Episode 4, Investigations Unpacked: Going Global

Rani John:

I begin by acknowledging the Gadigal people, traditional custodians of the land on which I'm recording today and pay my respects to their elders past and present. I extend that respect to Aboriginal and Torres Strait Islander people listening today. Hi everyone. And welcome back for the fourth episode of our Ashurst Podcast Series, Investigations Unpacked. I'm Rani John, a partner in Ashurst Dispute Resolution group, and co-lead of our Corporate Crime Practice. For those of you joining us for the first time today, this is a podcast series focusing on the topic of corporate investigations. Our earlier episodes have looked at key issues to consider in conducting an internal investigation, how to navigate difficult privilege issues once you've got an internal investigation underway, and we've also spoken with Kate Morgan, a senior barrister with extensive experience in white collar crime proceedings about how to manage an internal investigation, which might unearth potentially criminal conduct.

Rani John:

Today, we'll be talking about the particular challenges that come with conducting investigations across multiple jurisdictions. And we're very lucky to have a guest who is very well-placed to talk to us about some of those challenges. Alexander Dmitrenko is a partner in our Tokyo office. He's got over 15 years' experience in white collar defense, internal investigations, sanctions, and exports control work. He's also worked across several jurisdictions, including on investigations, covering over a dozen countries. He's qualified to practice in England and Wales, New York and Russia, and he's a registered foreign lawyer in Japan. And he also happens to speak five languages. Welcome Alexander. We're very happy to have you on the podcast today.

ALEXANDER DMITRENKO:

It's a pleasure to be here, Rani. Thank you so much.

Rani John:

Alexander, we know that we misconduct by a company or its employees may expose it to regulatory investigations or enforcement action. In more than one jurisdiction, there's a whole raft of issues that can arise, and it can be a real challenge to ensure that what you do in a regulatory investigation in one jurisdiction doesn't disadvantage the company in a current or future investigation or enforcement action in another jurisdiction. What do you see as some of their key considerations for companies when dealing with that kind of scenario?

ALEXANDER DMITRENKO:

Thank you, Rani. Well, indeed, having a multi-jurisdictional investigation is always a difficulty in itself, and it's a headache for the client, and it's a challenge for lawyers. One of my recent examples, which I wanted to share with you involved UK, Vietnam, Singapore, BVI in Australia. Thankfully for the client, the regulatory component was only ultimately limited to a couple of jurisdictions, so it wasn't too bad, but it still requires a lot of work. As you have variety of countries, you have variety of legal regimes, and it does create challenges. So to answer your question, I guess what I wanted to focus is three key areas for focus when you have a multi-jurisdiction investigation. And they are privilege first, second, data privacy protection, and third and quite important, determining the relevant regulators. So, allow me to start with first privilege, and I appreciate I'm coming on the heels of your prior privilege discussion, but this is a bit of a different topic here. We have the multi-jurisdictional component here.

ALEXANDER DMITRENKO:

And as you know, and as listeners know, the privilege isn't the same everywhere. The privilege itself is a common law concept, so it would be very familiar to those of us who are practicing in common law jurisdictions, like Australia, like US, Canada, UK, et cetera. The privilege is not the same and doesn't even exist in countries where you have civil law jurisdiction. There are many more of them. So if your investigation has a combination of those common law and civil law countries, then the privilege have to be assessed very carefully. And the reason for this is because you will inevitably have documents that may need to stay privileged, such just legal advice, particularly around investigation itself, or anything prior to investigation. And what we're seeing in most recent times is the key advice I would say would be, for the first one is, look, if you have those multi-jurisdictional concerns, let's make sure that we keep the privileged documents in the privileged jurisdictions.

ALEXANDER DMITRENKO:

That means that if you have a document in Australia, you didn't want to be transferring it to another country for review purposes, et cetera. And this brings me to a topic where when we do investigations, we deal with a lot of electronic data. So, what we've seen as well is the electronic data may be stored in one place, maybe accessed in a third place, and then maybe reviewed during investigation in third jurisdiction. So you may have three jurisdictions access points or processing points with certain data. And those jurisdictions may or may not provide the privileged protections. Again, very importantly at the very outset, determine whether you have privileged protection, you have those documents, and keep it as safe as possible. The second point, and I think this is very relevant to the first point, is data protection and data transfer of documents. And I think this is quite important because once you think about moving documents around, the issue of data privacy comes into play because many, well practically, all of the major jurisdictions now have data privacy and data protection laws. Again, they will not be matched.

