LONDON--(BUSINESS WIRE)--Dr. Roger Barker, Director of Policy and Corporate Governance at the Institute of Directors, has issued a call for a fundamental shift in corporate governance, urging companies to prioritise truly independent internal investigations by eschewing law firms and advisers with existing relationships to the business.
Speaking at a recent seminar hosted by Seladore Legal, Dr. Barker emphasised that the integrity of investigations into corporate wrongdoing is increasingly under question, especially when existing relationships between management and investigators raise concerns over transparency and impartiality.
"The danger that internal investigations are viewed as unreliable, or worse, used as a tool for whitewashing management failures, is very real," said Dr. Barker. "We’ve seen too many examples where investigations lack substance, transparency, or independence."
Dr. Barker continued by stressing that the current approach to investigations, often led by advisors with close ties to the organisation, is inherently flawed.
"Who conducts an investigation is a fundamental question of corporate governance. The worst criticism an investigation can face is that it’s not independent, with investigators appearing to pursue a predetermined outcome," he added.
"A bogus investigation does more harm than good. It not only prevents boards from identifying key risks but also attracts public and regulatory scrutiny, further eroding trust," he warned. "Directors must resist the temptation to passively accept legal advice without critical thought — they need to elevate their understanding and decision-making."
“This is a very fundamental question of who should and who shouldn’t conduct an investigation, and whether there are any circumstances where law firms or other advisors with existing relationships to an organisation are the right people for the job”, Dr Barker said in conclusion. “And from a good governance perspective, I would argue that in most instances the answer will probably be no.”
Simon Bushell, Senior Partner at Seladore Legal, echoed Dr. Barker’s concerns, reinforcing the need for independence in corporate governance: "Experience shows that perceived or actual conflicts of interest in investigations can quickly undermine an organisation’s efforts to resolve serious issues," Bushell said.
"Only through a truly independent process can companies ensure a fair, comprehensive investigation and regain the trust of regulators, stakeholders, and the public."
The seminar brought together key experts to address the growing need for rigorous, independent investigations.
Dan Hudson, head of white collar crime and regulatory disputes at Seladore, was joined by Allison Clare KC of Red Lion Chambers to provide an overview of recent high-profile investigations and discuss the impact of recent legislative changes, including the increased corporate criminal liability for misconduct by senior managers, and how this is likely to lead to more individual prosecutions.
Jonathan Glass and Antony Dunkels of Brunswick Group added insights on managing the reputational risks associated with corporate wrongdoing, emphasizing the importance of ensuring stakeholder trust when conducting investigations and how corporates should manage intense media interest around such probes.
With growing scrutiny from regulators and law enforcement agencies like the Serious Fraud Office, all speakers underscored the need for companies to adapt to this new reality by ensuring their investigations are independent, accurate, and beyond reproach.
