1 Introduction
As a result of the investigations described in the previous chapter, a decision needs to be made about how to deal with the norm violation identified through the investigations (if any). This chapter describes such solutions as put forward by respondents. Although reporting a norm violation to the law enforcement authorities is a possibility in the case that a criminal offence has been committed, most solutions are more privately focused (Williams, 2014: 67). The different settlement solutions presented in this chapter relate to different parts of the (Dutch) legal system and show the unique position of corporate investigators (Williams, 2005). As discussed in Chapter 2 of this book, corporate investigators move in multiple regulatory contexts and legal frameworks, which creates room for forum shopping . The interdisciplinary character of the sector reveals itself also in the context of jurisdiction: the market for corporate investigation services constitutes a commercial sector (regulated by private law), offering a product that may have an outcome either relating to public law (criminal proceedings), private law (contract or tort), labour law (labour relations) or internal regulations.
Corporate settlement solutions following corporate investigations (This schematic is an adaptation of one published in Meerts [2013: 4])
There are instances in which organisations are not provided with the choice to file an official report to law enforcement authorities. In certain cases, the authorities may already be involved, prior to any conscious decision made by the organisation. Cases that start with criminal investigations and in which corporate investigations are initiated only after the organisation has been informed by law enforcement authorities are an example of this. Case studies 1 and 11, examined as part of the research underlying this book, are examples of this (see the next chapter for more details). A report to law enforcement authorities is a logical outcome here, as these authorities have initiated the investigations and criminal charges are likely. Although not necessary per se (law enforcement authorities are already investigating ex officio), a report to the authorities is used in such a situation to provide the authorities with additional information and as a reputation management tool (see below for more on this strategic behaviour). When an official report to law enforcement authorities is made, other types of corporate settlements are not necessarily dismissed as options, as multiple settlements may be chosen alongside each other in a single case. An organisation may for example choose to report a crime to the police, dismiss the person or launch a civil claim for damages based on private law. In addition to the situation in which law enforcement authorities are involved of their own volition, the choice whether or not to report might not be available for all the investigations done by corporate investigators. One category of norm violations which cannot be reported to the criminal justice system is formed by those norm violations which are not defined as criminal in the Criminal Code. These behaviours fall outside the jurisdiction of the criminal justice system.
They’ll probably won’t do anything with it, which makes sense. CM: why? Investigator: because they can’t. To go after him in civil court would be somewhat useless, they can’t get the money back. The work was authorised by someone in the organisation so the only thing they can do is sue the person for giving unauthorised permission. But that person doesn’t work there anymore, otherwise it would have meant that he’d be fired. And if they go public, the person who should have gotten the contract for the work will want compensation. So it’ll only cost more money. But they wanted to know what was going on so they’re satisfied with the results of the investigations. (Excerpt from observation 1—informal conversation)
Usually, doing nothing is not an option. That’s my fall-back position in these kinds of situations. On one side of the spectrum you have the option to solve it entirely internally. So think of measures to prevent this [from] happening again. And I always say, doing nothing is not an option because once you are aware of an internal issue and you don’t act and it does happen again, that will make you liable based on article 51 of the Criminal Code [as being responsible for de facto committing the offence by not acting to prevent it]. So you really have to be careful there. But it may happen that an organisation wants to just solve the situation internally, for example by creating a new code of conduct and implementing that. It may also be that they want to involve their auditing accountant so then these measures which are taken to improve procedure have to be coordinated with the accountant. So you can choose how many people you involve. (Respondent 30—forensic legal investigator/client)
When there is enough information available to take measures against individuals and there are no considerations opposing action, broadly four categories of possible consequences that follow a corporate investigation may be identified. These break down into criminal justice solutions (criminal justice), a resort to civil court (private law proceedings), settlement agreements (contract law) and internal solutions (internal regulations). The fieldwork shows that one major first decision point is whether or not to report the matter to the police.1 Below, the considerations for and against reporting to law enforcement authorities are discussed, after which more private forms of corporate settlement are considered.
2 To Report or to Not Report, That’s the Question
There is no guideline or any directive from above with regard to the decision whether or not to report a case to the police, the decision is made on a case-by-case basis. A report to the police is not very common. There are several reasons for that. First, as you’ll probably know by now, the police don’t give such cases priority so they will almost never investigate. Secondly, we have noticed that if it does come to a court case, judges often will dismiss the case or apply no sanction as they see the dismissal as punishment enough. Thirdly, it takes a lot of time to report a case to the police, especially when it comes to specialist knowledge from within our organisation. It is difficult to make lay people understand what happened. Reputation can play a role, but the organisation isn’t very much bothered about that. As I said before, we are a reflection of society and rotten apples are found in society so they are also found in our organisation. When a report is made to the police, it hardly ever happens that we report to the police at the moment we get a case. Usually we investigate and see what has happened before the decision is made whether or not to report. Sometimes, for example in a case like [case study 11], law enforcement is already in. FIOD [the investigative service of the Dutch tax authority] brought the case to us. Then we may report during the process as the injured party. In [case study 13] it was decided to report because we found that there was a criminal organisation involved. It had happened before, in other organisations: two temps are placed in the financial administration department of an organisation as Trojan horses and at a certain point in time these persons start to falsify invoices. These are then paid to shell companies ‘owned’ by straw men. We wanted to prevent that they carried on with their activities and victimise other firms, so we reported the case to the police. [CM: the police did not investigate]. (Excerpt from observation 2—informal conversation)
In that big case we did recently there have been multiple raids by the police. The people in charge of the company had no idea. So they came to us, ‘there has been a raid, apparently we have a fraud problem but we are completely in the dark about specifics, so please investigate’. (Respondent 5—corporate investigator)
Corporate investigators are often called into investigate further. The information flow from law enforcement to the organisation is often very limited during criminal investigations. The corporate investigations are then meant to provide the organisation with information—usually law enforcement authorities will only inform the organisation after the criminal investigations have been concluded (which may take a long time).
When law enforcement agencies are already involved prior to corporate investigations, the process of investigation as described in the previous chapter is also affected. In these cases, corporate investigators try to adapt their investigative activities to the criminal investigations. ‘When the police or FIOD are involved you have to wait to take action because otherwise you’ll disturb their investigative process’ (Respondent 43—corporate investigator). This may for example mean that certain people are not interviewed just yet or that a dismissal is postponed. Respondents indicate that in these cases in which law enforcement agencies are already involved, they often make an official report to law enforcement authorities during the investigations, as this allows them to hand over information without the risk of breaking (privacy) laws. Chapter 5 discusses public-private relationships and information sharing in more detail. At this point, it is important to note that although the corporate investigations form independent investigations, ending in a report to the client, in the specific situation of law enforcement involvement prior to the corporate investigations, the autonomy of corporate investigators is rather limited. The question whether or not to involve criminal justice authorities is not relevant in such a case and during investigations, law enforcement authorities may influence the process by asking for specific information. The centre of gravity in such situations lies with the criminal justice procedure: respondents with a corporate investigation background indicate that they endeavour not to hamper criminal justice proceedings with their investigative actions.2
Many cases, however, start without the initial involvement of law enforcement agencies. Here, organisations and corporate investigators retain the autonomy to decide whether or not to make an official report and mobilise law enforcement authorities. As we have seen in Chapter 3, many organisations prefer to conduct internal investigations before such a decision is made. One reason for this is that it is not always clear from the beginning whether or not the norm violation may be defined as criminal in the sense of the Criminal Code (Klerks & Scholtes, 2001). The decision whether or not to involve law enforcement authorities is commonly made only after corporate investigations have been concluded. Below, (strategic and normative) considerations which may induce organisations to report are discussed (Sect. 2.2). To start with, however, Sect. 2.1 focuses on considerations organisations may have to avoid reporting to the authorities.
