Helplines, Investigations, Case Management & Databases...EthicsLine Database • Getting Started ... – Determine the required output • What data do you need on the reports •

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Helplines, Investigations, Case Management & Databases

Patricia J. EllisVice President, Business Ethics and Compliance

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Topics

• Establishing a Database

• Managing an Ethics Line

• Effective InternalInvestigations

Kirk Lavoie

Paul Esposito

Glen Schuhmacher

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Create Case in

EAS*

Receive Investigative

ReportEvaluate Results

• Advise Complainant of Results

• Obtain ComplainantSatisfaction Feedback

Close Out Corporate

Database (EAS*)

Close Out Local Case

File (History)

Determine Disposition

• Work with leadership to determine required corrective action or discipline

• Convene Ethics Committee, as appropriate

• Implement corrective action or discipline, if necessary

Yes

*Ethics Administration System (Database)

Interview and Take Note:

- In Person- Phone

Formal Case? Memo to File in EAS*

NoQuery and/or Allegation Received

by Ethics Office

Ethics Case Management (A Model)

**Timing of an initial voluntary disclosure is case sensitive and may occur at any point in this process (following an initial investigation)

Form Investigative

Team

Conduct Internal

Investigation

- Pulse Progress- Manage

InvestigationVoluntary

Disclosure**?Yes

No

To Cognizant U.S. Government Department/Agency

As Required

Establishing a Database

Kirk Lavoie

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EthicsLine Database

• Why track EthicsLine calls?

– Management reports– Trend analysis– Early warning indicators– Measure training program effectiveness– Consistent treatment– Investigation status (open, closed, substantiated …)

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EthicsLine Database

• Getting Started ...

– Determine the required output• What data do you need on the reports• What level of detail or granularity is needed• Are there charts and graphs• What is the timing and frequency of the reporting• Do you need ad hoc reporting• Do you need to export the data to other systems

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EthicsLine Database


– Determine the required output• Currently

>no ad hoc>no graphics>no export >static report layouts

• Considering>using other tools to access the data we have>replacement

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Memorandum of Communications Log Case Number: Company: Reported by: Date: Segment: Telephone (w): Received by:Facility: Telephone (h): Input form:

Reported Data

Synopsis:Details of Issue:Other Data:Referred to:

Required Action:Reply due by:

Office of Business Ethics and Compliance COMPANY MOST PRIVATE

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Companies by DispositionActive during from-date to to-dateAlleged Misconduct

Co#1 Co#2 Co#3 Co#4 TotalDispositionSubstantiatedInternal ControlUnsubstantiatedTOTAL CLOSEDOpen as of to-dateTOTAL CASES


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Co#1 by DispositionActive during from-date to to-dateAlleged Misconduct

Div#1 Div#2 Div#3 TotalDispositionSubstantiatedInternal ControlUnsubstantiatedTOTAL CLOSEDOpen as of to-dateTOTAL CASES


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Companies by CategoryActive during from-date to to-dateAlleged Misconduct

Co#1 Co#2 Co#3 Co#4 TotalCategoryBusiness CourtesiesContract ComplianceInternational RegulationsLabor ReportingOtherTOTAL CASES


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Co#1 by CategoryActive during from-date to to-dateAlleged Misconduct

Div#1 Div#2 Div#3 TotalCategoryBusiness CourtesiesContract ComplianceInternational RegulationsLabor ReportingOtherTOTAL CASES


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Nature and Volume of CommunicationsCases Opened during from-date to to-date

Alleged Personnel Seeking Total %Misconduct Concerns Advice

Company #1Division #1Division #2Division #3

Company #2Division #1Division #2

TOTAL CASES


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EthicsLine Database


– Determine the platform• What are the security concerns• What are the company standards• How many users • Where are the users• Do they have the resource requirements

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EthicsLine Database


– Determine the platform• Currently

>stand alone >limited network sharing of data>everyone using the same system>FoxPro

• Considering>web enabled / served>multi user>dynamic

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EthicsLine Database


– Determine the input• Source of input• Will all the input be relevant for all users• Are there data items that can be entered as codes to

facilitate use>standardization >how stable or dynamic will these codes be

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EthicsLine Database

• Standard Case Types

– Alleged Misconduct– Personnel Concerns– Seeking Advice

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EthicsLine Database

Labor Reporting ImproprietiesMisuse or Abuse of AssetsQuality or Manufacturing IssuesRecords FalsificationTheftCompensation and Benefits IssuesDiscipline and Termination IssuesDiscriminationEmployee Misconduct - MiscellaneousEmployment and Placement IssuesIntimidation or HarassmentManagement Practices and Performance

