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Dawn Raids: How to Best Prepare and Protect your Organization.

Rossana Buzzi, Esq.Assistant General Counsel &Ethics and Compliance Leader South EuropeInvensys Systems Italia Spa

What this presentation will cover?

• Definition and purpose of Dawn Raids

• Europe’s Data Protection Directive (95/36/EC) and the new proposed General Data Protection Regulation: which role ?

• How to plan, train and prepare your personnel to respond to an unannounced EU inspection.

• Dos and don’ts : practical and legal tips on how to manage and respond to investigators

• Q & A

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Definition and Purpose of Dawn Raids

• Dawn raids are the investigative tool of the European Commission and national competition authorities in Europe for unannounced inspections into suspected competition law infringements.

• Targets of EU raids are Companies / Organizations operating in EU Member States

• They can be conducted both at business and non-business premises.

• Raids at business premises may be conducted under an “authorization” or under “formal request/decision” (warrant). The first without the approval of the full Commission.

Definition and Purpose of Dawn Raids

• A company may refuse to submit voluntarily to EU inspection if carried out under an “authorization” only but …

• Commission officials conducting an investigation are usually assisted by officials from the relevant national competition authorities

• Inspectors will accept to wait in the lobby for no more than 15-30 minutes for the lawyers to arrive. Likely they will not wait at all if in-house lawyers are present on the company premises. Playing for time to start the inspection is high risk!

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Definition and Purpose of Dawn Raids

• EU inspection shall set scope of the investigation, time. What about geographical boundaries?

• “Accidental” discovery and an “illegal targeted search” outside of scope: which difference?

• What happens if inspectors uncover documents which fall outside of the scope of its original mandate? What distinct an illegal “targeted search” for out of scope evidence and an “accidental” discovery? The “plausible reasons” rule.

EU Data Protection Directive (95/36/EC) andGeneral Data Protection Regulation

• Interest of the citizens and their privacy opposed to the public interest

• European Court of Justice ruled to invalidate Safe Harbor (Oct. 2015)

• Companies in EU has the right to refuse providing information to inspectors if those information are under the hat of «personal privacy»

• It is likely that the new EU General Data Protection Regulation (which should come into force 2017-2018) will be more strict on privacy than EU Directive

• EU Data Protection like a shield also for international inspections

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How to plan, train and prepare your personnel to respond to an unannounced EU inspection

• It is important to define a company plan on how to respond to potential dawn raids.

• Trainings targeted for receptionists and management to familiarize with unannounced inspections procedures

• Simulate real life experience by guiding personnel that can be impacted by unannounced dawn raid

The Arrival at the front desk

• Inspectors to sign in as per company’s procedures.

• Receptionist to inform immediately the Managing Director and legal

• Receptionist to guide inspectors to separate room

• Management should take into consideration to give day off to all employees not impacted by the investigation

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The First Hour

• Supervise and coordinate the overall search

• Ask Inspectors to present their staff cards or identity cards

• Take a copy of the Commission’s mandate or warrant

• Fax the documents to Legal & Tax, and external legal counsel

• Ask Inspectors to await arrival of external counsel (15-20 min reasonable)

• Note the scope of the investigation

The Inspection

• Employees concerned by the scope of the inspection should be briefed

• A team of shadowers should always accompany the inspectors and take extensive notes (documents examined; questions asked) and assist with copies

• Examination of documents and devices by Inspectors.

• The Commission may ask factual questions related to the purpose and the scope of the inspection

• What to do with documents and interviews

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The Departure

The Departure

• Inspectors will establish a protocol. Necessary corrections or clarifications should be made

• Any open issues re privilege/relevance/confidentiality should be discussed

• Inspectors should be asked by the Coordinator for a copy of any records or inventories and about the next procedural steps.

• A detailed internal report should be prepared and shared / discussed among Senior Mgmt and counsel

• A briefing meeting with employees, legal counsel and management should be held by the Managing Director

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Dos Don’ts

• Destroy documents or data files• Volunteer information• Create any new documents relating

to the investigation• Tell anyone outside the company

what is happening• Allow the investigators access to

the office unattended• Sign any documents consenting to

a search• An employee is not obligated to

speak with investigators, though an employee may speak with the investigators if he or she desires.