2.1 Considerations Against Reporting to the Authorities
In the report, Observation Company 1 mentions the option of a report to the police. The advice was not to report to the police. The report does conclude that the actions can be qualified as criminal in the sense of the Criminal Code. The reasons given to substantiate the advice not to report in this case are that the chances the case will eventually reach criminal court are slim; that the criminal justice system can take a lot of time even in the decision whether or not to proceed with the matter, leaving everyone involved in a situation of doubt and uncertainty; and finally, that there is a real possibility of publicity, which can harm the persons involved as well as the organisation. (Observation 1—investigations report of case study 5)
It is a well-researched phenomenon that organisations do not report many (criminally definable) norm violations against them to law enforcement authorities (cf. Gill, 2013; Gill & Hart, 1997, 1999; Hoogenboom, 1988; Steenhuis, 2011; TNS Nipo/WODC, 2011). Research by PricewaterhouseCoopers for example reveals that in cases with employee involvement, in 24% (for traditional crimes) and 42% (for cyber-crimes) of the cases a report is made to the police (PwC, 2014). Another interesting outcome of this research is that a mere 9% of cases (of economic crime) is revealed by investigative endeavours of law enforcement authorities. It therefore seems to be a plausible conclusion that most cases of internal crime3 within organisations do not reach public law enforcement. There are multiple reasons for this circumstance and this section focuses on the most prominent ones.
The things we investigate are cases with an internal component and they are linked to either criminal behaviour or integrity breaches. You could say criminal is what is defined as such in the Criminal Code and integrity breaches are defined in our code of conduct. There are crossovers off course, for example [behaviour that is a breach of both the Criminal Code and] our internal guidelines. Business principles. (Respondent 10—corporate investigator)
The forensic instruments are not just there for a quest for the truth in criminal cases. Our society has become so complicated that there are also norm violations outside criminal justice that need forensic expertise and forensic surety and truth seeking have become quite important there as well. (Respondent 26—corporate investigator)
I feel pretty strongly about this, when you feel you can’t conduct your investigations in an independent and professional manner, you have to give the assignment back. So if a client or a lawyer obstructs our investigations in such a way that I will not be able to responsibly put my signature at the bottom of the report, that it will tarnish our good name as investigators, well then I think you should cease your investigations. (Respondent 13—corporate investigator)
The fact remains, however, that even when investigations are done independently and norm violations of the organisation are included in the report, the client may decide not to act upon that part of the corporate investigations report. Respondents indicate that while (punitive) sanctions often fall upon individuals, organisations commonly take action with regard to the adaptation of procedures as well as a result of the corporate investigations report. In this way, the organisation is able to correct the situation without being punished or held liable in criminal or civil court.
People often say ‘It shouldn’t come out because that’s bad press’ but look it can happen to anyone. It happens. But just say, ‘this is bad, it shouldn’t have happened, we gave the orders to look into it and to figure out how we can prevent it in future. We’ve learned from it and we’ve held the person responsible liable, through private law or criminal law or whatever. We’ve done everything you may expect from us in these circumstances’. Hiding behind lawyers will only make the damage far worse when it comes out in the end. ‘If we report to the police we’ll have to face open court’. So? So be it. And we say, we have plenty cases to which no one takes any notice. And even if they do, fine. You can say: it happened and we’ve dealt with it. (Respondent 13—corporate investigator)
You lose control. You don’t know how long it will take, what they’re going to investigate. They might say ok we’ve looked at it but by the way we also found something else and we’re investigating that too. It might back-fire on you. So the criminal justice part is the least interesting solution for organisations. (Respondent 27—corporate investigator)
After a report to the police, you lose control over the matter. It might be a very simple case but it could easily take a year and a half to reach a court and all the while you have to deal with someone who is just a suspect, not someone who has been convicted. So it is very difficult for you as an organisation to take action against him. (Respondent 18—corporate investigator)
The loss of control over the situation may also prove problematic in the sense that the prosecutor may decide not to prosecute a matter which has much impact on the organisation in question.4 While the norm violation may be minor in the eyes of the authorities—thus making it a low priority—the impact on the organisation may be significant. Public and semi-public sector organisations, for example, place high value in public trust. A minor norm violation may do much damage to the organisation. In addition to the impact of the violation itself, a criminal justice procedure also has much impact (through reputational damage, loss of control and lengthy investigations and criminal procedures). In the Netherlands, public sector organisations are obliged to report (most) crimes committed by public officials (article 162 of the Criminal Code). However, because of the impact of (often lengthy and complicated) police investigations, in practice public sector organisations often opt for private investigations, just as commercial organisations do (Kolthoff, 2015: 165).