RetributionSexual HarassmentSubstance Abuse

Standard Case Categories

Conflict of InterestContract ComplianceEnvironmental IssuesEstimating/PricingFinancial AccountingHealth and Safety IssuesInternational RegulationsMarketing IssuesProcurement IssuesProduct SubstitutionProprietary or Competitive Data

Business CourtesiesHealth and Safety Issuesother

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EthicsLine Database


– Back up / Recovery• How do I do this manually • How is the data backed up• How do I get it back• What is the security of the back up

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EthicsLine Database


– Growth / Expansion• Will the system grow with my needs• Will it work on future platforms (hardware / software)• Can I update it without involving the supplier

Managing an Ethics Line

Paul Esposito

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Managing the EthicsLine

• Methods of Communication• Knowledge / Skills of the EthicsLine Administrator• Process / Confidentiality• Initial Risk Assessment• Scope of Ethics and Compliance Issues• Documentation • Assigning the Investigator• Closing the Case

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Methods of Communication

• The Corporate EthicsLine & EthicsLine Tape– Toll-free– Staffed during business hours, Monday - Friday– Secured– Corporate office receives 58% of all contacts

• Fax– Toll-free– Staffed during business hours, Monday - Friday– Secured

• Office visit

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Methods of Communication

• Mail– P.O. Box– Inter-Company– Delivered directly to the Ethics Office– Secured

• E-mail via Ethics website– Internet– Intranet– Not secured

• Operations’ Ethics Officers– Toll-free – Point of Contact

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Knowledge/Skills of the Administrator

• Company knowledge– Geographic locations– Company’s organizational structure, point of contact -

HR, Legal, Security, Finance, Audit, etc...– Company policy and procedures

• Knowledge of ethical reasoning and decision making models

• Background in Law/Audit/Contracts/Accounting/HR• Strong interpersonal skills

– Conflict management, interviewing, listening, coaching/counseling, handling “crisis” situations

• Sensitivity to cultural diversity– Geographic, ethnic, industry differences and corporate

subculturesWhen the phone rings, answer it!

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Process / Confidentiality

• Explain the investigation process– Keeps the caller informed, and earns their trust– Helps ease callers #1 fear

• Retribution– Retribution for good faith reports is not tolerated

• Self Identify– 73% of all callers self identify

• Confidential– Confidentiality will be respected to the maximum

extent possible• Anonymous

– Establish system to follow-up with anonymous callers

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Initial Risk Assessment

• Initial report drives risk assessment and early stages of an investigation– Clarify the nature and scope of issues– Who, what, where, when, how and why?– Spot the issue, why is the caller really contacting

the Ethics Office?• Be a good listener and make the caller feel

comfortable• Active listening• Take detailed notes• “Is there anything else you would like to discuss?”

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Scope of Issues

• Alleged Misconduct– Labor reporting improprieties, misuse of assets,

procurement practices, FCPA, export compliance, conflicts of interest, etc...

• Personnel Concerns– Employment issues, disciplinary actions,

management practices, etc... – Employees encouraged to bring concerns to

management or HR (Ethics Office may assist with referral)

– 59% of all contacts receive immediate response or are guided to appropriate management/HR

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Scope of Issues

• Asking Questions/Seeking Advice– Employees are most concerned about business

courtesies, benefits, potential conflicts of interest and employment/placement issues

• Constrained on matters covered by collective bargaining agreements or if party has retained legal counsel

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Documentation

• Transcribe notes into database as soon as possible• Just the facts• Maintain all supporting documentation with

assigned case number and include in case file• Documents are discoverable by legal process and

may be subject to voluntary disclosure

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Assigning the Investigator

• Assign an Investigator who is objective, independent, and a subject matter expert– corporate or local

• Allegations of fraud, criminal conduct, other illegal activity– Consult immediately with Company General Counsel

• Allegations of security breach/compromise of classified data– Referred to Security Office

• Allegations of mischarging– Referred to Controller or Internal Audit

• Allegations involving product safety or quality– Referred to operation unit involved and Quality

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Closing the Case

• Allegations of Misconduct are coordinated with Corporate Ethics Office– Disciplinary actions - reasonable, fair and consistent– Corrective actions - financial adjustments, training,

improved controls– Reporter must be informed of results - verbally

Effective Internal Investigations

Glen Schuhmacher

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Ten Elements of an Effective Corporate Internal Investigation

• Step 1: Receipt of employee or stakeholder concern• Step 2: Case management• Step 3: Risk assessment & analysis• Step 4: Plan the investigation• Step 5: Determine required or prudent interim corrective

actions• Step 6: Conduct the internal investigation• Step 7: Factual analysis and determine final case concept• Step 8: Prepare the Report of Investigation• Step 9: Implementing the results of the investigation• Step 10: Case documentation

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Receipt of Employee orStakeholder Concern

• Issue: The initial contact starts the investigation and can impact all subsequent steps.

