A couple of previous corporate situations in France and Japan highlight the importance for companies to implement archiving systems. Email is the primary communication source for companies being able to track historical information. With both the Kerviel-Société Générale and Livedoor scandals, employee email and instant message archived records were critical to the companies as the scandals unfolded. This included executive communications, as well.

Both situations are reminders that these days electronic messages are a constant way of life for all business professionals. For company self preservation, it is important to keep track of commitments employees have made or have not been making on behalf of the organization. This is where archiving systems facilitate in maintaining message communications, while protecting a company’s business  interests.  As innovative new technologies, like the iPhone, move messaging outside the constraints of the traditional corporate IT infrastructure, an organization must strive to capture all instances of employees’ business related messages. This requires that archiving be taken out of employee’s hands.

A fake email supposedly coming from Deutsche Bank led the French bank Société Générale to realise that something was not kosher with transactions being made by a junior trader, Jérôme Kerviel. An investigation was initiated when bank management concluded Mr. Kerviel had exposed it to 50 billion euros of potential liability.  All of Jérôme’s messages stored by the bank came under scrutiny.

The New York Times previously reported “One top Société Générale executive informed investigators that Mr. Kerviel rarely used his office e-mail account. In 12 months he had only sent 60 messages from his corporate email account.  Apparently instant messaging was Mr. Kerviel’s primary business communication method of choice.” Referencing whatever electronic records that were available, the bank quickly responded to minimize its liability by making good on Kerviel’s outstanding trading positions.

During a thorough investigation, a key question that needed to be answered was whether Kerviel acted alone. The bank examined thousands of messages stored from the bank’s internal instant message system. This included communications some between Kerviel and a suspected accomplice, Moussa Bakir,  who was an employee at a company called Fimat. In one message that warranted particular attention, Mr. Bakir communicated to Kerviel, “You have done nothing illegal in terms of the law.” And at least one e-mail suggested that an assistant inside the bank had also helped Kerviel.

The outcome of the investigation was critical to the bank and its investors, as responsibility for the scandal was distributed. Had the bank not been archiving email and instant messages, its investigation and steps taken to minimize the damage would have been seriously hampered.

In the instance with Livedoor, an Internet service company in Japan, email message archives saved the company.   Livedoor, a popular web portal in Japan, became caught up in an accounting scandal that led to criminal prosecution of several executives, including the CEO. Executive email records figured prominently in the investigation. As an example, archived email messages indicated Livedoor executives deceived other business entities by offering to purchase stock the company already owned.

Although this situation gave Livedoor a big black eye, the company still survived through it. As an entity separate from the individuals who serve as executives, the company regrouped and pressed ahead as a viable competitor in the Japanese Internet market. It installed a new CEO who said, “When you’re a company with 2,000 staff and 200,000 shareholders, people expect some corporate responsibility.”

Livedoor received much unwarranted publicity from this situation.  A hard copy of an email circulated in Japanese politics pointing to evidence there was an attempt by the firm’s former CEO to use company funds for bribing top Japanese politicians. The company conducted an internal investigation of its records.  From that investigation the new CEO was able to publicly express skepticism that such a bribe took place. Archived records also allowed the company to prove the bribe allegations were not true.

So retrievable electronic communication records positioned the new CEO to deflect suspicion away from the company.  The bribe email was later proven to be fake. This scenario highlights how today’s competitive business environment dictates companies preserve email. Just as electronic archives can inform an enterprise about its commitments, they can protect it from false accusations and even eBlackmail.

Any questions?