It’s not practical to report every one of these cases as there is no added value in that for us. About a year ago we had a big fraud case – in such circumstances you are going to have to decide whether or not to report. So will you report and never get your money back – or with a lot of effort and costs. Or you can choose not to report and he will hand over the money. Well if you can cash five million in this way, the company will probably choose that road. (Respondent 19—corporate investigator)
So reporting to the police means a loss of control. This means that your production processes are probably going to be interrupted, because, say they arrest the guy and think ‘we need more information’, they’ll just come and take it. Even if you are the one reporting. And they might think, ‘great that you reported this but we feel that there might also be a suspicion against the organisation here’. So, they come and take your books, interrupt your production process, you have no clue what the result of the criminal investigations is going to be, it might back-fire on the organisation or management, you will get bad publicity… It’s not the case that the prosecution office reports every investigation to the papers but there are cases in which they do want publicity. And they are in charge, the best you can do is try to exert some influence by consulting with them. (Respondent 28—forensic legal investigator/client)
Say you have an employee who has stolen a phone or something. Someone saw, he is confronted, he confesses. He will be suspended, two weeks later the labour agreement is dissolved, done. Now look at the other side, what if we would go to the police with this? Fourteen, fifteen months waiting for nothing? He’ll be at home, we’ll have to pay him every month and wait until he’ll be convicted? Then the question is will he appeal or not. If he does, that’s another few months at home for him. Well, combine that with the absence of communication from the police and justice department… (Respondent 18—corporate investigator)
When there’s a way to get through an investigation relatively quickly and settle the matter at once, that’s what an organisation will choose to do over a report to the police. And that’s also because – I have been a policeman myself and it’s in my blood, but it sometimes concerns me that the reaction to a report to the police seems to be more like a policy of discouragement than that they’ll actually try to help. Often people expect a lot from a report to the police, they think ok I have reported a crime, everything’s going to be ok now. And then absolutely nothing happens. (Respondent 18—corporate investigator)
Ok so there’s your report to the police. Three months later it will be discussed in a meeting and then they will prioritise and then they’ll make a plan and then they’ll have to make some room in man-hours. So about six months later they’ll start looking at it. That’s not really making much progress is it? And I’ve represented some victims, don’t think that you as a victim will be very happy with what they do with your case. They’re on your side? No they’re not. So I always say, please don’t get your hopes up. The problem-solving abilities of the criminal justice system are very, very limited. (Respondent 28—forensic legal investigator/client)
If you go to the police with such a case, they look at you as to say, don’t you have anything better for us? I mean, petty theft, that will be dismissed or maybe they get a minor fine or something. And the involved person would have lost his job already so that’s a punishment in itself. If you go the criminal justice system then and make a case out of it, that’s useless. The judge will say ok he’s been fired and he’ll just get a symbolic sentence. What’s the use of that? (Respondent 15—corporate investigator)
And after all that, the criminal court will decide whether or not a criminal act has been committed and if the judge is convinced this is the case, he will sentence the suspect. And then the public enforcement machine has done its job. The law has been enforced. And whether all those things the employee did were investigated in detail is not really important in that perspective. (Respondent 3—corporate investigator)
A company that is faced with such a problem has certain considerations. It wants, first and foremost, to make right in a private law sense: when there are damages, these must be compensated. Related to labour law , they have another issue on their hands because if someone has behaved badly, they want to get rid of him. And finally, there are the criminal justice considerations: the common good demands this to be prosecuted in criminal court, so we will report to the police. But the criminal justice consideration is not top priority, it’s the least interesting one for companies. (Respondent 27—corporate investigator)
Ok, say you’re an employee here. And I think, something’s off with her expenses. You may have made some claims of expenses in the past which haven’t been entirely by the book. The moment I decide – without prior internal investigations, it is a possibility – to go to the police and report, that’s quite some way off. Because I will damage you with that. Even if it turns out that there’s nothing there, maybe the rules were just interpreted differently or you’ve made a mistake – you will still have been damaged. That’s quite something. And additionally, I lose control over the situation, they might go and search your house, they might dig into your past, etc. And I won’t know any of that. So that might be disproportional to the situation. (Respondent 27—corporate investigator)
I think that when they handle the matter privately, it’s something that will not be reported very quickly anyway. You know, if they hadn’t hired a corporate investigator. That wouldn’t end up with the police anyway because that’s just something they don’t want. (Respondent 3—corporate investigator)
2.2 Considerations in Favour of Reporting to the Authorities
Considerations are, well first of all our self-interest as an organisation. That also means that without a formal report you won’t get anything done from the police. And secondly, the claim of damages but also the use of formal powers of investigation , we have no access to that. Or [access to] certain information sources. And paying damages to clients always requires a report to the police, you need to be transparent. (Respondent 10—corporate investigator)
If you report, there has to be a combination of measures, just a report to the police does not make much sense. A report is not a solution, you also need a private law remedy or a settlement agreement. A report to the police is never the ultimate solution for an employer, you’re going to have to act yourself as well. A criminal case does not fire the person. (Respondent 50—client)
It is possible to settle privately but still combine it with a report to the police. Because they [clients] feel it’s so reprehensible that they can’t accept it and want to make an example [of the employee]. Also towards the employees, show how you handle internal fraud by reporting to the police. As a warning. Use the possible preventative power of that. (Respondent 20—corporate investigator)
I always say, an organisation is a collection of people and mistakes will be made, it’s about human actions. The most important thing is that you stand for what you do and that you are transparent in doing so. And that you own up to things that go wrong and say ok this was bad, we take our responsibility and we’re going to fix it. You see, sweeping things under the rug will not help you in the long term. So we’re not going to advise our clients to do so. (Respondent 27—corporate investigator)
Theft and fraud, it happens. And whether it’s here or at a competitor, we all have to deal with it at some point. My colleagues from other companies say the same. That’s no breaking news. And I don’t reach the six’o clock news with a report to the police, nor with a court case, believe me. (Respondent 15—corporate investigator)
However, some big scandals are dangerous to the organisation’s existence and respondents’ views on how to handle this differently. Most state that when it is likely that a norm violation will get publicity, reporting to law enforcement authorities is the wisest course of action. ‘[Reporting] is inevitable once something has reached the papers, then you just go and report to the police. Otherwise you appear to be covering stuff up or to be an accessory to the norm violation’ (Respondent 27—corporate investigator). ‘You know, the [a large scandal] is also out in the open, speaking of reputation… You won’t keep that inside. So you shouldn’t try to because that will only work to your disadvantage’ (Respondent 18—corporate investigator). Numerous examples can be derived from the media of organisations taking a different path though (see, e.g., NRC, 2017; Radar, 2015). The damage of the information reaching the media in the end indeed seems considerable. It would be speculation to argue that the damage could have been contained if the organisation had been open about the norm violation from the moment the internal investigations were concluded.5 However, there seems to be merit in the above argument of respondents.
Interestingly, respondents suggest that because of a lack of specialised expertise and insight into the internal systems of an organisation, the police sometimes partly have to rely on information provided by corporate investigators. This might mean that investigators may be able to provide a direction for the police investigations. This is a benefit for the police as police investigations may then be done more efficiently ; however, it also means that there is room for corporate investigators to leave out the more embarrassing details. Many corporate investigators have a law enforcement background, and they prepare the report to law enforcement authorities in such a way that they feel it is easiest for the police to act upon the information (Blonk et al., 2017). ‘I always make the report to the police beforehand. So, I take my laptop and make the report in such a way that everyone who reads it may understand. So it’s clear even to outsiders with no knowledge of our internal processes’ (Respondent 16—corporate investigator). Law enforcement respondents indicate that for a case to succeed in criminal court, at the very least the suspect needs to be officially interrogated by the police with all the procedural guarantees.6 However, when the suspect again states in that formal situation that (s)he stands by the declaration made earlier to the corporate investigators, the law enforcement efforts may remain relatively minor. ‘We always try to shape the official report to the police as a sort of witness statement, in which we put all the relevant information from our investigations. So you can steer them a bit for the benefit of your client, point them in the right direction’ (Respondent 41—corporate investigator). It depends on the views of the police officers and prosecutors involved how much room there is for corporate investigators to influence a criminal justice procedure in this way (see also Chapter 5).7
Respondents also indicate that organisations occasionally report to law enforcement authorities ‘just as window dressing. They’ll report but actually they just want to wipe the slate clean and move on’ (Respondent 27—corporate investigator). As we have seen above, organisations often do not expect much from a report to law enforcement authorities and some just report because ‘it looks good’. This might be regarded as a strategic way to manage the reputational impacts a case might have. Below, other strategic considerations to report are discussed, which is followed by a deliberation of some normative considerations .
