Corporate misconduct can be devastating for businesses. Whether it’s employees committing fraud, corporate theft, or presenting falsified documentation, these acts of wrongdoing can take many forms and leave lasting damage on organisations of all sizes and sectors. They’re also becoming increasingly common.
A recent survey of over 1,200 European companies published by the compliance software company found that one in five companies had experienced at least one indecent misconduct incident that had cost them more than €10,000 in the past year. One in ten of them had lost more than €100,000 due to a single incident.
With the impact and risk of corporate misconduct clear, organizations need to be prepared to take action when it happens. The problem is that it can be difficult for a business to do so without proper whistleblower systems in place, preventing them from gathering and presenting the evidence they need to ensure that justice is served. In these scenarios, corporate investigators have become a common solution to help organizations gather evidence of an act of wrongdoing and take action.
This article tells you everything you need to know about corporate investigators, including what they are, how they work, and when you need them.
What is a corporate investigator?
Corporate investigators are individuals employed by businesses to uncover evidence of corporate misconduct that could harm a company’s everyday operations and success.
They specialise in identifying internal threats, including intellectual property theft, corporate fraud, misbehaviour, and other issues that could be causing a business to lose money.
They also manage external threats, discreetly gathering information on partners and competitors to uncover evidence of industrial espionage, copyright infringement, and even the risk of security breaches and unfair trade practices by potential partners.
This saves the company time, money, and resources. Dishonest employees or external partners can be a huge liability for a business’s reputation and service, so solving the issue quickly and properly is crucial to keep operations running as smoothly as possible.
What do corporate investigators do?
Corporate investigators use a mix of skills to gather information and evidence of corporate misconduct from employees and external partners. They gather information from various sources – interviews, documents, digital forensics – and piece them together to form a clear picture of what’s happening.
They also often conduct interviews with employees, discreet technical surveillance, financial record analysis, and background checks on potential applicants.
They present any evidence they gather in reports and recommendations to help companies take appropriate action, which could involve legal proceedings, disciplinary measures, or improvements to internal controls.
This can help companies make informed decisions, protect themselves from losses, and sometimes even bolster their reputation by demonstrating they take such issues seriously.
What risks do corporate investigators manage?
1. Employee Misconduct
Employee misconduct could involve anything from embezzlement (stealing money) to harassment or violations of company policies. Corporate investigators interview employees, gather evidence like emails or witness statements, and reconstruct the timeline of events.
If there is a risk of fraud, they can also analyze financial records, identify suspicious transactions, conduct asset tracing to determine where money might be going, and speak to anyone involved to understand the motives behind the fraud.
2. External Threats
Businesses invest heavily in research and development. Corporate investigators can be hired to determine whether competitors are stealing their trade secrets or confidential information by conducting surveillance, monitoring online activity, and interviewing sources.
If a company suspects someone is copying their product or designs, investigators can also gather evidence of copyright infringement by examining product samples and purchase records and tracking down the source of the infringement, including the individuals responsible, identification of manufacturing plants, etc., as may be applicable.
3. Protecting the business
Sometimes, investigators are brought in to proactively identify potential risks before they become problems. This could involve analyzing a company’s security protocols, looking for vulnerabilities in its supply chain, or even screening applicants to ensure they can’t harm the business.
Before hiring someone for a key position, for instance, a company might hire an investigator to do a thorough background check, verifying employment history, education, and even criminal records. Investigators might also be called upon to assess the potential partner for any hidden liabilities or past legal issues before a big business deal.
Who needs corporate investigators?
1. Companies of all sizes
While big companies might have more resources to steal, even small businesses face common threats. Employee theft, expense account abuse, or data breaches can cripple a small company financially. Large corporations often have dedicated security teams or internal investigators. However, smaller businesses may not have the budget or manpower for such a department. Hiring an investigator on a case-by-case basis allows them to access this expertise when needed without the ongoing cost.
Investigators can be brought in not just for reactive investigations but also for proactive risk assessments. They can identify vulnerabilities in a company’s security protocols or financial controls, helping them plug the holes before someone exploits them. Small businesses often also compete with larger companies that have more resources for things like background checks on potential hires. Corporate investigators can help small businesses ensure they’re hiring reliable employees and entering into secure partnerships.
2. Industries prone to risk
Certain industries, like finance, healthcare, and technology, deal with highly sensitive information (financial data, medical records, intellectual property). These industries are often heavily regulated, with strict rules regarding data privacy and security. Corporate investigators help companies ensure they comply with these regulations, avoiding hefty fines and potential lawsuits. They can also be brought in to investigate potential violations and advise companies on how to rectify them.
In finance, investigators watch for elaborate fraud schemes, money laundering, or insider trading. In healthcare, they might be brought in to investigate fraudulent billing practices or the improper handling of patient data. Technology companies also rely on investigators to combat industrial espionage, where competitors try to steal their trade secrets or cutting-edge ideas.
3. Law firms and legal teams
Legal disputes can be complex, with layers of information. Corporate investigators, with their experience in interviewing people and digging into financial records, can help unearth crucial details that might have been missed by the legal team.
There’s a fine line between what a lawyer can obtain directly and what might violate client privilege. Corporate investigators can act as an extension of the legal team, gathering evidence without jeopardizing attorney-client confidentiality.
Law firms might handle not just lawsuits but also internal investigations for their clients. For instance, a company might hire a law firm to investigate allegations of sexual harassment, and the law firm, in turn, might bring in corporate investigators to conduct interviews, gather witness statements, and reconstruct the timeline of events.
4. Insurance companies
Insurance companies operate on a foundation of trust. They collect premiums from policyholders with the promise to pay out for covered losses. Unfortunately, some policyholders try to exploit this system by submitting fraudulent claims, and this has become a multi-billion dollar problem.
If an insurance company suspects fraud, they might need a strong case to deny a claim or even pursue legal action. By identifying and denying fraudulent claims, investigators help insurance companies save money. This translates to lower premiums for honest policyholders in the long run. The very presence of a corporate investigator can also act as a deterrent against fraud. Policyholders might be less likely to submit a fake claim if they know the company has a team dedicated to examining every claim in detail.
5. Government agencies
Government agencies might not seem like typical clients for corporate investigators, but they play a crucial role in upholding the law and protecting public interests. These agencies often have limited resources for in-depth investigations, and hiring corporate investigators with specialized skills and experience in areas like financial crimes or cybercrime allows them to leverage this expertise efficiently, expediting investigations and achieving better outcomes.
Corruption, such as bribery or embezzlement of public funds, can erode public trust and hinder government effectiveness. Corporate investigators, with their experience in financial forensics and following paper trails, can be instrumental in uncovering such schemes and bringing those responsible to justice.
SIP International’s Intelligence-backed investigation services
Since our establishment in 1983, SIP has successfully conducted over 50,000 estimated investigations worldwide, boasting an excellent success rate.
SIP remains current with the latest integration technologies and utilises a compliant, unique, bespoke server cyber-intelligence investigative software platform that extracts data and documents from the surface and deep web. Additionally, our specialist team infiltrates dark web chat rooms when necessary to obtain sought-after evidence.
SIP has the technical capabilities and specialised professional investigators, analytic researchers, computer/digital forensics, forensic accountants, and an established global network of local investigators, allowing us to conduct comprehensive online and on-the-ground inquiries globally.
Our diverse clientele for complex investigations ranges from regular public members to high-profile celebrities, HNW individuals, businesses of all sizes, banks, other financial institutions, and corporations.
Contact a corporate investigation expert to find out more
