By Lawrence S. Sher, Joseph W. Metro, Erin E. Atkins

• U.S. District Court for the District of Columbia holds documents related to internal investigations of possible violations of corporate code of conduct not protected from disclosure under either attorney-client privilege or attorney work product doctrine
• Ruling serves as timely reminder for companies in a wide variety of industries to review internal procedures relating to internal corporate compliance program or code of conduct investigations to maximize the likelihood that appropriate privileges will be honored

On March 6, 2014, the United States District Court for the District of Columbia granted a qui tam relator’s motion to compel the production of documents relating to the defendant Kellogg Brown & Root Services, Inc.’s (“KBR’s”) “Code of Business Conduct (“COBC”) investigations,” holding such documents were not protected from disclosure under either the attorney-client privilege (“ACP”) or the attorney work product doctrine (“AWP”). The court concluded that the company’s investigations were conducted pursuant to “regulatory law and corporate policy,” rather than for the purpose of obtaining legal advice. Accordingly, KBR was ordered to produce some 89 documents that it previously claimed as privileged under the ACP and/or AWP. U.S. ex rel Barko v. Halliburton Company, No. 1:05-CV-1276 (D.D.C., March 6, 2022). The court’s broader statements could have significant implications for companies in regulated industries where corporate compliance programs are commonplace, or even required.

The court’s description of KBR’s internal procedures is relatively sparse. As summarized by the court, COBC investigations usually result from a tip (via an employee to a designated mailbox, email address and/or hotline, or directly to the Law Department) of a potential violation of the company’s COBC. If a formal investigation file is opened, COBC investigators conduct witness interviews, review pertinent documents, and prepare an investigation report. The final COBC investigation report is then transmitted to the company’s Law Department.

The court declined to withhold the documents under the ACP or AWP because it found that the COBC investigations “were undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice,” citing FAR 203.7001. That regulation generally requires that certain government contractors have in place management controls reflecting the typical elements of an effective corporate compliance program under the U.S. Sentencing Commission Guidelines.¹ These elements are also commonly cited by the Department of Health & Human Services Office of Inspector General (“OIG”) in its guidelines for health care entities’ corporate compliance programs. See, e.g., 65 Fed. Reg. 14289 (Mar. 16, 2000). They are also reflected in the OIG’s numerous Corporate Integrity Agreements with health care entities.

The court reasoned that the COBC investigative process “merely implement[s] these regulatory requirements,” because investigations were routinely conducted, rather than following specific consultation with outside counsel concerning whether and how to conduct an investigation. Thus, according to the court, the investigations were not conducted for the primary purpose of seeking legal advice, since they “would have been conducted regardless of whether legal advice [was] sought,” and therefore the court held the ACP protection did not apply. The court also cited the fact that non-attorney COBC investigators conducted the interviews in question, and that written employee disclosures did not specifically reference that the purpose of the interviews was to provide legal advice to the company.

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By Eoin O’Shea, Charles Hewetson, Rosanne Kay and George Brown

The UK’s Serious Fraud Office has made clear that its anti-bribery investigations are focused on two industries in particular: construction and energy. Construction firms especially are under-prepared for the risks which this new approach will bring, and need to take action quickly.

Making a Clean Sweep

In a recent speech, David Green, Director of the SFO, said that the agency would adopt a “sweep” approach and focus on specific industries. The sweep approach involves seeking out intelligence, including by covert means, to identify businesses which might be breaking the law. Whistleblowers and co-operating witnesses will then be actively encouraged to provide information about their own and competitor companies. The idea is to build up a detailed picture of corrupt practices industry-wide. This inside information will then drive dawn raids, and document production orders, arrests and charges against a large number of individuals and companies.

Most international energy companies will have been exposed to the U.S. Foreign Corrupt Practices Act for some time and will have significant anti-bribery measures in place (though how effective these are is another question). Construction, as a sector, is not as well prepared. It is a particularly juicy target for the SFO because of its historic exposure to government contracting and international markets. Moreover, there is a general view that corruption is rife, with a recent survey indicating that 49% of respondents believe that corruption is “common” within the industry in the UK. You can find the report from the Chartered Institute of Building here.

A similar industry-sweep approach in the United States has seen numerous prosecutions in the pharmaceutical and medical devices sectors, for example, with huge effects on the finances and prospects of some of the biggest names in those industries. (Read more)