Related Professionals
The NBA’s recent investigation and disciplinary action against the Clippers highlights an issue that extends far beyond professional sports: the importance of requiring employees, contractors, executives and agents to cooperate fully in internal investigations.
According to the NBA’s findings, the investigation uncovered a pattern of misconduct involving impermissible business arrangements, failures to report potential violations and, notably, allegations that certain individuals provided “false and misleading statements” to investigators. Those findings contributed to substantial penalties, including a $30 million fine, loss of future draft picks and suspensions of organization leadership.
One of the overlooked lessons from this matter is that compliance programs are only as effective as an organization’s ability to obtain truthful information when questions arise.
Many companies maintain codes of conduct and ethics policies prohibiting misconduct. Far fewer invest equal attention in policies that explicitly require:
The NBA’s disciplinary findings illustrate why those provisions matter. When organizations lack clear cooperation requirements, investigations can become delayed, incomplete or compromised by missing information.
Professional sports leagues understand this principle well. The NBA’s Constitution and By-Laws: (1) permit the commissioner to investigate allegations as needed; (2) require that teams, team employees, players, referees and other covered persons and entities testify and produce documents and evidence requested in those investigations; and (3) punish anyone who fails to comply. All of this is designed to protect the integrity of league competition and ensure compliance with league rules. The Clippers investigation demonstrates the effectiveness of uncovering evidence with the policy in place and the consequences that can follow when investigators conclude that information was withheld, not reported or inaccurately presented.
Attorneys are well acquainted with investigating allegations — it happens in nearly every lawsuit.. To facilitate this, the legal system recognizes that fact-finding often requires compulsory cooperation. Courts permit litigants to obtain evidence through subpoenas, document requests, depositions and other discovery tools because relevant witnesses do not always volunteer information. Internal investigations generally do not enjoy those same powers. An organization’s ability to uncover facts therefore depends largely on the contractual and policy obligations it has established before an issue arises. Without a clear duty to cooperate, investigators may be left relying on voluntary participation from the very individuals whose conduct is under review.
For corporate boards, general counsel, compliance officers and HR professionals, the takeaway is straightforward:
Do not wait until a crisis occurs to determine whether your organization has the authority to compel cooperation.
A well-drafted cooperation policy should clearly define who must cooperate, what cooperation entails, the duty to preserve evidence, the consequences for providing inaccurate information and whether those obligations survive termination of employment or contractual relationships.
Investigations often succeed or fail based not on the underlying facts, but on whether the organization can obtain those facts promptly and reliably.
The Clippers matter is a timely reminder that governance is not just about preventing misconduct. It is also about ensuring that when questions arise, the organization has the tools necessary to uncover the truth.
