Eduardo Vidal and Martin Elizalde,
Miami and Buenos Aires,  respectively

Sometimes it is difficult for a multinational corporation to conduct electronic discovery or  investigate internal fraud with respect to its operations in Latin America – – a region that is seeing a dramatic increase in the focus on investigating potential wrongdoing within large organizations [1].

The difficulties become legal as well as factual issues that must be taken into consideration.  It is a fact that corporations must consider not only their own jurisdiction’s anti-corruption regulations, but also the relevant laws governing the region where they have business activities and relations. Understanding this scenario is key to a better assessment of an internal investigations strategy [2]. In the search for a good solution, a new,  fact-oriented  business model has appeared in Latin America.

Legal framework.

First, the legal right to access the local operation´s digital information must be secured, in a region where highly restricting data privacy protection laws have been enacted. So, the process of preserving and collecting relevant data and documents is made rather complex by Latin America’s patchwork of data privacy protection, which can complicate even the most straightforward investigation [3]. Clearly, data privacy is an issue to be addressed before collecting relevant and extremely sensitive information from employees’ data on electronic devices, such as corporate emails, smartphones, laptops, tablets and other devices, which should consider the particularities that may reflect local aspects in each of the jurisdictions involved [4].

Moreover, to interview the key persons that must be investigated, it is also required to have some special knowledge:  local labor and employment law may impact when, how and whether employee interviews may take place in an investigation,  as well as what the scope of permissible employee discipline may be [5].

Some practical barriers – and a new reality

Furthermore, other issues are costs-related. Investigations firms based in the USA that handle these cases, generally prepare budgets according to the market in the USA, making them difficult to afford and too expensive in the Latin American market – – even before the financial restraints brought about by the Wuhan virus pandemic. This leads to frustrating investigations that are otherwise necessary, especially when they involve multinational corporations that are publicly-traded in the USA – – and thus subject to the U.S. Foreign Corrupt Practices Act.

Other issues are rather practical: it is a time of the Wuhan virus, resulting in travel restrictions, physical safety precautions and public health concerns. Still, the response to the same pandemic showed that a lot of research can be carried out remotely, without moving from place to place,  and thus greatly reducing structural and travel costs.

Searching for a suitable model

In early 2020, a law firm based in the USA whose client’s operations in Latin America were subject to the FCPA and needed to conduct an internal investigation, contacted an investigations firm,  also based in the USA,  to conduct this investigation. The investigations firm  developed a bold business plan: it subcontracted the investigation to a flexible, young Latin American firm with regional experience,  and involved it in the task. Disregarding well known and legacy players, the move was pretty original.  This Latin American subcontractor combined a mix of legal and technological resources with vast experience in the procedures of electronic discovery and internal investigations.

The model was assembled as follows:  (1)  the client  (the U.S. law firm);  (2)  the contractor (the US investigations firm);  and  (3)  the subcontractor (the Latin American investigations firm).  Leading the project was left to the contractor; and the subcontractor contributed with its technology tools and specialized personnel – – and with its knowledge of the local regulations applicable to the case, thus carrying out what resulted in one of the most complex and voluminous investigations of the year in the region. 

The regional subcontractor identified the relevant extremely sensitive information, preserved it in a forensic fashion, and then reviewed it, thus offering a cost-effective collecting, hosting, and searching architecture to support the project. The costs were calculated before each of the phases of the project was carried out – – and subjected to the prior approval of the contractor.

In addition, the regional subcontractor produced regular reports to the US contractor, following the electronic discovery reference model guidelines and strictly adhering to the contractor’s data storage and reporting architecture.

The model in action:

  • More than 3,000,000 items of extremely sensitive information were identified and reviewed;
  • Of these, about 2,000,000 were emails;
  • More than 30 personal interviews were conducted via the Internet;
  • The review task included an important forensics accounting assignment.

Conclusion: New approaches for a Brave New World

The result was optimal and highlighted a new business model, where flexible and young regional subcontractors provide services of the same quality as those performed by traditional players. Besides, the work method is tailored to the contractor’s request and desire and under its close scrutiny. On top of that, the possibility of conducting witness interviews in Spanish through a regional partner also spared the contractor (and his client) from having to rely on costly third-party translators.

To sum it up, the contactor followed an expert advice for conducting an investigation in Latin America during the pandemic.  The lesson is “be flexible”[6].

Ed Vidal

EDUARDO VIDAL


Mr. Vidal is a corporate lawyer with over 30 years of experience in New York and Chicago firms, having worked on a wide range of transactions such as securities placements, loan financings and private equity investments. For the last few years he has been General Counsel of iCrowdNewswire, LLC and its predecessor affiliate, focusing on the legal aspects of outsourcing, crowdfunding and startup companies.

His experience includes cross-border transactions involving Latin America, Europe and Asia-Pacific. He is fluent in Spanish and has a working knowledge of Portuguese and French, having worked with local counsel in jurisdictions worldwide. He is a member of the bar in the States of New York and Illinois.

Martin Elizalde

MARTIN ELIZALDE


Attorney at Law. Graduate of Universidad de Buenos Aires. Graduate of LLM American University, WCL. I am a professor at the Universidad de las Americas, in Quito, Ecuador (Engineering School) and was a regular teacher at Universidad del Salvador, School of Sciences, Buenos Aires, Argentina.

I focus my practice on insurance law and technology, with a keen interest in Internet & Law. I am working in Latin America conducting internal fraud investigations, as well as advising domestic and multinational companies about e-commerce, e-discovery processing, and Cyber Law legal frame.

I write about technology for Abogados.com, La Nación, Sera Justicia Digital.com, Revista Estrategas, Revista Fortuna, IJ International Group, Pool Económico( cable TV) and take an active role on social network regulation issues. 

Specialties: Disputes & Investigations, Financial Crimes and Latin America practices, Cyberlaw, E-discovery processing, Legal writer, International speaker.

2.See “Managing Multi-jurisdictional Investigations in Latin America”, by Renato Tastardi Portella, Thiago Jabor Pinheiro, Frederico Bastos Pinheiro Martins and Bruna Simões Prado Coelho. Global Investigations Review

3. See “Investigations in the Time of Coronavirus: Conducting FCPA Investigations during the Pandemic”. JDSupra.

4. Again, see  “Managing Multi-jurisdictional Investigations in Latin America”, by Renato Tastardi Portella, Thiago Jabor Pinheiro, Frederico Bastos Pinheiro Martins and Bruna Simões Prado Coelho.Global Investigations Review

5.  See “Investigations in the Time of Coronavirus: Conducting FCPA Investigations during the Pandemic”. JDSupra.

6. See “Investigations in the Time of Coronavirus: Conducting FCPA Investigations during the Pandemic”. JDSupra.