In focusWhen the adviser becomes investigator

It takes a long time to build client, employee and shareholder trust. However, it can quickly be reduced or even lost. This is something Telia Company, Swedbank, Nordea, SCA and many other companies are well aware of.

Nowadays, the issue of trust affects not only the private sector. Also government agencies, non-profit organisations and elected politicians can quickly suffer from an acute lack of trust capital. The only difference is that their damage is not as easy to quantify in figures.

The pressure on businesses, government agencies and organisations to comply with the law as well as their own regulations and policies – or, quite simply, to live up to the expectations of their main stakeholders – has increased significantly in recent years. That said, bribes, cooperation with problematic subcontractors, dealings with undemocratic regimes and private consumption at the employer's expense are not new phenomena.

However, globalisation means that capital is moving across legal and geographic borders while previously closed regions with poor legal certainty and widespread corruption have opened up to the world. The increased exchange of capital, goods and services has both simplified and complicated the relationships of businesses to the outside world. On top of this, add the digital revolution, which has made it possible both to look for and distribute documentation that was not intended to end up in the public eye. Information from an individual whistleblower can have an enormous impact not only on an individual company or governmental agency, but on an entire nation.

The importance of managing risks

Today's globalised and digitised business environment has created a landscape filled with potential risks which companies must address. Anyone who has been in the middle of a storm of criticism or media hype knows that the damage may already be done the moment the news is a fact. It is important, there and then, to minimise the damage to trust and to avoid that it happens again. In the wake of globalisation and the increased focus on sustainability issues, we perform more and more "corporate investigations". In Sweden, Mannheimer Swartling has become the natural choice for large companies as well as government agencies and organisations who want an external review of their own operations.

"We are appointed for these types of assignments by the highest level within the companies; usually the board wants to see all the cards on the table", says Andreas Steen, lawyer and partner at Mannheimer Swartling.

Andreas Steen is a member of the firm's Corporate Sustainability and Risk Management practice group. In recent years, he has played a leading role in several of Mannheimer Swartling's major investigations with a special focus on organisational issues, corporate governance and agent liability.

The most high-profile example is Mannheimer Swartling's investigation of Telia Company's operations in Uzbekistan. Another is the firm's investigation in connection with Nordea's cooperation with the Panama company Mossack Fonseca in connection with the so-called Panama documents. In both cases, the companies faced enormous pressure from media, investors and government agencies and decided to retain Mannheimer Swartling to investigate the facts. This type of assignment has become increasingly common for the firm. In some cases, the assignments entail an altered role for the lawyers involved – rather than being the client's adviser, they are the client's external investigator. At the same time, this is not a new situation – investigating the client's business relations and identifying potential risks has always been a part of the job.

"We are hired as investigators by the client. The client pays and owns the final result of our work. At the same time, it is important that the investigation is carried out with a high level of credibility. Accordingly, we usually make sure we can carry out the investigation independently, but we avoid the term "independent investigation" because we have a client relationship", says Anders Nordström, lawyer and partner at Mannheimer Swartling.

"In this type of assignment, the work description is particularly important. It formulates how we should work and how we should deliver the result", says Anders Nordström.

The will to act correctly

As a partner of the firm's Employment and Pensions practice group and as one of Sweden's most respected employment lawyers, Anders Nordström is hired regularly in major investigations by clients. Together with his colleagues, he investigates whether the clients have complied with their labour law obligations and lived up to their policies and internal regulations. Among others, he participated in Mannheimer Swartling's noted review of the Church of Sweden, which was performed in the spring and summer of 2016.

Both Andreas Steen and Anders Nordström know that clients are eager to act correctly and transparently. Increasingly companies, government agencies and organisations are realising that the first step in doing so is to develop and approve internal guidelines, codes of conduct and regulations. The next step is to implement and review these.

"Proactive efforts have increased considerably, not least because the consequences of bribes, money laundering and inadequate working conditions are considerable and tangible. Today, we receive inquiries regularly regarding proactive investigation of counterparties, suppliers and procurement companies", says Andreas Steen.

Responsibility and compliance issues are often subject to one-sided smear in the media. Mannheimer Swartling's advice aims to create clarity based on relevant regulations and external factors. Ultimately, this is also a matter of long-term business values and acting in line with the organisation's values. Transparency in relation to stakeholders has become a revenue and cost issue.