INSIGHT: Responding to Dawn Raids—Advice for Foreign Companies Operating in the U.S.

Any business operating within the United States, including the U.S.-based office of a foreign company, is potentially at risk of being raided by law enforcement investigating crimes ranging from antitrust to immigration violations.

Unannounced visits by authorities to seize information and interview employees—known as “dawn raids”—can be unsettling under the best of circumstances, and especially intimidating to employees of foreign companies unaccustomed to the U.S. legal system.

Therefore, planning ahead is critical to protecting the rights afforded to these companies and their employees under U.S. law and minimizing the disclosure of information not otherwise required to be turned over.

Dealing With Authorities

As an initial matter, employees—particularly those at entry points where authorities are likely to arrive—should be instructed to confirm the identity of the officers and gather information about the purpose and scope of the search. This step can be accomplished by noting the lead officer’s name and badge number, and requesting a copy of the warrant. The reason for doing so is to ensure that the law enforcement officials who have entered the premises are, in fact, who they claim to be, and that the search is authorized.

Further, as law enforcement are limited by the scope of the warrant, it is important for company employees to understand what the issuing court has permitted investigators to search.

Rather than leaving the investigators to navigate a workplace themselves, counsel or supervisory personnel designated by the company in advance, should provide guidance to officials conducting the search by pointing them toward requested information and other resources.

As important, officials conducting the search should be specifically advised as to what information is not responsive to the warrant or subpoena, or else contains privileged information (see below). Doing so will limit the disclosure of information beyond the reach of the warrant or subpoena and safeguard communications protected by law.

While the concept of questioning and otherwise interacting with law enforcement officials may strike foreign employees as unusual, this conduct, in fact, is perfectly acceptable—and likely will be welcomed by authorities conducting the search, provided that it is done in a calm and courteous manner.

Under no circumstances, however, should employees attempt to argue with law enforcement or, worse yet, seek to limit them in their activities—even if seemingly outside the scope of what the court has authorized. To do so may constitute obstruction of justice and result in arrest, among other things. Instead, employees dealing with officers should reasonably make known any concerns and note the same, knowing there will be an opportunity later in court to challenge improper actions by law enforcement.

Privileged Materials

Employees should be instructed to alert authorities conducting the search to any documents that are protected by the attorney-client privilege. The attorney-client privilege, of course, is one of the most sacrosanct and powerful privileges under U.S. law. It is, therefore, important to identify for authorities any potentially privileged materials so that they can ensure their proper handling and not violate the privilege.

Foreign companies may be surprised to learn that certain documents that would not be deemed privileged outside the U.S. have, in fact, privileged status here. A key example is communications with in-house counsel. In the U.S., communications with in-house counsel about legal matters are generally privileged, whereas in many European jurisdictions, for example, this is not the case.

As noted above, companies would be well-advised in advance to identify counsel or designate a supervisor for employees to contact as soon as possible after the commencement of a dawn raid, especially to deal with issues like privilege. It is acceptable to ask authorities to delay their search until counsel arrives but, again, no effort should be made to thwart them if they insist on conducting their search before counsel arrives.

Computer Data

Foreign companies should expect authorities conducting dawn raids to seize desktop computers and hard drives that are kept on site—including that data contained on them. Through these devices, U.S. authorities may be able to access critical company documents that may otherwise be difficult to obtain.

Normally, when seeking evidence located out of country, U.S. officials must seek assistance from law enforcement officials in that foreign jurisdiction. This can be a difficult and time-consuming process, which becomes even more onerous—or even impossible—if the country from which information is sought does not have an operative treaty with the U.S. allowing for information-sharing.

The U.S. has recently enacted the CLOUD Act, which in some instances makes this process easier. A foreign company, however, that permits sensitive information to be stored on site within the U.S. does so at its own peril, potentially allowing U.S. authorities access to data that otherwise would be out of reach, or at least difficult to obtain.

While the same could be said of any data maintained at U.S. offices, the fact is that computers can provide U.S. authorities a window into all of the company’s data to the extent that such data is not properly managed. As such, foreign companies would be well-advised to take these concerns into consideration in setting up their computer and data management systems.

Interviews

Authorities conducting dawn raids in many instances will seek to interview employees about matters relating to the investigation. Statements by employees have the potential to bind the company being investigated and increase its criminal exposure. In the U.S., of course, employees are not required to speak with law enforcement, although they may choose to do so. These same rights are available to employees operating in the U.S. who are not citizens.

Providing guidance on this issue in advance of any raid is especially important for employees hailing from other countries, where refusing to speak with law enforcement may be anathema. Having company counsel present can be particularly useful in managing on-scene interview requests.

Conclusion

While the rights afforded to foreign companies and employees operating on U.S. soil are the same as those for their U.S. counterparts, these rights nevertheless may not be well understood by those from countries with different legal regimes. Proper attention to the above steps ultimately can mitigate against unnecessary criminal exposure.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Scott Hulsey is a former high-ranking Department of Justice official and corporate chief compliance officer who serves as counsel in white-collar criminal and regulatory enforcement matters. He represents individuals and institutions in complex international government investigations and trials, particularly those involving Asia and the EMEA regions.