Working with Investigators: A Beneficial Partnership

In high-stakes scenarios, ensuring organisations and legal teams have readily available, expert resources can be the difference between success and catastrophe. Legal teams can maximize their resources by partnering with a corporate investigator to ensure all avenues—asset tracing and recovery, dispute support, and fraud investigations—are explored and analyzed. This article explores some scenarios in which corporate investigators can provide critical insight, and why a strong relationship between legal counsel and the investigative team is crucial to a successful outcome.

Within many matters related to disputes, legal counsel often partner with corporate investigators to help support their client’s case. In high-stakes scenarios having expert resources readily available can define the difference between success and catastrophe. Maximizing a legal team’s resources by partnering with a corporate investigator can help ensure all avenues are explored and analyzed.

By building trust between the legal and investigative teams, both parties can drive the most comprehensive outcomes for clients. This article will explore some scenarios in which corporate investigators can provide critical insight, and why a strong relationship between legal counsel and the investigative team is crucial to a successful outcome.

Asset Tracing and Recovery

Recovery is the ultimate goal of almost all commercial disputes. A favorable judgement or arbitral award is often only the beginning of complex battle to recover funds due to a client. Globalized finance and trade have created convenient and simple ways to obfuscate ownership of assets—from bank accounts and business structures to property and other tangible, high-value assets. Managing both the asset tracing and the recovery requires an investigative and legal approach that is both iterative and coordinated.

The client’s legal team manages the jurisdictional rules and regulations, determining where recovery will be most likely and how to prioritize legal tactics. An investigative team works in a complementary role to identify and evaluate assets which are worth pursuing. These inform the overall recovery strategy to determine which tactics will be most fruitful for the client: a traditional asset seizure and recovery, the collection of information designed to bring the opposing party to the negotiating table, or a combination of both. Frequently information obtained by investigators serves as a foundation for disclosure applications by the legal team. We regularly work with legal counsel to uncover complex offshore companies used by subjects who hold valuable shares in companies listed on the London Stock Exchange. In one case, through successful cooperation, we were able to determine details of shareholder structures and banking information through legal disclosures in offshore locations and were able to show direct connections between the subjects and the offshore entities.

In another example, we identified assets held outside of Russia and Ukraine by a former manager who defrauded our client. We conducted a comprehensive review and analysis of the structures used by the manager to siphon funds out of the client’s company. These structures included Russian and Ukrainian entities owned by several layers of offshore-registered companies. Through a combination of intelligence gathering and an analysis of the connections between the identified entities, we were able to link the former manager to the fraudulent scheme and identify assets held by the subject in the UK, Jersey, and Switzerland. The legal counsel were then able to successfully freeze the assets we identified. The freezing order led to the opposing side settling the dispute. By combining legal and investigative tactics, a client has the highest chance of recovery in a multijurisdictional pursuit of assets.

Dispute Support

While disputes between entities are typically handled by lawyers, the role of a corporate investigator can complement the strategies and tactics of the legal team—particularly as a standard business dispute can very quickly become complex. The difference between success and failure frequently comes down to having actionable intelligence, robust evidence, and an effective legal and communication strategy.

The benefit of working with a credible investigations team in these instances is that they will work in lockstep with the legal team, and often have a clear understanding of what will stand up as evidence in court and what will not.

To help build evidence in a litigation, for example, investigators can conduct research across multiple jurisdictions touching multiple continents, identify and analyze corporate records and source materials, and conduct human source interviews to track and investigate the business dealings of a counterparty, as well as undertake site visits and surveillance to establish patterns of life of key individuals. By combining human intelligence with information from public records and research, investigators work with the legal team to build an overwhelming case against the counterparty.

Fraud Investigations

Incidents of fraud can cause major disruption to businesses and have a lasting impact on profit, performance, and reputation. Legal counsel often call upon corporate investigators to help uncover the facts in fraud investigations.

Traditional investigative techniques along with unique data mining technologies provide a broader, deeper level of analysis when reviewing suspicious information, be it human, physical, or electronic evidence. Investigators can diagnose and resolve instances of financial statement fraud, and other large-scale misappropriations from either inside or outside the client’s organization. Working closely with the client’s counsel, investigators determine how the wrongdoing arose, its impact on the business, and means of remediation.

We are often called upon to conduct forensic analysis of financial transactions relating to cross-border fraud involving countries in Central and Eastern Europe. In one case, acting for our client, through which the money was being funneled, we were able to determine the origins and destinations of the suspicious funds. The work conducted included a combination of forensic accounting to establish the flow of funds and open source and human source investigations to understand the affiliations between parties transferring the funds. We worked closely with the client’s counsel to determine how the funds were misappropriated.

Conclusion

On behalf of clients, counsel place immense trust in the corporate investigator to produce insights that are admissible and useful in supporting the client’s case. Managing the client’s expectations is a challenge best tackled together by the investigator and legal counsel.

Anna Gumowska, Senior Managing Director, K2 Integrity