2.2.1 Strategic Considerations
There are situations in which you can’t get to the truth but it is in the company’s interest and that of the stakeholders to get to the truth. But as a corporate investigator I don’t have powers of investigation and especially when there is a third party involved and that third party does not want to cooperate, well that’s that for me. And they have their reasons not to cooperate of course. But in such a case, you might have to go to the police and say, look this is as far as I could go but with the use of your powers of investigation you can get much further. So if powers of investigation may get you information that internal methods of investigations can’t provide, yes, a report to the police is an option. (Respondent 28—forensic legal investigator/client)
But the complicated situation might arise, I know from my colleagues specialised in labour law , that the employee has defrauded the company, a report to the police might be made, there can be an investigation, but it is still difficult to fire him. So he might still be awarded a severance payment by a judge. (Respondent 30—forensic legal investigator/client)
[A report to the authorities may be presented as an alternative for a] settlement agreement with the involved person guaranteeing that he will repay the damages within a certain time span. Well, if you cooperate with that, we will not report to the police. So that’s a trade-off, whether it’s right or wrong is another thing but clients may choose to use a report to the police as leverage. (Respondent 2—corporate investigator)
I can give you an example as well of why they would report to the police. It is much cheaper to have the police and prosecutor look into it than to do it yourself. For example with a charitable organisation that might be an issue, because an internal investigation may cost 50.000, 100.000 euro, easily. And curators [in a bankruptcy case] often think like that as well, just report and let the prosecutor do it. That saves me the trouble. So money may be a reason to report instead of investigating for yourself. (Respondent 28—forensic legal investigator/client)
If it’s a listed company – they make reports to the police more often. Not always, but more often. It depends in part on the scale of the fraud, is it to be considered of material importance to the financial accountability of the organisation? That’s a difficult matter but if the result would have been ‘50’ and after the fraud it’s ‘-50’ then [it is of material importance and] the public interest is affected. And then there are those who are under scrutiny of a regulatory agency, they report more often. There are some arrangements for that, they have to report discrepancies and they often report to the police as well in such a case. Some regulatory agencies have leniency arrangements – if you self-report you might get off with a minor fine or nothing at all. That may be of importance in the decision. It’s a very complex field of operations, there are all kinds of organisations and combinations. But in none of these categories of organisations reporting to the police is a law of nature. (Respondent 1—corporate investigator)
The regulatory agency might expect a company to report to the police. And they might expect the company to get to the bottom of what happened. And inserting criminal law into the equation means that the company can move on without being afraid that some government organisation might get them at a later point in time. That can be very threatening to a corporation. For example, say you are an international trading firm and there are suspicions against you from British or American or Dutch authorities, that may limit your business severely. You’re not able to give World Bank approved products to your customers anymore. And every contract has its anti-corruption provisions. And you’ll be excluded from public tenders from the government. So settling the matter with the use of criminal law has certain benefits for companies, it allows them to move on and participate in tenders and the like. Of course they can choose not to. But they do run the risk the government will step in anyway, for example because the guy is fired but the matter becomes known in the public realm anyway. (Respondent 32—forensic legal investigator/client)
But what I wanted to say, Ballast Nedam [a Dutch construction company] is a case which is in the news right now, I suspect that they thought, let’s just go to the prosecutor here [the Netherlands] as fast as we can, it’s almost begging for prosecution, please prosecute us and keep us safe. Although, oddly enough the ne bis in idem principle is not recognised internationally. By most countries at least. So the nasty thing is, if you report to the Dutch authorities, get a settlement, that doesn’t mean you’re off the hook in the US if you’re involved there as well. I remember a case, Akzo [Nobel], 10 years ago or something – Akzo was prosecuted in the Netherlands, it had something to do with trading with Saddam Hussein. But anyway, they were also prosecuted somewhere else but they [the prosecutors in the second country] did take the Dutch fine into account. I would prefer it if there was a treaty of some sorts about this. But right now, the unofficial trend seems to be, if you slip up try to get prosecuted in the Netherlands, because these prosecutions are reasonable. All my American colleagues say, had Van der Hoeven [Ahold] been prosecuted in the US, he would have gotten 10 years imprisonment [instead of a fine]. Without a doubt. (Respondent 37—client)
There may be a strategic interest for a corporation to self-report to the Dutch authorities. For example, in a case that has worldwide relevance, where American and English regulators or prosecutors may get involved, it might be in the best interest of that company to make sure that the criminal case is done here, because of our lenient criminal climate. The Code of Criminal Procedure prohibits the Dutch prosecution office to comply with requests for legal assistance in cases they are investigating themselves. So you sometimes see lawyers running to the prosecutor to please investigate, because they know the risk that there’s an American criminal investigation is greatly diminished then. (Respondent 30—forensic legal investigator/client)
By forum shopping in this way, the organisation may attempt to be tried in the more lenient jurisdiction, aiming for the outcome which is most beneficial to the continuation of the organisation.
2.2.2 Normative Considerations
I feel that when someone has stolen 200.000 euros, that person should be held accountable in criminal court and you should report it to the police and you should make an example out of him. You know, to show that you will not accept that as an organisation. And that you’ll do anything to make sure it doesn’t happen again. (Respondent 5—corporate investigator)
Tell me, what do you think you will accomplish dear manager? With the interests of your company in mind? You don’t have the obligation to report, just look it up. So it’s a feeling they have, especially in the semi-public sector, [a feeling] of ‘didn’t we all agree at some point to bring all criminal offences to the attention of the law enforcement agencies?’ Well those who actually do it are heavily disappointed. (Respondent 28—forensic legal investigator/client)
I’m working on an international fraud case at the moment, we’ve been involved in the factual investigations for some time now to see what the options are. But there’s also a matter of principle for them, the client has been defrauded and in truth he just wants to report to the police out of principle. We told him, the likelihood of it being investigated by the police is very low, the chance of the person responsible ever serving one day in prison is basically zero – all of that doesn’t matter, it’s a principle thing. If that’s the goal and we can help him achieve that, that’s fine. But it doesn’t happen very often because it doesn’t solve anything. We try to be of added value to the client, it is our job to help solve the problem. A report to the police has added value to a very limited extent. It can be to satisfy the retributive needs. (Respondent 41—corporate investigator)
The added value of a report to law enforcement authorities is not very practical but moral instead. A second normative consideration to report is an experienced need for punishment. ‘Sometimes the client wants to also report to the police. It depends. Some are furious and want to report to the police no matter what’ (Respondent 2—corporate investigator). ‘The moment it gets emotional they feel the police should be involved. Private law is more about procedures, the criminal justice system is about the person, punishing the suspect’ (Respondent 12—police investigator). The corporate settlement options that do not involve a report to law enforcement authorities lack the moral indignation that can be expressed by a criminal case. ‘I had this case, they had been to civil court and the person was ordered to repay the damages. But he didn’t have any financial means. That was a reason for the organisation to report to us [prosecution office], they felt he would have gotten off too easily. They wanted retribution’ (Respondent 51—prosecutor). This expression of punishment inherent in the criminal justice system is also one of the reasons for organisations not to report, as organisations might feel that the actions taken against the employee are ‘punishment enough’. These other actions, however harsh in their consequences, do not express the moral condemnation present in a criminal justice procedure. It depends on the organisation and on the severity of the transgression whether or not this need to show moral indignation is felt.
