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Virtually no hiding place from long arm of computer detectives

Financial Times: Virtually no hiding place from long arm of computer detectives

“…fraud investigation is to turn on a “smoking gun” document…,”: “I am becoming sick and tired about lying about the extent of our reserves issues.”

By Bob Sherwood

Published: August 19 2004

If a commercial court battle, employee discrimination case or fraud investigation is to turn on a “smoking gun” document, the chances are it will have been recovered from a computer.

Oft-quoted statistics claim that about 90 per cent of documents generated by a business are created and stored electronically. Up to 70 per cent of them are never printed as a hard copy.

The value of searching for the killer e-mail has been demonstrated in a number of recent cases. Frank Quattrone, the most prominent investment banker of the internet era, was found guilty in the US in May of covering up an investigation into hot stock offerings at Credit Suisse First Boston, his former employer, at the height of the bull market.

The case against him concerned a single e-mail in which Mr Quattrone urged colleagues to “clean up” their files and which was sent two days after a CSFB lawyer warned him the bank’s allocation practices in initial public offerings were under examination.

There was also the case against Henry Blodget, a star equity analyst at Merrill Lynch, who described in an e-mail a company the investment bank publicly recommended as “a piece of shit”.

Royal Dutch/Shell also disclosed e-mails and memos showing how two of its most powerful board members were feuding about the over-stating of its oil and gas reserves. In one e-mail, Walter van de Vijver, then head of exploration and production, wrote: “I am becoming sick and tired about lying about the extent of our reserves issues.”

But just because e-mails are often recorded on system back-up tapes or hard drives, even though the users have deleted them, does not mean they are always easy to retrieve.

“In a typical case, you could easily have a billion e-mails to filter through to find the one piece of data you need,” says Adrian Palmer, managing director of Kroll Ontrack, the computer forensic consultancy. “If a large multinational organisation has 125,000 employees, imagine how many e-mails they produce in a day. If you tried to print them out you would fill Wembley stadium in the first three days.”

The increasing use of instant messaging, Blackberry portable e-mail devices, personal laptops and electronic organisers, as well as private e-mail accounts, is making it harder to track messages and memos that do not go through a company’s main servers. Obtaining e-mails sent via a free web-based service can often require a court order, lawyers say.

The sheer volume also makes searching a specialised task, as a single back-up tape of a few inches square can hold 50m pages of data. And employing experts to use cutting-edge technology to search huge volumes of electronic information, recreate databases or track certain types of communications can prove hugely expensive.

But lawyers in the UK are beginning to realise the litigation potential offered by detailed forensic computer system searches of huge amounts of data. Mr Palmer says lawyers can now search volumes of documents that would previously have been unthinkable.

“Were it a warehouse full of paper documents, such a search would be hugely expensive and time consuming and could only be justified by mass torts,” he says.

In addition, the “metadata” encrypted in electronic documents provides a wealth of extra information, such as who had access to it, when it was opened, when it was amended and probably what changes were made to it.

It is not just the sensational e-mails that can make a case, Mr Palmer points out, but the “trail of communications that paint a picture of how an organisation arrived at a decision”. The heavy reliance on e-mail in many organisations can provide a trail of traceable electronic communications that reveal the workings of an organisation that would have been impossible in the paper era.

That was amply demonstrated by last summer’s Hutton inquiry where dozens of e-mails revealed how involved the Downing Street inner circle were in preparing the government’s intelligence dossier on Iraq’s weapons of mass destruction.

In addition, some people are deliberately using e-mails for key communications because they want to leave a trail – if they want to be able to prove they advised against a certain dubious course of action or were the victim of harassment at work, for example.

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