ETHICAL CONSIDERATIONS IN GOVERNMENT INVESTIGATIONS OF CORPORATIONS

• Jurisdiction: United States

Federal Offshore Regulatory Enforcement
(Jan 2016)
CHAPTER 16B
ETHICAL CONSIDERATIONS IN GOVERNMENT INVESTIGATIONS OF CORPORATIONS

Jillian M. Marullo
Associate
Liskow & Lewis
Houston, TX

[Page 16B-1]

Under the Outer Continental Shelf Lands Act ("OCSLA"), the Department of Interior ("DOI") has authority to investigate casualties and other injuries and incidents (e.g., fires, explosions and events of pollution) that occur as a result of offshore oil and gas operations. The DOI's Bureau of Safety and Environmental Enforcement ("BSEE") carries out these investigations through its panel investigations, district investigations, and the Investigations and Review Unit ("IRU").¹ Other agencies which may be involved in an investigation include the U.S. Coast Guard ("USCG"), the Environmental Protection Agency ("EPA"), the National Transportation and Safety Board ("NTSB") and the Chemical Safety Board ("CSB"). Following an investigation, these agencies may refer the matter for civil or criminal enforcement based upon possible statutory violations.

The IRU investigates violations of safety and environmental regulations in parallel with and in addition to ordinary BSEE panel and district investigations. Typical BSEE investigations are fact-finding proceedings conducted by inspectors and may result in the issuance of Incidents of Noncompliance ("INCs") with requirements for corrective actions and/or the imposition of civil penalties.² The IRU investigation may be triggered by an accident, a whistleblower, or an INC. The IRU concentrates on matters involving serious personal injury or harm to the environment. If the IRU determines that a criminal violation may have occurred, the IRU may refer the investigation to the DOI's Office of Inspector General ("DOI-OIG") for further investigation. The DOI-OIG may then refer the case to the United States Attorney's Office for criminal prosecution, which in turn may bring the matter before a grand jury to seek an indictment.

During the course of an investigation, BSEE and IRU inspectors and investigators will gather evidence and interview and take statements from employees and witnesses. Administrative investigations may include reviewing records and reports, taking photographs, collecting samples, and observing facility or on-site operations.

Corporate counsel must be mindful of the various ethical issues which may arise in the context of governmental investigations. The corporate lawyer must carefully navigate his or her responsibilities to fulfill duties owed to the client-company, cooperate with the government

[Page 16B-2]

investigation, protect the company's confidential information, and adhere to ethical responsibilities owed to the client and third parties.

The following provides a brief overview of the applicable ABA Model Rules of Professional Conduct which may be implicated in the course of a government investigation and any concurrent internal investigation.

I. Role of Counsel During Government Investigation

A. Cooperation with Government Investigators

Upon notification of an ongoing government investigation, counsel for the corporation should immediately visit the facility and meet with the lead investigator to determine the scope of the investigation and how counsel can assist to ensure cooperation and protection of the company's trade secrets and other confidential and proprietary information. Similarly, when a search warrant has been issued, counsel should contact the government attorney to discuss the scope of the warrant and negotiate the process for seizing the documents and other evidence. Counsel should work with the government investigators and prosecutors to ensure that privileged materials are properly labeled and segregated.

Cooperation is an essential factor in the prosecutor's exercise of discretion, and is one of nine factors considered by federal prosecutors in Principles of Federal Prosecution of Business Organizations, the Department of Justice ("DOJ") guidelines that govern how federal prosecutors investigate, charge and prosecute corporate crimes. Forms of cooperation include full and complete disclosure of relevant information (e.g., the results of an internal investigation). Refusal to cooperate may result in aggressive investigation methods, numerous grand jury subpoenas, possible search warrants, and regulatory reprisals. Interference with the investigation could lead to allegations of obstruction of justice.

In 2015, the DOJ announced revisions to its Principles of Federal Prosecution of Business Organizations. The new guidelines continue to give credit for cooperation to companies who voluntarily disclose relevant facts to federal agencies and prosecutors, regardless of whether they waive the attorney-client privilege and produce protected documents: "To receive cooperation credit for providing factual information, the corporation need not produce, and prosecutors may not request, protected notes or memoranda generated by the interviews conducted by counsel for the corporation." Nevertheless, "the corporation does need to produce, and prosecutors may request, relevant factual information--including relevant factual information acquired through [interviews conducted by counsel for the corporation], unless the identical information has otherwise been provided--as well as relevant non-privileged evidence such as accounting and business records, and emails between non-attorney employees or agents."

B. Preparing Employees for Government Interviews and Conducting Internal Investigations

If the company is provided advance notice of the government's intent to interview employees, counsel should take the opportunity to prepare the witnesses. In these discussions, the attorney must proceed cautiously to avoid imparting an impression that the employee is the attorney's

[Page 16B-3]

client. As will be discussed below, this requires the attorney to give an "Upjohn warning" explaining that the attorney's loyalty and confidentiality obligations belong to the company itself.

Although the lawyer may not give a non-client employee legal advice, the lawyer may inform the employee of his or her rights, including the right to refuse to participate in the government interview, the right to have counsel (either the company's attorney or the employee's independent counsel) present at the interview, and the right to speak with the company's attorney prior to the interview. The lawyer may not instruct the employee not to cooperate with the government investigators, but instead should urge the employee to voluntarily submit to the interview and answer all questions truthfully and without speculation, and explain that providing false information to the investigators may result in criminal exposure to the company and the employee. The employee should be advised that any information provided during the government investigation may be used against him or her (and the company) in any resulting legal action, and that participation in the interview could waive the employee's Fifth Amendment right against self-incrimination. Finally, the lawyer may ethically inform the employee that a refusal to participate in either an internal or a governmental investigation may result in the employee's employment termination.

II. Who is the Client?

Rule 1.13 Organization as Client

. (a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents. . .

Because a corporation's legal interests may conflict with the interests of its employees and officers, it is imperative for corporate counsel to clearly identify the client from the outset. Corporate counsel, as well as the company's constituents, must be cognizant of the fact that the organization itself--not its employees, shareholders, officers, board members, or other stakeholders--is the client. As such, the ethics rules require corporate counsel to put the best...