• Lessons Learned:– Get as much information as possible– Earn the caller’s trust– Take detailed notes– Establish a way to contact the caller if necessary

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Ethics Case Management

• Issue: Fixing case management responsibility

• Lessons Learned:– Case manager establishes the investigative framework

or case concept but does not generally micromanage the investigation

– Case concept provides order and purpose to investigator actions

– Investigative requirements may grow and change– Fix case management responsibility BEFORE onset of

investigation – Case manager is Company focal point for investigative

status and findings that require immediate corrective action

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Ethics Case Management

• Issue: Fixing case management responsibility

• Lessons Learned:– Know your investigative resources - establish Points

of Contact

• Security• Legal• Internal Audit• Quality• Supply Chain• Finance• Environmental, Health & Safety• Human Resources

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Conduct a Risk Analysis

• Issue: Collaborate with business unit and/or corporate office staff leaders in review and analysis of the reported allegations/concerns

• Lessons Learned:– Case management must be a collaborative process– Led by the ethics officer or responsible business

unit staff leader– Identify required investigative resources– Determine at the start if the attorney-client privilege

is required and reassess where necessary

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Conduct a Risk Analysis

• Lessons Learned:– Seek early involvement of Law Department and

others (e.g., Government Accounting, Procurement, Quality, Security Investigations, etc.) knowledgeable in relevant law, regulation and Company policy and procedure. However, confidentiality is crucial and those informed of the allegation(s) and investigation must have “a need to know”

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Plan the Investigation

• Issue: Case manager and investigator roles and skill sets

• Lessons Learned:– Case manager must have multidiscipline knowledge

of laws, regulations and Company policies, rules and business processes

– Investigator(s) must have subject-matter expertise in matter(s) at hand

– Case manager and investigator(s) must be objective, independent and free of business unit or organizational bias/parochialism. Generally requires that such roles be performed at the next organizational level

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Plan the Investigation

• Issue: Case manager and investigator roles and skill sets

• Lessons Learned:– Case manager collaborates with investigator(s) in

designing the case concept, scope and investigative strategy. Ensures that they have “room to roam”

– Identify role of investigator

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Determine Required or PrudentInterim Corrective Actions

• Issue: Implementing interim corrective action(s) pending completion of the investigation

• Lessons Learned:– It may be in the Company’s best interest to take

prudent interim corrective actions – Such actions may include temporary employee

reassignment, employee suspension, supplier suspension, etc.

– Reinforce that there is no tolerance for even the ‘appearance of impropriety’

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Determine Required or PrudentInterim Corrective Actions

• Issue: Implementing interim corrective action(s) pending completion of the investigation

• Lessons Learned:– Investigative team provides facts, evidence of

wrongdoing and identifies internal control deficiencies for which corrective action would likely be appropriate

– Leadership’s job is to approve and implement interim corrective action(s) if appropriate

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Conduct the Internal Investigation

• Issue: Conceptualize the case and develop/implement an investigative strategy

• Lessons Learned:– Case manager conceptualizes the case and

formulates a Case Concept that:• Establishes the parameters for witness/subject

interviews and specific lines of questioning• Includes: leadership/staff inputs; results of

documentation reviews (including prior investigations), characteristics of the local business culture, initial results from early specialized audits, etc

• Frames and drives the investigative strategy and determines the actions of the investigator

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• Issue: Conceptualize the case and develop/implement an investigative strategy

• Lessons Learned:– Without a Case Concept, investigators may dismiss,

discount and/or fail to take account of relevant facts

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• Issue: Sequencing, conducting and documenting interviews--management, witnesses, external entities, subject(s)

• Lessons Learned:– Subject interviews depend on results of witness

interviews, review of documentation, interim audit results and other inputs. It is generally inappropriate to close a case based solely on a subject interview

– Ensure coordination with Labor Relations when interviewing union-represented employees

– Prepare interview summaries within a reasonable period following the interview date

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• Issue: Sequencing, conducting and documenting interviews--management, witnesses, external entities, subject(s)

• Lessons Learned:– Confidentiality is prerequisite to foreclosing

defamation claims--distribution of case documents determined by the case manager and counsel, if assigned. Exercise discretion in e-mail use

– Incorporate required markings or legend; e.g., ‘attorney-client privilege,’ etc.

