Clarifying Export Control Internal Investigations.

• Author: Neelakantan, Usha
• Position: Ethics Corner

U.S. government contractors operating in the defense sector compete in a highly regulated and scrutinized market that is subject to investigation by federal enforcement agencies.

With respect to U.S. export controls, contractors must ensure compliance with the International Traffic in Arms Regulations--which prohibit the unlicensed transfer of defense articles, defense services and technical data through training, software and other technology transfers--as well as the Export Administration Regulations, which control the export, reexport and transfer of commercial and dual-use commodities, software and technology, as well as certain less sensitive military items.

Internal investigations of potential violations have grown increasingly commonplace, both in the United States and globally. Contractors must carefully consider and establish the contours of any internal investigation to maximize benefits while simultaneously avoiding potentially serious, negative consequences.

Many situations demand an internal investigation to address both business and potential liability concerns. Such investigations are often a crucial part of an effective overall compliance program, aiding companies to not only identify potential issues that have already occurred but also to identify and rectify compliance program vulnerabilities. While internal investigations are often tailored to the specific needs of the business/issue at play, there are at least five key components to success.

A clearly defined, mutually agreed upon scope is perhaps the most important but often overlooked component. While many high profile, high stakes internal investigations have grown exceedingly expensive and time-consuming, this does not always need to be the case.

The investigation mandate should clearly define the nature of the potential violations to be investigated. For example, the scope can be limited to one particular realm of export controls (e.g. ITAR) or can be broader to include, for example, export controls, anti-corruption and economic sanctions concerns. An appropriately targeted investigation will alleviate concerns of "mission creep."

It should also define the period of time being examined. Such investigations generally focus on a five-year "look back" period, coinciding with the statute of limitations for most noncapital offenses.

Additionally, the business should determine whether an internal investigation will cover a single country, an entire region, or an...