ALEXANDER DMITRENKO:

So for instance, Korea has a very strong data protection laws. It will require the owner of the data to give you full consent. And frankly, it's an important point as to how do we access it in data in the first place when we are dealing with the data privacy issues. So for most jurisdictions, and the most investigations is as we represent the client, we would rely on internal rules and regulations that require the custodian of the data, an employee to surrender the data. But what happens if data is stored on the personal device? For instance, if a person was using the chat application to talk to a client, to talk to a customer or lobbyist, can we access that? It's a big question. It does require consent from the individual to say yes and obviously, written consent. They're agreeing to providing such data. They're agreeing to give you their personal device. They're agreeing to give you the password to access the certain applications, maybe certain chats, and then it comes the burden on us as the investigators to ensure we're not accessing anything that's actually protected as personal or private. That is when we come to a point where we need to make sure what our search terms are structured in a way that is very tailored. And we've been very careful how we do this.

Rani John:

And Alexander, you mentioned a third point, which is identifying relevant regulators.

ALEXANDER DMITRENKO:

This is very, very important because as in my case, you may have five jurisdictions where you have some concerns or some relevant operational issues, but actually, the regulatory exposure may not be everywhere, but what if it is relevant for multiple jurisdictions? And I think it's something we may cover a bit later in more detail, but to me at the very outset, it's very important to determine, if possible, the legal landscape as to where we are, who are the regulators we may be potentially dealing with, and whether they're going to be aligned, whether we're going to be aligned with them.

So, there is a lot going on there because again, regulators may have very different approach, the rules may be very different, and we as representing the client, we need to map it all out in the way that's going to be fair to the investigation process, but regulators expect to be fair and independent, but also relevant and responsive to regulator's expectations and concerns. So, I'll stop here. I know we probably have a few follow-up questions, I'm sure.

Rani John:

Just picking up on your point about regulators. I think sometimes, you tend to assume that regulators, of course, communicate effectively with each other and of course, that must be going on in the background. And certainly, my experience has been that's not always a valid assumption in multi-jurisdictional investigation. So for example, this happened in one of the investigations I was involved in where you had one regulator that demanded that the mere fact of its regulatory investigation was kept confidential. But if you were to do that, then you would be breaching your obligations to a different regulator in a different jurisdiction. And once we explained that scenario, we got it sorted out, but that's just one example of conflicting positions in different jurisdictions and a situation where regulators were perhaps not as aligned as you might have expected.

Rani John:

Moving on the topic of privilege which you touched on and it's been something of a recurring theme in this series. So clearly, the scope of privilege, and when it can be claimed, and the documents over which can be claimed can differ quite substantially across jurisdiction as you've pointed out. But you can imagine a scenario where, for example, you've got documents that might be protected by privilege or would be ordinarily protected by privilege in one jurisdiction, but they're being required to be produced in a different jurisdiction, which either doesn't recognize privilege as a concept as you've touched on or has a more limited conception of privilege than jurisdiction number one. And what is then the implication of producing that document in jurisdiction number two, where it's not protected? Does that then affect your privilege claim in jurisdiction number one? And that's obviously a very challenging situation for the privilege holder. Have you seen circumstances like that arise in the work that you've done?

ALEXANDER DMITRENKO:

Well, you're correct, Rani. I think it is a very different proposition. And the mismatch of privilege regimes may be utilized by the regulators. And actually, I think in the past when the regulators were less aligned, I would say you would've seen a bit more. In recent years, you see a little bit more of alignment between regulators and appreciation that the rules have to be followed and the protections have to be extended beyond the borders of certain country. But to pick up on your point really, the privilege itself is critical, especially for the work we do as counsel because we will be providing updates, reports, analysis to the client that may lead to client's decisions, as well as advice ultimately to self-report and not self-report, interim analysis, which may or may not be correct at the end of the day. All of that, that's a whole reason of privilege. We want to be able to have fully proper and honest conversation with the client.

