Leading a Global Forensic Investigation - Lessons from The Helm
This article first appeared in Fraud Intelligence.
In January 2020, Airbus announced its agreement to pay penalties of €3.6 billion, in what is the world’s first simultaneous settlement with four national authorities: the French Parquet National Financier (PNF), UK Serious Fraud Office (SFO), US Department of Justice (DOJ) and US Department of State (DOS). The global settlement marks the largest foreign corruption settlement of all time and is part of a Convention Judiciaire d’Intérêt Public (CJIP), Deferred Prosecution Agreements (DPA), and Consent Order allowing Airbus to avoid potential criminal prosecution.
The investigation, beginning nearly four years earlier, presented extraordinary challenges for Airbus. How do you respond to the world’s largest corruption investigation, covering more than a dozen jurisdictions, while simultaneously meeting the timelines and expectations of multiple authorities? The answer lies in a ground breaking collaboration of leading international law firms with deep expertise in their respective jurisdictions, underpinned by a global forensic accounting and data governance consultancy, Forensic Risk Alliance (FRA). FRA was the only firm to work across all of the jurisdictions and with all of the authorities, providing forensic accounting and data analytics expertise, building a customised data governance strategy, supporting Airbus’ overhaul of their compliance programme and also developing the approach to the fine calculation.
Along the way the team conquered numerous challenges, developing innovative solutions that will inform the way investigations are managed for years to come. Here are some key lessons learned.
Lessons for navigating a complex, international forensic investigation
Airbus is the world’s largest commercial airline manufacturer, as well as a global provider of helicopter, military, satellite and secure communications. This means it has an extremely complex legal and accounting structure. The company has undergone multiple restructurings over the years, resulting in dozens of current and legacy technology systems. With millions of transactions taking place every year, determining which data sets were relevant to the scope of the forensic accounting investigation was at the crux of the work.
Spend time understanding the history and structure of the data
It may seem obvious, but this is a key step to ensure accurate scoping. It was important to not make any assumptions. When the scope of the investigation stretches back a number of years, developing a clear timeline of personnel and variety of systems used is critical. This includes understanding upgrades, migrations and archives. Preparing thoroughly for interviews with key personnel in finance, compliance and IT provided a clearer pathway to obtain the required data, which can have a huge impact on the ability to meet deadlines.
A forensically sound approach to the collection process will help withstand regulatory scrutiny
Given the multijurisdictional nature of the investigation, it was essential to consider meticulously all applicable data protection laws and national blocking statutes. These apply not only to where the data is sourced but also where it will be analysed. Any processes and protocols in relation to data collections and transfers needed to be considered with the company and its legal counsel. Additionally, clear and understandable technical guidance can be very difficult when dealing with multiple languages, so having the proper language resources on each team made a significant impact on optimising time spent in the field.
Understanding how different transaction types are processed by each of the accounting teams
Different accounting teams in different divisions can process transactions differently. Walking through examples of the types of transactions with the accounting team was helpful in identifying the transactions of interest.
Develop a central repository for effective reporting
Data specialists were critical in creating a central database which could be used to report to the many different stakeholders. Standardisation of the raw data was crucial with data coming from many different sources, including bespoke or locally sourced ERPs that required additional effort to analyze.
Lessons for executing a customised cross-border data governance strategy
The work to support the data governance and eDiscovery components of the Airbus settlement provided many unique technological and logistical challenges. With hundreds of millions of documents collected for the investigation, it required ingenuity and a holistic strategy.
Set the data governance strategy early in the investigation
Developing a data governance strategy up front was essential for getting buy-in from all relevant stakeholders including Airbus, its legal team and the investigative bodies. This included obtaining appropriate understanding and approvals of new technologies, which were fundamental to meeting the unique challenges.
Develop a central reporting database to manage multiple review workstreams
Centralized reporting mechanisms facilitated the review and prioritization of various investigative topics. Defining a process, allowed periodic extracts of non-sensitive information, from which meaningful statistics could be generated.
Deploy a variety technologies
An investigation with this level of complexity meant that it was essential to use the right technology at the right time to manage effectively nationally sensitive data across multiple jurisdictions. Using a combination of technologies, including independent, secure and separate eDiscovery review environments, air-gapped hardware and machine learning AI, enabled the identification of key evidence and production of documents to numerous enforcement authorities with different data specifications and legal limitations.
Lessons learned while harmonizing methodologies for the fine calculation
The key challenges of producing such a complex calculation were twofold. Firstly, the forensic accountants had to establish the scope of the calculation to ensure Airbus was not penalized twice for the same conduct. Secondly, they needed to align the methodology of calculating the financial gain and this is even before calculating the fine itself. This may sound easy, but there was the added complication of the live investigation running in tandem and dealing with not one, but four national authorities. This meant that there were a few surprises along the way.
Generate meaningful discussion with the authorities as early as possible
As previously mentioned, Airbus has an extremely complex accounting structure, which stems from an equally complex manufacturing process, spanning across different areas of the business. Engaging as early as possible with the authorities not only provided time to explain the processes in Layman’s terms, but it also provided the opportunity to present a proposed gain framework to give an idea of the magnitude of numbers involved.
A key ingredient to these meetings is having the right people present, who all speak the same language, the language of finance. Engaging with the authorities through their own forensic accountants and incorporating the expertise of the key Airbus personnel made such discussions more meaningful. There really is no such thing as over-communicating; frequent meetings and presentations with the authorities allowed for knowledge sharing, particularly when dealing with more contentious areas.
Ensure that each number is backed up by reliable support and be transparent where exclusions have been made
Ensuring that the numbers presented were supportable and granular enough to avoid later questions was particularly difficult when dealing with legacy data or ERP systems. Nonetheless, it helped the authorities and their forensic accountants understand why certain costs included in the calculation were genuine deductions.
Have the confidence to fight for your proposed principles
Discussions with the authorities can be lengthy. The authorities often initially reject a principle presented to them, whether it be certain costs or scope of what should be considered. Do not hesitate to circle back to them with more information or insight. Sometimes it is easy to forget that you may be more familiar with the data and the business than they are. No matter how insignificant a cost might be, when multipliers are taken into account for the fine aspect, these costs matter. Therefore, in these instances, education is key.
Although harmonizing the approach is important, very often with multijurisdictional cases, each authority will have their own approach to culpability and harm. A common theme throughout this exercise, is the need to share information and to engage in discussions early. The speed and means of this vary depending on data governance or national laws. In the Airbus case, encouraging these open dialogues not only among the collaborating firms and the authorities, but also amongst the authorities involved contributed to the overall success of this settlement.
A successful conclusion through collaborative approach
From the outset, Airbus took a transparent and robust approach to the investigation. Engaging advisers with deep expertise, willingness to innovate and commitment to timely reporting won the company recognition for its “exemplary” cooperation with all authorities. Regulatory cooperation and coordination is likely to become a familiar tenet for multijurisdictional investigations going forward. Understanding how to approach these complex issues from the outset can have a huge impact on a successful resolution.
