Congressional Investigations: Unique And Significant Risks

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congressWe have all watched the familiar scene on Capitol Hill – the latest public scandal like officials from the Internal Revenue Service are dragged up to Capitol Hill to appear before a Committee, raise their right hands, take the oath and then assert their Fifth Amendment right against self-incrimination.  Senators and Congresspersons make comments on the scandal, vilify the witnesses, and promise a thorough Congressional investigation.  It is a scene that happens all too often, and one that carries its own set of legal and reputational risks.

The list of high-profile investigations conducted by Congress is lengthy and tied to a number of major historical events.  The risks to businesses from a Congressional investigation involve criminal and civil prosecutions from referrals to Executive Branch prosecutors and regulators, and significant reputational damage from a high-profile Congressional inquiry.

A number of Senate Committees focus on specific industries on a continuing basis.  The Senate Finance Committee and the House Energy and Commerce Committees will conduct multiple complex and in-depth investigations of the health care industry, pharmaceutical and medical device companies, FDA and HHS enforcement operations, or other industries within their respective jurisdictions’.  The House Financial Services Committee and the Senate Banking Committee focus on financial service companies and their business operations.  Overarching in jurisdiction is the House Committee on Oversight and Government Reform and the Senate Subcommittee on Permanent Investigations.

Congress has unmatched ability and discretion to investigate whatever and whomever it wants.congress2

The Rules of Evidence do not apply to Congressional investigations, and the recognition of common law privileges (e.g. attorney-client, work product) is up to the discretion of the Committee conducting the investigation.  Along with this broad discretion, Congress has unique subpoena and enforcement powers which give it the ability to ignore established privileges and protections from executive branch investigations.

Congress has no obligation to carry out its investigations in secrecy like a Grand Jury.  To the contrary, the investigation is being conducted for public and political purposes.  Any information collected from documents or depositions can appear at any time in the media.  Once disclosed to Congressional investigators, politicians enjoy making public comments referring to such information.

Businesses run the risk of criminal prosecutions for false statements to Congress or obstruction of a Congressional investigation.  In any case where Congress cannot learn all of the information it wants, investigators often turn to prosecutions of individuals for false, statements, perjury or obstruction of justice.  Congress will refer matters to the Justice Department for criminal prosecution in these situations.

Perhaps the most significant risk that a business faces is the possibility of a referral of a matter by a Congressional Committee to the Department of Justice for prosecution.  As an example, the Senate Subcommittee on Permanent Investigations referred its lengthy investigation of money laundering activities to the Department of Justice which ultimately led to the prosecution and settlement of the HSBC criminal case last year for $1.6 billion.

congress5Congressional investigations are a world unto itself.  While Congressional Committees use traditional tools to conduct an inquiry like subpoenas, witness testimony, and hearings, all of these actions occur in a political context.  The members of the Committee are the investigators, judge, jury and executioner.  Their functions can be – and often are — influenced by political forces.  Their respective views of the evidence can change depending on the political winds.

Businesses which get caught in a Congressional investigation need to respond carefully to avoid significant missteps.  Legal and political strategies have to be developed in coordination and closely to avoid serious legal and reputational harm.

Topics:  Compliance, Congressional Investigations & Hearings, Enforcement, Enforcement Actions, FDA, Fifth Amendment, HHS, HSBC, IRS, Risk Management

Published In: Civil Procedure Updates, Criminal Law Updates, Elections & Politics Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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