Investigating a company director presents a category of challenge that distinguishes it from almost every other corporate investigation. The subject has authority, institutional knowledge, and in many cases direct control over the systems and people that the investigation will need to access. They may have relationships with the board members who need to instruct the investigation. They may control access to financial records whose review is essential to establishing the facts. And the legal and reputational consequences of getting the investigation wrong — either by conducting it improperly or by failing to act when action was warranted — fall ultimately on the board and the organisation.
At Bond Rees, we conduct director investigations for boards, audit committees, and General Counsel who need an investigation that is rigorous, independent, and conducted by people with no existing relationship with the subject. This article sets out what that investigation involves and why the approach at this level differs from a standard employee investigation.
Why Director Investigations Are Different
The principal difference between investigating a director and investigating any other employee is the combination of authority and access the director possesses. A director may be able to instruct finance, HR, or legal functions to withhold information; they may have relationships with external advisers whose independence becomes questionable; they may have access to board materials that they could alter or remove; and they may have the seniority to apply significant pressure on individuals who might otherwise cooperate with the investigation.
This combination of authority and access requires an investigation approach that accounts for it: early and comprehensive evidence preservation before the subject has any indication of the investigation; the instruction of an external investigator with no prior relationship with the subject or their associates; clear governance of the investigation through the audit committee or independent non-executives rather than through management channels that the director influences; and careful sequencing of any action that would alert the subject.
Governance of a Director Investigation
The first question in any director investigation is who has the authority to instruct and oversee it. Where the concern involves an executive director, the appropriate governance structure is typically the audit committee or a subset of independent non-executives, acting with the advice of the General Counsel or, where the GC’s independence is itself a concern, external solicitors. The investigator reports to this governance body, not to management, and the investigation findings are delivered to them rather than through any channel that the subject influences.
Where the concern involves the CEO or CFO specifically, the governance question is more acute: the board needs to be briefed as a whole, the Chairs of the audit and remuneration committees typically need to be involved from the outset, and in regulated sectors the regulatory notification obligations may need to be assessed at an early stage.
Evidence Preservation
The most consequential early decision in any director investigation is the preservation of evidence before the subject becomes aware of the investigation. A director who knows they are under investigation has the means, and may have the motivation, to delete electronic communications, alter financial records, remove documents, or contact potential witnesses in ways that compromise the investigation.
Bond Rees works with IT forensic specialists and with the organisation’s own systems administrators — on a strictly confidential basis — to preserve the relevant evidence before any other step is taken. This typically covers email and messaging records, document access and amendment logs, financial system audit trails, and any other electronic record relevant to the specific concern.
Investigation Scope and Methods
Director investigations draw on the full range of corporate investigation methods: digital forensic analysis of the director’s communications and system activity; financial forensic review of transactions in which the director was involved; corporate intelligence on the director’s external business interests and connected party relationships; background investigation of any third parties implicated in the concern; and in appropriate cases, physical surveillance where the concern involves conduct outside the office environment.
Facing a board-level concern that requires an independent investigation? Contact Bond Rees for confidential, expert support.
