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2 The Cost of Doing Business: Understanding and Avoiding the Hazards of Internal Investigations in Asia Presentation to the Association of Corporate Counsel October 5,

3 The Panel Eric B. Bruce, Partner, Washington DC William F. McGovern, Partner, Hong Kong/New York Shaun Z. Wu, Partner, Hong Kong Catheryn O Rourke, Assistant General Counsel, Litigation and Investigations, New York 3

4 Overview! Where in the World Are Your Documents & Why Does it Matter?! Preserving Upjohn Protections Across Language and Cultural Differences! Attorney Client Privilege: Don t Assume Too Much! First Do No Harm Balancing US and Local Reporting Expectations! Context Matters: Cultural Considerations When Doing Business In Asia 4

5 Where in the World Are Your Documents & Why Does it Matter? 5

6 IT Assessment & Access Threshold Questions:! Where are the document servers located?! Are there any local law restrictions based on server location that may have an impact on document review?! How do you deal with social media, instant messaging, WeChat, etc.? 6

7 Chinese State Secret Law What is it? Prohibits unauthorized export of China state secrets Defines state secrets to include documents related to 7 areas deemed to be important to national interests Presents significant challenges for MNC s Best Practices KYD: Know Your Data Implement data export policies training across organization Ensure sufficient relationships with experienced local service providers!!! 7

8 Data Privacy Laws What are they? Laws that protect employees personal data 89 countries have adopted comprehensive data privacy regimes Unfamiliar concept to US investigators Best Practices Obtain prior written consent from employees as part of hiring process Adopt internal policy governing use of personal data!! Strictly monitor offshore export of personal data! 8

9 Preserving Upjohn Protections Across Language & Cultural Differences 9

10 Upjohn Considerations: Problems & Solutions Problems: Lack of familiarity with the principle behind the Upjohn warning and the idea of privilege being held by the company Common mistaken belief that company and counsel commit to confidentiality Insufficiency of verbal communication of the Upjohn warning Reluctance to cooperate upon learning companies can disclose information to third parties while witnesses cannot Some witnesses may not respect the confidentiality obligations. 10

11 Upjohn Considerations: Problems & Solutions Solutions: Have company personnel explain to witnesses the importance of cooperation Provide a written Upjohn warning in the witnesses native language Special difficulties and solutions in China Carefully select witnesses and consider what information is shared in an investigation 11

12 Use of Asian Language Translators Cautiously employ translation services Be aware of nuances in language and translation that affect interpretation Vendors may not appreciate the legal sensitivities of translation and interpretation. Solution: Utilize native-speaking team members to discuss and resolve any significant and debatable translations 12

13 The Role of Local and In-House Counsel Seek local counsel experienced in state secrecy, data privacy, or other local nuances! For example: If a witness indicates he or she is about to discuss an area that may touch on state secret information, foreign counsel can temporarily leave the room and let local counsel resolve that point. Consider whether U.S. or Asia in-house counsel should participate in the interview 13

14 Handling Parallel Interview Requests from Local Regulators Global strategy across multiple jurisdictions Consequences of actions across jurisdictions Overlap of regulators constraints and interests 14

15 Attorney Client Privilege: Don t Assume Too Much 15

16 Recognition of Privilege Across Asia Common law jurisdictions like Hong Kong, Singapore and Malaysia generally recognize legal privilege But note civil law jurisdictions like China, Korea and others do not have the same legal privilege protections 16

17 Recognition of Privilege China? No privilege but limited confidentiality for attorney client communications Attorneys are under a duty to and may also have the right to keep confidential facts and information learned during the representation But note they can be made to disclose evidence that may threaten national or public security 17

18 Recognition of Privilege China? (cont d) Any such confidentiality protection is also somewhat limited in China! It does not exclude attorneys from the obligation to testify! It does not prevent government demands from attorneys to cooperate by producing work product or other information! Attorneys may even be sanctioned for concealing important facts 18

19 Recognition of Privilege Korea? No privilege except in very limited circumstances e.g., post-indictment Instead, only attorneys confidentiality obligations and their right to refuse testimony regarding confidential information detrimental to client! Work product may be inadmissible if the attorney refuses to testify! But prosecutors may authenticate documents via the client directly 19

20 Recognition of Privilege Korea? (cont d) If prosecutors or regulators in Korea obtain a search and seizure warrant! Practically no protection even for outside law firms over work product! Most recently in August 2016, one of the largest law firms was made to voluntarily produce work papers in a high-profile tax investigation 20

21 Status of In-House Counsel in Asia?! Common law jurisdictions like Hong Kong and Singapore entitle in-house counsel to privilege provided that advice is related to legal matters! But China restricts confidentiality protection to licensed lawyers practicing in law firms registered in China, and not in-house counsel! Likewise, in-house counsel in Korea are not protected by legal profession confidentiality 21

22 How to Maximize Privilege-Like Protection in Asia Where possible, internal reviews can be conducted under the direction of counsel Establish at outset that they are conducted for the purpose of providing legal advice Plan to preserve privilege over documents by limiting exposure in jurisdictions where privilege does not exist or is limited 22

23 First Do No Harm Balancing US & Local Reporting Expectations 23

24 A Complex Web of Cooperating and Competing Regulators Regulators and enforcement bodies around the world may engage in parallel regulatory action arising from the same alleged activity. Sometimes, regulators and enforcement bodies will compete with one another over turf. But more often regulators and enforcement bodies can and do share information with each other. 24

25 Major Regulators in Asia State Administration for Industry & Commerce (SAIC) Independent Commissions Against Corruption (ICAC) Supreme Public Prosecutor s Office (PPO) Corrupt Practices Investigation Bureau (CPIB) National Development & Reform Commission (NDRC) Hong Kong Police Commercial Crimes Bureau (CCB) Financial Services Commission (FSC) Commercial Affairs Department (CAD) Ministry of Commerce (MOFCOM) Public Security Bureau (PSB) Securities & Futures Commission (SFC)!! Monetary Authority of Singapore (MAS)! 25

26 Contact Information Eric B. Bruce William F. McGovern Shaun Z. Wu

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