In that regard it may help that someone is convicted and ends up on a blacklist. Because if he wants to work for a competitor in future he won’t get a certificate of good conduct because he has the conviction. So should we fire someone without reporting him to the police, he will just apply for a job at a competitor tomorrow and he may continue with his norm violations. And it has a preventative effect within the organisation as well. Employees talk. So they know we are serious about it. There are stories to be told about managers taking stuff home and employees copying that behaviour. If you don’t act upon it, that bad apple will spoil the barrel. So that’s the preventative side. And looking at it more from a societal angle, us reporting will help to ensure that that specific person can’t go on with defrauding organisations. We work with many temp agencies, should we just get rid of the person and not report and not notify the temp agency, he’ll just be put at another company. And it works both ways, if a competitor gets rid of someone without reporting and he applies here he might get the job. Because he has relevant experience and a good resumé, seems good. But all the while you will welcome a fraudster into your company without being aware of that. (Respondent 15—corporate investigator)
Case study 13 can be seen as an example of this. The reason for reporting this case was that investigators found that there was an organised crime network involved. Observation Company 2 was not the first victim. In order to prevent the frauds to continue, it was decided to report the case to the police. Investigators indicated they were disappointed that the police did not investigate the matter.
2.2.3 Timing of Law Enforcement Involvement
Sometimes the authorities are already involved from the get-go but if you stumble upon the matter yourself you’re going to have to see whether there’s any validity in your suspicions first. It depends on the urgency of the matter but generally you want to take some time to assess the severity. You don’t want to act on every false alarm. You have to realise, the moment an organisation is faced with something like this, it creates a lot of turmoil. People start to speculate, the dynamics in the organisation change, so you have to be very careful in dealing with that. (Respondent 37—client)
Let’s say you report to the police the moment you get the feeling something’s wrong. If you do that and they do act upon it, you’ll lose all control over the situation. It’s possible that the prosecutor decides to just arrest the person. Ok so then he knows what’s going on right away. That could be a problem. So that means that in practice, many clients choose to report – when they want to do that – only after we finish our internal investigations. And the recoverability of assets may be of influence here. First you make sure you seize all assets of the involved person, maybe use a settlement agreement et cetera. (Respondent 2—corporate investigator)
I usually tell them, do yourself a favour and make sure you investigate the matter first. At the end we will know what happened, if you still think you want to report – I wouldn’t know why, but if you still feel the justice department needs to be involved in this, you can report then. But it is not illegal not to report, you don’t have an obligation to report and you’re not doing anything wrong by not reporting. On the contrary, I think that if you are a responsible manager, you will investigate privately first. You have to take the interests of the organisation and your employees into account. You have to make sure that there is no unnecessary reputational damage. And the only thing you’re doing is saying, I want to know more before I decide how to handle this. (Respondent 28—forensic legal investigator/client)
Nowadays they have lists of priorities and they have to do a certain amount of fraud cases every year. Well, it’s nice for them when you can deliver a case that’s a piece of cake. When you attach a full investigative report, including the underlying evidence, with a big bow around it, it makes things easier for them. So that means you’re less likely to end up at the bottom of the pile. So if the client wants to report to the police, we can help them to increase their chances of it being investigated. (Respondent 2—corporate investigator)
Even though the above course of action does enhance the chances of a case being investigated and tried in the criminal justice system, it is far from certain this will actually happen. This section has discussed reasons for and against reporting a norm violation to the law enforcement authorities. In the remainder of the chapter, more private types of settlements are discussed.
3 The Civil Suit
The considerations set out in Sect. 2 finally lead to a decision to report to the authorities or to refrain from doing so. When a report to the authorities is not deemed the (sole) solution in a case, other options are available. The most ‘public’ one of these is the use of the civil court system. As a judge is involved here, chances are that (some) details of the case may become public knowledge. As mentioned before, this does play a role in the decision-making; however, the influence of fear for reputational damage should at the same time not be overstated. Civil courts may be involved in a corporate settlement after corporate investigations in multiple ways. For example, a civil suit may be launched against the employee for the repayment of damages suffered. ‘Damages’ is a broad term here, as the costs for investigations can also be claimed as damages.8 In addition, the organisation may ask the judge to compensate for the interest missed over the sum that has been defrauded and to make the involved employee responsible for possible fiscal consequences of the fraud. ‘Damages can also contain the costs the organisation has made for the investigations. So, the repayment of damages includes the costs for the investigations. However, the costs of the use of a lawyer do not fall within ‘damages’’ (Excerpt from observation 1—informal conversation). Case studies 1, 9, 11 and 13 are examples of cases in which a civil suit to reclaim damages was initiated against the involved persons in addition to a criminal justice procedure. In case studies 6, 7 and 10, a civil case was brought against the employee to reclaim damages, without a report to law enforcement authorities.
Often you see a report to the police being combined with civil court proceedings because, you can join as an injured party in the criminal procedure but the criminal judge will only take it into account for simple cases. For example, when you can say: ‘I’ve suffered damages, see here’s the receipt’. The moment it’s more complicated than that he’ll refer the case to civil court. (Respondent 1—corporate investigator)
It does happen. Once I had to provide legal assistance to an organisation in summary proceedings that were held against it. An ex-employee who was being investigated started the summary proceedings to get the judge to block the internal investigations. He lost the proceedings of course, there were no grounds, but it does occur that the employee takes the organisation to civil court. (Respondent 30—forensic legal investigator/client)
A civil suit by an employee is often initiated to prevent the organisation from dismissing the involved person. Case study 4 is an example of this. Respondents indicate that while it happens that a judge retracts the dismissal, usually the relationship between employer and employee has been disrupted in such a way that the labour contract is dissolved. However, the court may award the employee with a financial compensation in such a case.
3.1 The Civil Suit to Terminate a Labour Agreement
A civil suit may also be initiated by the organisation to dismiss an employee.10 Often, employer and employee may have attempted to negotiate the termination of the contract and the conditions under which this will take place, but are not able to reach an agreement. The dispute may then be settled in civil court. Damages are usually included in this civil court procedure as well. In case study 11, one of the employees involved was dismissed through the aid of civil court.
In general, a ruling by a civil court is necessary in case an employer wants to terminate the labour contract without the consent of the employee.11 The grounds for such termination may be a disrupted labour relationship or culpable malfunctioning by the employee. In both cases, the employer will need to make a plausible argument to underpin these allegations. The termination is initiated by the employer, who has to comply with the term of notice. When the judge agrees with the allegations, the employee usually has no right to unemployment benefits, nor will he be granted a severance payment. The judge may decide to award the employer with a compensation in the case of culpable malfunctioning by the employee, to be paid by the employee (Ministry of Social Affairs and Employment, 2015a). In the case of a disrupted labour relationship that can be attributed to the employer, the judge may grant the employee an additional compensation (Ministry of Social Affairs and Employment, 2015b).