• Call the Company‘s contact person and legal counsel at arrival

• Keep detailed written notes• Only hand out copies to the

Inspectors• Insist on your rights but do not

obstruct the inspection• Documents containing privilege, or

business/company secrets, should be stamped “Confidential” before being provided to investigators

Q & A

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Society of Corporate Compliance and EthicsEuropean Compliance & Ethics Conference

March 18 22, 2016Prague Czech Republic

Gabriel L. Imperato, Esq.Broad and Cassel

Fort Lauderdale, Florida

WHAT TO DOWHEN THEGOVERNMENT KNOCKS IN THE

UNITED STATES

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Enforcement

Department of Justice UnitedStates Attorneys

Inspectors General

Attorneys General

SEC

FTC

Other Federal and State Agencies

Multi Agency Task Forces – HEATProgram

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How Investigations Are Initiated

Competitor complaints

Consumer complaints

Current or former employee “Whistleblower”complaints – FCA, IRS, SEC

Insurance company complaints

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Investigative Techniques

Informal Interviews andrequests for documents

Insider Informants andWhistleblowers

Search Warrants

Subpoenas

Electronic Surveillance

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When The Government Knocks To ObtainDocuments ……

Search warrant or subpoenaor request by governmentagentEmployees notify executivesimmediately.Executives refer agent tocompany’s counsel

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Search Warrant

Search Warrant

Agents can seize original documents

Corporations do not have 5thamendment privilege

If agent demands copy of personalrecords – (5th Amendment)respectfully decline and refer tocounsel

Important to label documents

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If Search Warrant

Request copy of warrant and affidavit (may notbe available)

Accept warrant and immediately fax to counseland/or organization contact (i.e. general counselor compliance officer)

Send all employees (except essential responseteam or coordinator) away from work locationwhere search is taking place

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AND….

Search warrant authorizes agents to execute search at location

DO NOT INTERFEREWITH AGENTS AND AVOID CONFRONTATION

Review warrant carefully

Technically, agents can only seize what is listed on warrant

Bring to agent’s attention if search areas are not listed in warrant

List may include personal (5th Amendment) and corporate records andprivileged documents

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AND….

No requirement to speak to agents or respond toquestions

Respectfully decline & refer agent to counsel

Search warrant is for documents and E data whichcan be seized immediately but not testimonialevidence

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If Search Warrant (cont’d.)

Attempt to identify attorney/client privileged documents

Identify and determine agency of each investigator and theagent in charge and request contact information;government attorney assigned to case

Agents will request signature on a vague inventory of itemsseized – avoid execution of document

Keep your own inventory of areas searched, documentsand items seized and questions asked by the agents

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Post Search

Counsel typically requests debriefing from investigators and/orgovernment attorneys and addresses legal and search issues (i.e.privileged documents)

Consider public relations

Debrief employees and response coordinator/team – preparestatement with counsel

Attempt to obtain copies of documents seized through counsel

Notice and instruction to employees

Notice of investigation

Litigation hold and suspension of document destruction

Instruction regarding interaction with government agents

Specialized Federal Authority for ImmediateInspection and Search

Environmental Protection AgencyOccupational Health and Safety Agency

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Subpoena

Served by Mail or Personally by Agent

Does not Require Immediate Response

Typically Has Future Return Date

For Documents and/or Testimony

Turn Over to Counsel for Appropriate Response

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Subpoena

Prepare to assist counsel with response

Different types of subpoenas (Civil InvestigativeDemand, HIPAA Subpoena, IG Subpoena)

Complete and timely response is important

May negotiate scope and timing of response (i.e.Rolling production)

Custodian of records for response to subpoena

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What To do When TheGovernment Knocks tointerview You or Your

Employees

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Employee Rights

May decline to speak with Agents

May voluntarily speak to agents, but noobligation to do so

5th Amendment Right to Refuse

Ask Agent to contact Company Counsel – 6thAmendment Right to Counsel

Joint Defense Agreement – Share informationbetween employee and organization – stillprivileged

Company can advance $ for cost of employeecounsel (if necessary)

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Employee Rights(Cont’d.)

Right to be represented by counsel at interview

Organization’s Counsel can assist, but typically does not directlyrepresent Employees

Organization’s Counsel represents organization

Employee can retain their own counsel

Organization should not forbid Employee to speak to governmentagents

Obstruction of justice

Expect employees to advise if visited by government agents

Organization memorandum regarding investigation is advisable

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T H E E N D

QUESTIONS?

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