ALEXANDER DMITRENKO:

What happens is in particular investigative context is not only that the rules are all over the world map in terms of the actual privilege protections, but even US that has the, I would say as a US lawyer, we rely on privilege quite extensively because we do have quite extensive privilege protections. But UK, for instance, has moved away from that really broad coverage of investigation privilege. And there may be a mismatch. There were cases litigated in the UK where the UK regulators were demanding some documents to be privileged, and were provided, and were utilized in the enforcement proceedings. To your point, again, if we have a mismatch in how the regulators react, I think again, there is appreciation much more from particularly US regulator that I've seen in the past, acknowledging, okay, we understand there are no privilege protection in the jurisdiction.

ALEXANDER DMITRENKO:

And I've seen, to be honest with you, cases where in some particularly tricky cases, they have utilized, like for instance, with Japan, they have asked the regulators to maybe if they conduct a dawn raid and they get some documents from legal department to potentially share them or share summaries of them. I think we're not in that bowl game anymore. I think there is more appreciation from regulators that this has to be respected. But what I wanted to mention to clients now is when we deal with the documents internally and we share them within certain groups, what you're really asking, Rani, is by producing document in one jurisdiction because we're legally obliged to do so, on those dawn raids where the document was taken away, are we waiving the privilege in another jurisdiction? The answer will, as most things in law, it depends. I think we will... In the UK, maybe different from the US.

ALEXANDER DMITRENKO:

Again, I think US will take a more helpful approach to their client, but it won't be helpful, Rani. What I've seen happen in the past was some of the documentation relating to the investigation process or some of the interim results were shared by the client internally with larger groups. So, the email was sent, say, oh, full lessons learned or background purposes. And the email went to the people who weren't really part of investigation. So, they weren't the client per se. And as you know, the client is the key determinative to whom privilege belongs. That's one thing we have seen a bit of a trouble where you say, look, guys, you've waived the privilege not because you've given document to the actual regulator, but because you've shared it with entire risk department of 400 people and said, look, don't do this again. But actually by sharing that, you waive the privilege, and then it would be difficult to rely on it.

Rani John:

So moving onto a slightly different topic, which is the need to balance a range of considerations in the course of investigation. And of course, this isn't necessarily unique to multi-jurisdictional investigations, but perhaps that kind of investigation can add another dimension to this. And so, you've got on the one hand your legal risks coming out of the conduct that is being investigated, exposure to sanctions or fines or what have you, and then you've got exposure to reputational risk, and that if not mitigated can also be damaging to the client's business, and the need to work cooperatively with the regulator or with multiple regulators as the case may be. And sometimes, being cooperative with a regulator in one jurisdiction may jeopardize the ability to effectively defend an action in another jurisdiction. And giving that balance right between cooperating as you think is warranted with a regulator but also preserving your legal rights somewhere else. I wondered if you could provide some comments on how do you think a company can best balance those competing or potentially competing considerations.

ALEXANDER DMITRENKO:

Rani, you're absolutely right. I mean, this is a very difficult question. If you're facing multiple regulators, your ideal position is that they're all aligned and you're aligned with them. We don't live in an ideal world, obviously,` so in many cases, you may indeed have regulators moving at different speeds, having different agenda. And remember, in a way, the enforcement action is like a pie. There's a certain amount of money that the regulators can get from you, maybe they think, in their budgeting and that it will be competing with other regulators. So, the ideal scenario is a joint settlement with all relevant regulators, at least the major ones. And we've seen this more and more recently. I think in the last three, four years, you would've seen, particularly US, I would say being fairly generous in a sense, combining their actions with the UK, with Brazil, with some of the Asian countries. It has happened. What happens less is... And again, the regulators maybe in an action against a company that is under CPA and the misconduct is placed in Russia or China.