3.2 The Pro Forma Procedure
One interesting (though it seems, not very frequently used)12 possibility is that the civil court is asked to validate a private agreement between employee and employer. In this case, the two parties will have negotiated the terms of separation and will have come to an agreeable solution for both parties. During the pro forma procedure, the parties provide the judge with their agreement, who looks it over and ratifies it. The actual content of the agreement is not considered closely by the judge, nor is this desired by either party. The employee formally disagrees with the solution provided by the employer but simultaneously states that (s)he will not contest it if the judge rules in favour of the employer. This practice is described as a ‘puppet show’ by many commentators (see, e.g., Beltzer, 2005). The employee merely contests the agreement to ensure the right to unemployment benefits will not be lost. This situation was deemed undesirable by the Dutch government: ‘the government notes that it is no advocate of pro forma procedures because of the unnecessary pressure on the judicial system. If parties agree about the terms of termination, no interference of a judge should be necessary’ (Eerste Kamer der Staten-Generaal, 2014: 89).
As a result of changes in labour regulation, employees no longer lose their right to unemployment benefits by agreeing to a termination of the contract (such as a settlement agreement). The advantage of the pro forma procedure for the employee is therefore no longer present. According to respondents, the employer might still deem it wise to formalise an agreement with the employee through civil court. The added value of a pro forma procedure for an employer is that it provides more security than a settlement agreement (see below), because the employee has the option to revoke the settlement agreement, while the pro forma procedure produces a court ruling which cannot be contested (although the employee may still appeal to a higher court).
Respondents mostly seem to feel that the pro forma procedure has become obsolete. ‘The judge does nothing really in such a procedure, I see it more as an extension of a settlement agreement. But it hardly ever happens, I don’t see the usefulness of a pro forma. We hardly ever use it’ (Respondent 50—client). According to respondents, many organisations feel a dismissal or a settlement agreement is a much more efficient solution. Nonetheless, the pro forma procedure remains an option. It may be used to shorten the legally defined waiting period which is used by the Dutch unemployment agency before allowing benefits or in a situation in which it is expected that the employer will not pay the severance payment agreed to (ontslag.nl, 2014). It provides both employee and employer with an enforceable court sentence and thus with more security that the termination of the labour contract holds up and that agreements will be honoured, without making the details of the case known to the wider public (van Hellenberg Hubar & Remers, 2016). While the civil court makes the final determination, both the shaping of that determination and the choice of the court as the legal venue are privately governed.
3.3 The Enterprise Court
That Enterprise Court is a special court for disputes relating to companies. It is a highly qualified part of the court of appeals and it is highly respected. No one will think of refusing the investigator access. If they do, the investigator will report to the court no access was granted and the court will fine the corporation, 100.000 euros a day. Its powers are enormous. (Respondent 32—forensic legal investigator/client)
3.4 Some Differences Between Criminal Justice and Civil Court Proceedings: The Use of Evidence
The rationales underlying a criminal justice procedure , on the one hand, and civil court proceedings, on the other, are significantly different. Criminal court is about ‘finding the truth’ in a dispute between the state and an offender, while civil court proceedings are focused on the facts as presented to the court by the parties (who are presumed to be equal). This means that when some facts are not contested by either party (even if not ‘true’), the court will accept these facts: ‘in the private law system, the trial is organised in a certain way. You litigate based on presented facts. So facts which are not presented and facts which are not contested are considered to be true’ (Respondent 40—corporate investigator). As mentioned in the previous chapter, the standard of evidence is higher in criminal court and the burden of proof lies with the state (in this case the public prosecutor). As the rationale of civil court proceedings is based on horizontal relationships, information presented in court is granted the status of a fact when neither party contests its accuracy. This means that information, which may be considered circumstantial in criminal court, may serve as evidence in civil court.
Article 152 Rv [Code of Civil Procedure] dictates that evidence may be given by all means and that the evaluation of evidence is left up to the magistrate, unless the law states differently. In a civil court procedure the general rule is not that the court should ignore illegally obtained evidence. In principle, the public interest of revealing the truth and the interests of parties to substantiate their claims, which are the basis for article 152 Rv, outweigh the importance of the exclusion of evidence. Only when there are additional circumstances, the exclusion of evidence is justified. (ECLI:NL:HR:2014:942)13
In principle, everything which is presented to the court may be used in a civil court procedure. Solid evidence obtained with the aid of private investigators is not easily removed from the procedure. But it might still be illegally obtained if you look at it from a criminal justice perspective. A criminal procedure is so different from a civil suit, they should be viewed separately. Just speaking in terms of timing for example – the civil court procedure will usually be done before the criminal procedure even started. (Respondent 50—client)
In addition to the difference in the way civil and criminal courts handle illegally obtained evidence and the timing referred to by this respondent, another notable difference is the symbolism that is attached to civil court proceedings and criminal justice. As stated, some organisations feel the need to punish the involved employee. The criminal justice system, which is largely focused on retribution and punishment, is much more suited for that than the private law system (although it is not the organisation doing the punishing in the criminal justice system but the state16). Civil court proceedings, representing horizontal (though not necessarily equal) relationships between parties, are more about compensation than punishment.
This section has discussed multiple ways to involve a civil court, some of which are fairly private (the pro forma procedure), and others may become much publicised (e.g. some large cases done by the Enterprise Court). In any case, the use of civil court is (potentially) fairly ‘open’, as the norm violation or at least relevant parts of it will become known to the court and hence, potentially, to the wider public. The sections below discuss more private ways to settle internal norm violations.
4 The Settlement Agreement: A Court-Free Arrangement
Party 2 [employee] commits to reimbursing the financial damage of party 1 [employer] within 24 months after this agreement is signed. (…) [Employee] furthermore declares to pay the legally established interest from the moment the illegal payments were made until the moment these are repaid to [employer] (…) In addition, [employee] agrees to pay the costs made by [employer] to investigate and settle the incident. (…) As far as the unlawful/illegal acts of [employee] have tax implications, [employee] agrees to fulfil those obligations independently and to free [employer] of any such obligations. (…) [Employee] states to instantly (date of signature of this Agreement) take immediate resignation from [employer] and to directly resign from employment with [employer]. (…) [Employee] agrees to irrevocably waive the invocation of a possible claim that this agreement is null or void and to place no objection or appeal against the termination of the employment relationship with [employer].17 (Observation 1—settlement agreement)
Negotiations between employer and employee resulting from the corporate investigations report usually form the basis for the settlement agreement. It is possible to hand this agreement over to a civil court for ratification in a pro forma procedure; however, this is not necessary. This type of termination of the labour contract does not need to be approved by court because it is consensual. In many cases, the settlement agreement is the corporate settlement of the norm violation. In case studies 10, 12, 16 and 20, a settlement agreement was used to terminate the labour contract. In other case studies (3 and 16),18 a settlement agreement was used as an addition to the (one-sided) dismissal of the employee. In such a case, the agreement contains arrangements about a severance payment or (more likely) a repayment of damages.
