More and more Latin American companies are conducting FCPA internal investigations when faced with allegations that employees or business partners have engaged in corrupt acts. This includes taking appropriate steps, such as issuing document preservation “holds,” conducting internal investigation interviews and considering voluntary disclosures to enforcement authorities. Latin American companies subject to U.S. law enforcement are also learning the importance of preserving the attorney-client privilege when conducting investigations.
The Attorney-Client Privilege. The attorney-client privilege is a U.S. evidentiary privilege that allows a client – either a company or an individual – to seek legal advice from a lawyer in confidence. The purpose of the privilege is to encourage free and open discussions between a client and the client’s attorney, which in turn promotes adherence to the law. The privilege applies when a client – either a company or an individual – communicates – either orally or in writing – with a lawyer – either inside or outside counsel — in confidence, for the purpose of obtaining legal advice. If the privilege is established, and so long as the communications are not disclosed to anyone else, neither the client nor the lawyer will be required to disclose these private communications to third parties.
The Importance of Preserving Privilege in Internal Investigations. Making sure investigations are privileged is important because it allows clients and their lawyers to discuss problems, to reach conclusions or other findings, to discuss alternative solutions and to make informed decisions based on the findings – without fear of disclosure to outside parties. This helps protect the accuracy and integrity of the review. This protection is especially important in the context of FCPA investigations, given the potential that third parties, including the U.S. government, company shareholders and other stakeholders, could seek access to highly sensitive information produced in a review. The findings of corruption investigations, by their very nature, have the potential to be harmful to a company’s interests. The review might reveal that the company has violated the FCPA, the activity is criminal in nature and wrongdoing is widespread, which the company wants to remedy. Alternatively, the review might reveal that there are some questionable practices and some employees who believe the company’s conduct is worse than it actually is. Without control over that information, companies can be left highly exposed and unable to choose the appropriate path to resolve the problems.
Because there is no way of predicting the outcome of the review when it begins, taking affirmative steps from the outset to preserve privilege is critical. It gives the company the ability to assess its problems and the alternatives facing it without the pressure that someone else will seek to use the information for his or her personal gain or to embarrass the company. If the review and the advice are privileged, company representatives can engage in frank discussions with its lawyers and can take the time to consider the company’s options. This is particularly important if the company eventually decides to produce information to the government or the public.
How to Preserve Privilege. To establish privilege in an investigation, a company should:
- Use U.S. lawyers, either in-house or external, to initiate, direct and oversee the review. If other providers, like forensic accountants or investigators, participate in the investigation, their work should be conducted under the direction and oversight of lawyers so their findings are privileged as well.
- Take steps to make clear that the investigation is being conducted to obtain legal advice. This includes marking materials as “PRIVILEGED AND CONFIDENTIAL” and informing witnesses of the legal purpose of the investigation, as discussed here.
- Limit the distribution of investigation-related materials to help protect the confidentiality of the review.
- Do not allow company representatives to discuss the review with anyone who is not involved in the review.
Other Issues of Note. While internal communications with a company’s in-house counsel can be deemed privileged, they can also be subject to challenge. This is because in-house lawyers usually perform dual roles and the line between legal and business advice can be difficult to draw. Third parties might argue that the purpose of a communication was business-related and not legal, thereby leaving vulnerable the company’s assertion of privilege. Because of this, many companies choose to involve outside lawyers as a way to clearly establish privilege.
When structuring internal investigations, companies must also concern themselves with the privilege rules of local jurisdictions. For example, in Brazil’s civil law system, confidentiality between an attorney and a client is treated as an obligation, not a privilege, that cannot be waived by either party with some specific exceptions. Companies must carefully structure their reviews to consider rules like these so that they maximize protections over the findings in all relevant jurisdictions.
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Matteson Ellis serves as Special Counsel to the FCPA and International Anti-Corruption practice group of Miller & Chevalier in Washington, DC. He is also founder and principal of Matteson Ellis Law PLLC, a law firm focusing on FCPA compliance and enforcement. He has extensive experience in a broad range of international anti-corruption areas. Previously, he worked with the anti-corruption and anti-fraud investigations and sanctions proceedings unit at The World Bank.
Mr. Ellis has helped build compliance programs associated with some of the largest FCPA settlements to date; performed internal investigations in more than 20 countries throughout the Americas, Asia, Europe and Africa considered “high corruption risk” by international monitoring organizations; investigated fraud and corruption and supported administrative sanctions and debarment proceedings for The World Bank and The Inter-American Development Bank; and is fluent in Spanish and Portuguese.
Mr. Ellis focuses particularly on the Americas, having spent several years in the region working for a Fortune 50 multinational corporation and a government ethics watchdog group. He regularly speaks on corruption matters throughout the region and is editor of the FCPAméricas Blog.
He has worked with every facet of FCPA enforcement and compliance, including legal analysis, internal investigations, third party due diligence, transactional due diligence, anti-corruption policy drafting, compliance training, compliance audits, corruption risk assessments, voluntary disclosures to the U.S. government and resolutions with the U.S. government. He has conducted anti-corruption enforcement and compliance work in the following sectors: agriculture, construction, defense, energy/oil and gas, engineering, financial services, medical devices, mining, pharmaceuticals, gaming, roads/infrastructure and technology.
Mr. Ellis received his law degree, cum laude, from Georgetown University Law Center, his masters in foreign affairs from Georgetown’s School of Foreign Service, and his B.A. from Dartmouth College. He co-founded and serves as chairman of the board of 
