other jurisdictions to coordinate information sharing with the client’s regulators and enforcement agencies. The case of Airbus and cross-border coordination is a recent example of success in that area.
Once it is apparent that the internal investigation has concluded, and the agencies are satisfied with the factual findings, counsel’s foundational dialogue established with the agencies will facilitate a global resolution, the focus of Part 5 of this series.
