Given the heightened regulatory focus on compliance with export control laws, it is more salient than ever to be prepared to conduct an export controls investigation in the event an issue arises.
Corporations must be able to count on both regulatory expertise and well-established white collar investigations practices to demonstrate to regulators that they are capable of conducting a thorough investigation and providing the necessary information to best avoid criminal, civil, and nonmonetary penalties.
The following checklist is based on a recent webcast hosted by the International Trade and White Collar Practice Groups at Gibson, Dunn and Crutcher LLP on “Emerging Trends in U.S. Export Control Enforcement.” The steps provided are foundational to conducting such an investigation.
- Answer the appropriate preliminary questions to set the pace and structure of your investigation.
When notice of a potential violation arises, you may have very little information initially in hand. However, it is important to ask some preliminary questions to shape the investigation.
- How did the issue arise?
- Through a routine audit or an allegation of an anonymous whistleblower?
- What is the alleged or apparent severity of the violation?
- Are there indications of willfulness or recklessness?
- Are there apparent aggregating factors?
- What is the likelihood of this allegation or issue becoming known externally?
With these questions answered, you can determine which agencies you may need to potentially engage through a voluntary self-disclosure submission, how quickly to conduct the investigation, and who should form part of the investigative team.
- Establish and protect privilege before commencing your investigation, although waiver may be strategic in the long run.
After answering your preliminary questions, you may determine that the inclusion of subject matter experts would be helpful to the investigation. However, it is important to layer in a secondary analysis regarding the establishment of privilege, before establishing the formation of your investigative team.
Some courts will consider that privilege attaches to subject matter experts that form part of the investigation, but others do not.
It also worth noting that, although advisable to establish privilege from the onset, waiver of privilege may be a strategic choice in the long run when facing an enforcement action.
Given the complex regulatory environment that surrounds export controls, advice of counsel can serve as a full defense or significant mitigating factor when arriving at a settlement decision.
- Prepare to right-size your investigation.
To solidify the scope of your investigation, you must determine in advance:
- What data is needed to complete the investigation?
- What sources of information presently exist and contain that data?
- Where are those sources stored?
- Who needs to be interviewed to provide additional needed information?
It is important to right-size your investigation to demonstrate to the relevant agencies that you’ve met your due diligence obligations through a formal investigation, while also appropriately tailoring the deployment of resources.
- Take the necessary steps to preserve and collect data that may present itself in a variety of forms.
While taking steps to conduct back-end preservation of data concentrated in key corporate software systems is essential, it is important to take steps proactively to preserve other forms of data as well.
Consider, for example, how to preserve off-platform communications, communications made through applications such as WeChat and WhatsApp, as well as other unconventional sources of data such as customs and procurement documents, engineering or IT support tickets, among others.
Also, it is important when making these data collection and preservation decisions to be mindful of cross-border privacy considerations, such as conformity with General Data Protection Regulation (GDPR), even when the data pertains to one’s own employees who sit in international offices.
- Avoid jumping to conclusions before the interview process.
The data preserved and collected is critical to conducting a complete investigation, however, the data cannot be understood in a vacuum and should be complimented by witness interviews.
Individuals can provide context that supports the identification of both mitigating and aggravating factors.
Therefore, it is generally not advisable to submit a voluntary self-disclosure to the appropriate agency based only on data collected prior to the interview process.
- Strike the right tone in the written analysis of your findings when preparing your voluntary self-disclosure submission.
Once enough information is collected to analyze the nature of any potential export control violation committed and/or any related misconduct, it is time to determine whether to make a voluntary self-disclosure.
Should a voluntary self-disclosure submission be made, it may be tempting to place significant blame on external factors within your written findings.
Instead, companies should assess their compliance programs with a critical eye and a clear path towards ensuring similar issues do not arise again.
It is important to strike the right balance between expressing candor and assuming responsibility, on the one hand, while not unnecessarily admitting to willful violations of the law, on the other hand.
- Be mindful of the interagency implications of your disclosure and the medium by which you engage your government regulator.
Although you may make the decision to disclose to one particular agency, interagency channels may result in the disclosure being flagged to other agencies.
Therefore, it is important to consider the full potential ramifications of any information included in your disclosure.
In light of these interagency connections, it is especially advisable to take opportunities to present disclosure information orally versus presenting written documentation.