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Weingarten Right

• Background:– National Labor Relations Act created right of

employees to “engage in…concerted activities for the purpose of mutual aid and protection”

– In Weingarten, the Supreme Court held this included right to have a union representative present during an investigatory interview that the employee reasonably believed might result in disciplinary action

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Weingarten Right

• Impact of National Labor Relations Board Decision -- Epilepsy Foundation– Extended Weingarten right to non-union employees– Entitled employee to the assistance of a co-worker of

his/her choice during the interview--not an attorney, family member or friend

– Does not obligate the Company to delay interview if co-worker of choice is unavailable

– Co-worker may participate in interview; but may not disrupt it

– Does not obligate the Company to inform employee of Weingarten right

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• Issue: Importance of case manager updates for Company counsel (if relevant), business unit leadership and other Company officials

• Lessons Learned:– Case Manager establishes the form, scope and

frequency of required updates from the investigator or the investigative team

– Allows for the Case Manager to assess the effectiveness of the investigative strategy and overarching case concept

– Used by the Law Department in determining the timing and content of disclosures to the USG or other external agencies

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• Issue: Importance of case manager updates for Company counsel (if relevant), business unit leadership and other Company officials

• Lessons Learned:– Used by the leadership to gauge scope and impact

of wrongdoing, if any– Case manager determines how best to treat

secondary issues that surface during the course of the investigation

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Close the Investigative Phase

• Issue: Analyzing the facts and formulating a Final Case Concept that resolves the allegation(s) at hand

• Lessons Learned:– The Case Manager is responsible for

• Analyzing all of the relevant facts and determining the final case concept

• Collaborating with the investigative team and counsel

• Resolving disagreements within the investigative team

• Concluding that the allegation(s) have been resolved and closing the investigative phase

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• Issue: Analyzing the facts and formulating a Final Case Concept that resolves the allegation(s) at hand

• Lessons Learned:– Final case concept must resolve nature, scope and

reasons for violation(s), resolve lingering concern(s) relating to the offender’s intent, address mitigation and document interim corrective actions

– It must support any enforcement agency disclosure requirements

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• Issue: Mitigation

• Lessons Learned:– Consider law, regulation, policy, organization,

business processes, culture, internal controls, personalities, etc. in describing misconduct

– Case manager integrates causes, conditions and mitigating considerations in closing the investigation

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Report of Investigation

• Issue: Format for a Report of Investigation

• Lessons Learned:– Elements common to a written Report of

Investigation• Background• Summary of Findings• Details of the Investigation• Conclusions• Interim Corrective Actions

– Standard format provides the required level of detail for leadership to make decisions consistent with Company practice and precedent

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Report of Investigation

• Issue: Preparing the Report of Investigation

• Lessons Learned:– Draft Report of Investigation

• Prepared by Case manager • Identifies interim corrective actions (including

discipline), if any• May include proposed internal control

improvements that became apparent during the course of the investigation

• Other control weaknesses disclosed and reported to management under separate cover

• Confidentiality is crucial--distribution limited to those with a strict “need to know”

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Implement the Results of the Investigation

• Issue: Implementing and documenting the results of investigative findings

• Lessons Learned:– Implementation of corrective actions is a leadership

responsibility. Leaders must support investigative results and undertake corrective actions where appropriate

– Evidence of completed corrective actions provided to the case manager for inclusion in the relevant case file

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Implement the Results of the Investigation

• Issue: Implementing and documenting the results of investigative findings

• Lessons Learned:– Challenges to investigative findings and related

disciplinary action(s) may require the case manager and/or investigator(s) to be witnesses in internal proceedings and/or litigation

– Notwithstanding the completeness of an internal investigation and the appropriateness of any related discipline, appeals by union-represented employees using an established grievance procedure can yield a different outcome (e.g., arbitrator order reinstating discharged employee)

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Questions or Comments

Patricia J. Ellis, Vice President-Business Ethics and Compliance

Raytheon Company141 Spring StreetLexington, MA 02421(781)-860-1708(781)-860-1616 (Fax)[email protected]