Ok so he’s gone with a settlement, you settle the matter there and that’s that. I’m rid of the guy. And you come to terms with each other about what you will and will not make public. You make a settlement agreement and a non-disclosure is usually in there - well, then we won’t talk about it anymore. From either side. We don’t always want that because we want to be able to talk about it. In case the next employer of the guy contacts us to ask, ‘how did he perform when he was with you?’, you want to be able to say, ‘we’ve kicked him out’. (Respondent 19—corporate investigator)
To stay with the example of the guy who is kicked out. Something will be arranged with him, he gets something of a severance payment and it’s stated clearly: we will not discuss this anymore. Or the word ‘fraud’ is, and will be, avoided by both parties. When parties agree about this, they should sanction the transgression of this agreement, you know a reimbursement payment if someone doesn’t stick to the arrangement. So yes, these things happen. You know, that parties keep quiet. I think you can imagine that [the employee] is fair game in a way when he sits there. And when you [CM: the investigator] have your suspicions but you can’t make it stick, you may decide ok let’s do it this way. I think that in the end both parties must make the best of a bad bargain. (Respondent 6—client)
A settlement agreement is done by mutual consent and it has a non-disclosure agreement. To me, it remains a bit risky to use it because it is showing your weakness. The legal representative of the employee often tries to get some severance payment for his client. A settlement agreement often is chosen because of a lack of strong evidence and they know that of course. So you’re going to have to get into a negotiation. So I’d rather try a dismissal on the spot. (Respondent 47—client)
It is very easy to destroy someone entirely, we are aware of the enormous power of an organisation compared to a single individual. And that might mean that we present results twice to an involved person. And that we also report information that is not beneficial to the client. For example, if you would claim expense accounts falsely three times and we investigate and say ok this is indisputable, I always also look for the person’s peers, how do they act in similar situations? (…) And I also check whether there has been a correction. Just imagine, you have written down in your report this person has claimed expenses thrice and you build your case on that, only to have the person prove at the end of the day that he has corrected it and reimbursed the money. (Respondent 27—corporate investigator)
Some organisations decide to take additional steps against someone when they have settled through a settlement agreement, for example report the person to law enforcement authorities or initiate reclamation of damages. In case study 10, for example, the labour contract of the involved person was first dissolved through a settlement agreement and after additional investigations, a civil suit was brought against him to reclaim damages. Often, this possibility of additional action has been excluded as an option in the terms of the settlement agreement. An interesting case in this regard is the 2015 news story that SNS Reaal had been reported to the law enforcement authorities by a former chairman as a result of breach of the settlement agreement.19 The CEO who was involved in the matter had come to a settlement agreement with SNS Reaal, and this agreement stated that the severance payment awarded to him could only be reclaimed by the company in the case of fraud, if this fraud was reported to the authorities within six months. SNS Reaal tried to reclaim the money because of fraud; however, they were too late (but claimed to have been in time). As a reaction, the CEO reported SNS Reaal to the police for falsification of documents. In this case, the involved person actively responded to what was in his eyes abuse of the settlement agreement (and the pending criminal and civil court cases), though many involved persons will not. However, the fact remains that there is more room for influence by the involved person in the process of negotiating the settlement agreement compared to other corporate settlements.
5 Internal Sanctions as a Solution
In addition to conclusions to corporate investigations which make use of the criminal and private law system, corporate investigations may lead to internal sanctions. Many organisations have their own array of internal regulations and sanctions. Some commentators use the term private justice specifically for this type of corporate settlement (cf. Henry, 1983; Purpura, 2019). These sanctions and the transgressions which merit them are usually embedded in the collective labour agreement or in the labour contract employees sign when entering the working relation with the employer. These sanctions are discussed with the works council of the organisation (if available). ‘People know this, it is laid down in the collective labour agreement and they are warned [against unwanted behaviour, CM]’ (Respondent 15—corporate investigator). Internal sanctions range from very mild to pretty severe. Below, internal sanctions which keep the employee inside the organisation (thus retaining the labour relationship) are discussed first. Section 5.2 goes on to consider some internal sanctions resulting in the termination of the labour contract .
5.1 Internal Sanctions: Disciplining the Employee
When you have your suspicions but you can’t prove it. In those cases someone might be removed from financial administration or you make sure he can’t access certain systems anymore. Because you might have a pretty good idea about the source of the irregularities, especially when there is also outside involvement. Or if it simply has to come from the inside but you can’t pinpoint who is involved. We might think, ‘it’s him’ and by removing that person you might solve the problem. (Respondent 6—client)
We have different kinds of warnings, you may receive an official warning, but there’s also a reprimand and a serious reprimand with a conditional discharge. And then we have downgrading salary, downgrading pay grade. Just name it. (Respondent 18—corporate investigator)
In the case studies, internal sanctions were indeed used when the norm violation was either minor, a result of faulty internal organisation (when the norm violation was not too harmful) or when no specific employee could be identified as being responsible for the norm violation. In case studies 2 and 21, the person was relocated, so (s)he could do no more harm. The involved employee in case study 21 was furthermore suspended from active duty. In case studies 11, 12 and 20, some employees who had minor involvement in the case received different kinds of warnings, with or without the obligation to pay damages. In case study 12, a manager was furthermore demoted to a lower employee position. According to investigators from Observation Company 1, there were internal sanctions in case study 7 as well but which specific sanctions could not be derived from the case report (or the memory of the investigators).
There is a very wide range of possible sanctions, which have to be communicated to employees before they may be used. This is often done in the collective labour agreement or the terms and conditions of an organisation. As the internal sanctions are part of the internal regulations, there is no legally defined standard set of sanctions. However, the sanctions mentioned by respondents fall within the general categories of warnings, reduction of benefits or salary, demotion, removal of access and (temporary) suspension. The termination of the labour relationship may be considered to be the ‘ultimate’ internal sanction. Section 5.2 focuses on this.
5.2 Termination of the Labour Contract
One could place the termination of the labour contract under the banner of internal sanctions. It is however an internal sanction which effectively puts an end to the labour relationship between employer and employee (which is why some respondents do not feel it is an ‘internal’ sanction). There are multiple ways to terminate a labour contract. The employer may ask a civil court to dissolve the contract (see Sect. 3 of this chapter), there may be a termination of the labour contract under mutual agreement (see Sect. 4), or the employer might want to dismiss someone on the spot. Furthermore, the employee may be the one initiating the separation, and in some cases, a contract might automatically cease to exist after a certain period in time. Some of these have been discussed above. In this section, the remaining relevant ways to terminate a labour contract are discussed. It is interesting to note that apart from case studies 17 and 19 (in which no involved person was identified) and case study 2 (in which there was not enough evidence to dismiss the involved person), termination of the labour contract in one way or another was part of every case study.20
Compared to the settlement agreement discussed in Sect. 4, there is less room to take the interests of the involved employee into account in these other types of termination. For example, a severance payment may be paid here. When the employer initiates the termination but the employee consents to the termination, it is not necessary to involve a court (article 7:671 under 1 BW; Ministry of Social Affairs and Employment, 2015a, 2015b). This leaves some room for negotiation and influence by the employee. By not granting consent to the termination, the employee forces the employer to go to court. An agreement may then still be inserted with regard to a severance payment or other arrangements. This does not necessarily have to be in favour of the employee: in case study 16, for example an involved person was dismissed and a payment plan for damages was also agreed to. Interestingly, consent from the employee is not necessary under certain circumstances, notably when it involves a director of a legal entity (article 7:671 under 1 e BW).