ALEXANDER DMITRENKO:

You may settle with the US regulator and potentially UK or someone else where there has a jurisdiction. But I think in particularly current environment, it may be difficult because geopolitical context may not align, the Chinese or Russian regulators with the US or UK regulators. It would be difficult to see that happening. And then whether you have those domestic jurisdictions coming on the heels of the US or UK or others, that hasn't happened. The other point that hasn't happened is when we're in Asia and a lot of regulators here are still learning about the enforced protections, they're still implementing the laws, they may not have had those major experiences in the past. But they may see the news coming out of I don’t know, Malaysia, Indonesia that there is big US action against companies doing misconduct on the ground here in Asia. They may use that, as you mentioned, as a follow-up, and then start their own action. Again, it's not ideal for the client but something to bear in mind. And what I would call is, I think you mentioned this as well, is it's a balancing act.

Rani John:

Yeah, that's very helpful set of observations. Just on the experience with the US regulator, I think it's probably informed at least in part by the US Department of Justice's anti piling on policy that they issued in 2018, which is just a very good response to the phenomenon of multiple regulators in investigating and prosecuting what's essentially the same conduct in multiple jurisdictions. So perhaps, that's been the driving force behind what you mentioned in that regard. So, let's shift tact a little bit and talk about some of the practical and logistical challenges that arise in multi-jurisdictional investigations. And I think it's fair to say that most lawyers present company accepted qualified in and familiar with single jurisdiction. And as much as we'd like to think that we at least have some understanding of development in other location, the reality is that local nuance won't be as visible to an outsider as it will be to a local. What would you say are the value ads to companies who might be considering whether or not to engage local counsel to assist with a multi-jurisdictional investigation?

ALEXANDER DMITRENKO:

Frankly, a lot can go wrong if the local counsel is not engaged. And I will mention from my experience just maybe three key areas where things can go wrong. First, the law in legal analysis, secondly, culture, and thirdly, the language. Let me tackle this very briefly for us, very clear on the law point that you need to understand the local legal landscape. Particularly for Asia, what I've seen is the legal landscape may not be as clear as we may have in countries where the regulations and enforcement actions have been coming for many years, and there is quite a clear set of rules and guidance, et cetera. So, you may need to understand the law but also the regulatory approach, the trends, as well as the industry standards. We've had cases where it wasn't just the law, where client was exposed to some industry standards. Let's say, in accounting world, they had to be taken into account. It's not something that lead counsel sitting in and another jurisdiction will appreciate or will know.

ALEXANDER DMITRENKO:

So to me, it's a no-brainer. You need to have proper legal analysis from domestic jurisdiction because you need to follow the rules as we discussed before, the actual investigation process followed by local rules, data privacy protections, et cetera, as well as the application of law. And ultimately, you may actually have the exposure to local regulator. So, that's a no-brainer, I would say. The second point is culture. What I've seen as well is mismatch. Again, particularly in Asia, where you may have investigative teams coming from far abroad representing the client. The case I would mention would be where you have a headquarter company in the UK or US, and the subsidiary, there's just some trouble in subsidiaries, some investigation, some whistle blowing report, and the team is sent from the HQ to investigate. Well, there may be cultural nuances that if they're not taken into account, they may actually derail the investigation.

ALEXANDER DMITRENKO:

In Asia, we take pride in how diverse we are and how different we are. And there's certain approach even to the interview process. That has to be taken into account to support the investigation because remember, again, you need people to cooperate with the investigation if you want to get the right results, and they may not be willing to do so if they don't feel the cultural connectivity. And that brings me to the last point that I wanted to mention is language. I've seen one investigation where an attempt by the English speaking lawyers who were running the investigation to understand the landscape of all of the relevant documentation was to translate all of the documents from a foreign language into English, and then reviewed by the English speakers.

ALEXANDER DMITRENKO:

Well, at the end of the day, the translation cost was more than the legal cost. That's not what we need to do. Obviously, there's plenty of ways to avoid this. And one of ways is obviously engaging the local counsel who may well be, who will definitely be better placed to review documents at least in the first round to determine what's relevant, what's not, and be able to then... Maybe you only need to translate documents that actually, like the gold mines, the core core, the hot hot relevancy. I appreciate that there is natural tendency as an American lawyer, again, to take ownership and run the project. If you're dealing with multi-jurisdictional projects, it may not be the best approach for the client and for the actual regulator. So, I would definitely recommend ensuring liaising and advising and working with local counsel, particularly in places like Asia.

