Professional ways to deal with fraud and bribery allegations

Anti-corruption is a hot topic. Recent scandals in Kenya have involved household names and attracted a lot of media attention.

Often, it will be difficult for an organisation to gauge whether the allegations are in fact true. Companies will often be pressured into giving an official response, even while they scramble to uncover the facts in an internal investigation.

Kenya has a wide range of laws relevant to fraud and corruption, including The Anti-Corruption and Economic Crimes Act, the Penal Code, the Public Officers Ethics Act, the Leadership and Integrity Act, the Proceeds of Crime and Anti-Money Laundering Act and various tax legislations.

These and other written laws create a myriad of civil and criminal offences for acts of fraud, bribery and corruption. The offences cover natural persons and corporate bodies and some have extra-territorial elements. Liability may also extend to officers and employees.

Kenya is also obligated to assist in cross border investigations and the service of judicial process, having ratified both UN and African Union Conventions on corruption, and enacted written laws such as The Mutual Legal Assistance Act and Witness Summonses (Reciprocal Enforcement) Act.

These may have cross border implications and involve parallel investigations by different regulators with overlapping jurisdictions.

There are some basic tips on what to do and not to do when faced with serious allegations. There may be several distinct allegations. It is important to separate them in terms of sources of information, dates, individuals, nature of activity and any cross-border elements.

Additionally, consider whether to conduct a purely internal investigation and, if so, do not involve any staff named in the allegations.

An external investigator may bring more credibility, provided they do not have a conflict of interest.

Law advice

It is important to take local legal advice. Take independent local law advice at an early stage in the various countries involved.

Where there are several jurisdictions with differing laws, an overall strategic view will need to be taken such as legal professional privilege and differing disclosure obligations. Individuals named in the allegations may need independent legal advice.

When being faced with serious allegations, it is vital to preserve all documents and issue a “hold order” across the organisation requiring the retention of all documents and records in whatever format they exist.

Instruct the IT department to preserve electronic records. A media audit may need to be undertaken to keep track of any fresh allegations and ongoing publicity. In some cases, expert advice will need to be taken as to the drafting and release of any official statements.

Consider whether to contact key stakeholders. In some cases, it may not be possible to issue statements because of ongoing legal proceedings.

One major thing to avoid when faced with serious allegations is destroying documents. This may expose the company and its staff to additional offences and lead to a reversal of the burden of proof for some offences.

Be careful about releasing an official statement denying all of the allegations, especially where there are specific facts alleged that need to be verified.

A denial followed by some “clarifications” later will be more damaging than simply confirming that the matter is under investigation.

Even where the allegations have been previously investigated (eg in disciplinary proceedings), an additional review should be taken as to the adequacy of the same and the findings made.

Furthermore, do not assume the same laws apply — the legal landscape in relation to corruption and criminal offences differs markedly around the world and it would be a mistake to fail to take local law advice.

In addition, completely ignoring media coverage could work against dealing with major allegations. For some organisations (eg listed companies) it may not be possible to refuse to comment on allegations. For the rest, it may be unwise not to reach out to some key stakeholders.

Each case is, of course, unique and the above are some general guidelines that may assist.

Aisha is a partner, Anjarwalla & Khanna