I have become less cautious, if you follow the advice of the attorneys too much you’re too careful. All they see is roadblocks, they would rather be too careful than to take a chance. But experience shows that employees hardly ever use the condition of immediacy against you. Sometimes you’re just going to have to take a chance and dismiss someone on the spot and see whether he will fight you on it. Sometimes it’s not possible, your case is too weak. Investigators find that very frustrating because to them it is obvious. I often agree and I understand where they are coming from but we have to make sure it sticks in a legal sense. (Respondent 47—client)
Summary dismissal, I am not a fan. To be honest, I think that with a summary dismissal you get into a different trajectory – the person may fight it, get a lawyer, you go to trial and all of that takes time and manpower because we will have to generate more reports to help the lawyers in trial. It’s just a far-reaching decision and it’s hard to take it back. (Respondent 18—corporate investigator)
It also depends on how strongly you feel about the matter. When your evidence is not very strong but you’re certain about the involvement of this person and you’re not willing to compromise, you can choose dismissal on the spot and wait and see whether it sticks. Sometimes we’re sticking to our guns and the employee disagrees, well he will have to appeal to the court. The thing is, our internal systems are very complex and employees may be able to hide behind them. That makes the whole thing a bit difficult in legal terms sometimes. When someone does not say in a statement that he did it, that makes things more difficult. (Respondent 47—client)
Case studies 6, 11, 12, 15 and 20 involved a summary dismissal of the involved person. Another option is that the employee is the one terminating the contract. The downside to this for the employee is that he cannot apply for unemployment benefits (which is not specific to resignation by the employee, several other types of termination also mean forfeiture of the right to unemployment benefits). On the other hand, resignation may serve the employee as it looks better on a resume than to have been dismissed. For the employer, there is the benefit of not having to go to much trouble regarding dismissal procedures and not having to pay a severance payment. In the negotiations which may follow corporate investigations, these things may be taken into account.
When the involved person is a temporary worker or has a fixed-term contract, it is easier to dismiss the person than when the labour contract is for an indefinite period, respondents suggest. One could for example choose not to renew the contract without having to dismiss the person. In this case, the employee retains the rights to unemployment benefits, no involvement of a court is necessary, and no severance payment has to be paid. However, when the employer wants to terminate the contract before that time, the same rules apply as set out above. As fixed-term contracts may be entered for multiple years, the employer might have to act prior to the end date of the contract. If the remaining period is not too lengthy, respondents suggest that the employee may be suspended from active duty in the meantime (such as was the case in case study 21).
An employee with an indefinite contract has a stronger position than temporary workers or employees with a fixed-term contract. The employer may simply not renew the contract in the case of an employee with a fixed-term contract or the services of that person will no longer be used (in the case of a temporary worker). Dismissal of a permanent employee requires a dossier, explicating reasons for dismissal (which may be formed by the corporate investigations report). Especially when it comes to summary dismissals, standards for this dossier are high as this type of dismissal does not include a notice period or court involvement. ‘Before you can fire a permanent employee you need a solid dossier, for the dismissal of a temporary employee this is not necessary. When they [temporary workers] transgress, saying goodbye is pretty easy, that’s just a matter of immediately terminating the collaboration with this person’ (Respondent 47—client). A temporary worker is employed by the temp agency, not by the organisation that uses this agency. Case studies 13 and 14 involved temporary workers who were terminated.
If we catch someone with a theft or fraud, they’ll immediately get the worst punishment. That’s the end of your job here. Prosecution works differently, you might get a probationary sentence or a fine and get another chance. Our policy is once you start doing that kind of stuff, we’re going to say goodbye. That can be pretty heavy. Someone working for years and years with us and slipping once… But the trust is gone, you know. There’s no coming back from that. (Respondent 15—corporate investigator)
6 Discussion
This chapter has explored different types of ‘follow-ups’ for corporate investigations. In the case that the norm violation may be defined as criminal, organisations might decide (mostly after the investigations have been finalised) to report the case so as to involve the criminal justice system. There are multiple considerations compelling organisations to either report or choose not to do so. Both strategic and normative considerations may underpin the decision to report. At the same time, strategic and normative considerations also influence the decision not to report. There are various reasons for organisations to prefer to handle matters privately. Most of these motivations revolve around the concepts of the framing of (economic) crime; secrecy discretion and control ; and legal flexibility and responsiveness (Williams, 2005). In cases where no criminal behaviour is involved, a report to law enforcement authorities is not even an option. Some respondents suggest that they do not report in certain cases to protect the employee who is involved. Some moral considerations may therefore be discerned here as well.
The decision whether or not to report is an important choice. Once this choice is made and the organisation has decided not to report to law enforcement authorities, other, private options remain open, as discussed in this chapter. In general terms, there are corporate settlements that involve a civil court, those that are based on negotiations and mutual agreement between the organisation and the involved person, and those that are concluded by what is often called ‘private justice’: forms of internal sanctioning. In this chapter, the different solutions provided by different legal venues are termed ‘corporate settlements’. More generally, they can be argued to provide a system of corporate justice. Within this system of corporate justice, corporate investigators and clients may be flexible, forum shopping in a way to get to the solution which is considered best suited in a certain case. This may mean that a report to the authorities is made out of strategic or normative considerations , that civil court is used to for example reclaim damages, that the private law system more generally is used to reach a mutual agreement of termination through a settlement agreement or that internal sanctioning systems are used to either punish but retain some in the organisation, or to dismiss the involved person. All of these possibilities may be used separately, but combinations between them often occur as well. A report to law enforcement authorities is for example usually combined with another corporate settlement as the report in itself does not solve the problem of the organisation. A report to law enforcement authorities seems to be regarded as an additional measure by most respondents instead of an end in itself. Other types of corporate settlements may also be combined, for example a dismissal might be accompanied by a civil suit to reclaim damages. The case studies used in this research are dominated by a form of dismissal, combined with another type or corporate settlement.
While a driving force behind the choice for a certain settlement is ‘fixing the problem at hand’, certain other considerations also seem to influence the decisions taken. The desire to punish someone might compel an employer to either report the person to law enforcement authorities or dismiss him on the spot, even when a case might not be strong enough to do so. In other instances, the necessity to repair the damage done and move on might make a settlement agreement the more likely option. It is difficult to discern a fixed decision-making process. Just as is the case with many other matters in the field of corporate investigations, deciding how to handle the matter is a decision which is made ad hoc. This chapter has discerned some considerations that may steer these decisions. The next chapter focuses on those instances in which law enforcement agencies have become involved in the corporate investigations in one way or another.