Rani John:

Thanks, Alexander. I think I can one up you on the translation story, which is I once witnessed an attempt to deal with foreign language content using Google Translate, which was not a good idea at all. Let's talk about how legal teams in multiple jurisdictions can collaborate effectively. And obviously, particularly, we do have team members based in different jurisdictions. It's obviously important to work together effectively. Have you encountered any particular ways of working or forms of collaboration that you thought were particularly effective?

ALEXANDER DMITRENKO:

Yes. I think as lawyers, we like the process, and I think we should like the process and should be clear about the process, right, Rani? I think the key critical point, if you have teams working from different law firms and different, again, cultures, legal backgrounds, et cetera, I would say there's three points that I would mention as critical for ensuring the efficiency of the investigation in a multi-jurisdictional context. One, and I think very important, is at the very outset to create a document sharing protocol, that document sharing protocol would take into account privilege, data protection and other considerations. And it is very important because it lays out the rules of the game between different players. Because again, they may be slightly competing investigative priorities.

ALEXANDER DMITRENKO:

One of my examples where again, we were helping the headquarters to investigate one of the subsidiaries in Asia, the local team really wanted to engage in certain counsel. And that was allowed, but again, in that context, we had to make sure that the local counsel wasn't too tightly aligned with the local team because again, the investigation had to be neutral, et cetera. So, one of the ways to ensure this, this is the second point that I wanted to make, is the regular, typically, weekly team calls. I prefer if I run an investigation in, particularly, the review process, book review process is to even have it twice a week so you can have the updates, what is hot, what is not hot. And everyone's on the same page because that may again, derail or create a disconnect between the investigation being done on the ground and the reporting being done to the client.

ALEXANDER DMITRENKO:

And that's the third point I wanted to mention is it is important from the local counsel perspective to be involved in the reporting to client. They need to understand what are the concerns, what is the big picture items because it's very easy for them to dig into documents, find out what they think might be relevant, not relevant, hot, not hot, but it may not be what the, ultimately, client wants or appreciate, so maybe the focus of the client. Those three points, document sharing protocol, regular team calls and updates, and lastly, the engagement and involvement of local counsel reporting to the client would be the three things I think, if you lay them out initially and follow them carefully, they'll ensure the efficiency in investigation. One thing recently that there is now specialist legal project managers who can assist in the investigations. I think at Ashurst we have those people as well. Those teams can help you around the projects because if you have multiple jurisdictions, multiple time zones, a lot of people, a lot of documents, that's may be a lot.

ALEXANDER DMITRENKO:

Frankly, I think it's still important for lawyers if you're running an investigation to be quite hands on and to ensure that you understand where things are heading if there's any really hard documents coming up because you may uncover something else. And typically, Rani, as you know, if there is one issue, there may be other issues. It means, there's a smoke. There's more than one fire potentially. So, you need to act very quickly on those things. And that's why I would recommend, even though you may be using the legal specialist who manage the project, to still have the lawyers involved in all the steps of the process because you may need to adjust the search terms, you may need to have the reporting to the client very quickly, you may need to decide on some even self-reporting issues, you may need to talk to the regulator very early on. All of those things do require the legal attention. So, I would recommend that to be aligned and lawyers to be actively involved in the process.

Rani John:

Oh, excellent points, Alexander. And there's so much to think about. Well, thank you so much for joining us on the podcast today. It's been terrific to hear your insights on some of the many complex issues that come with multi-jurisdictional investigations.

ALEXANDER DMITRENKO:

Rani, as you and I tell our clients, we hope they won't need our cross border investigative services, but human nature prevails. We see clients, unfortunately, where things can go wrong and we provide solutions and support clients. You guys know where to find us, very happy to help and hope you enjoyed this. Thanks again for hosting me today.

Rani John:

So, we hope you've enjoyed today's chat. If you'd like to catch up on previous episodes of Investigations Unpacked, you can find these at ashurst.com/podcasts. We'd also really appreciate your feedback on our podcast, so please leave us a rating or review if you can. Thanks again for listening.