How best to respond to serious allegations?

http://www.guardian.co.uk/media/2011/jul/26/daily-mirror-publisher-to-review-editorial-controls
It’s a real test of your judgement if you’re faced with very serious allegations of illegal conduct by your organization, even if they only relate to the past. Particularly so when you’ve seen what’s happened to a competitor found guilty (at least in one case and allegedly more) of the same thing.
So how do you respond?
Obviously, first you have a serious conversation with the CEO and the other relevant executives to find what, if anything, they know and ask them to have conversations further down the organization on the basis that it’s most important that you know the facts regardless of blame.
If there is any basis to the allegation, you look into how you’re going to manage the situation.
If there isn’t, you need to put out a robust statement promptly saying that after looking into it thoroughly you can find no facts which back up the allegation.
I found TM’s disappointing because:

• It doesn’t mention any internal investigation into the past, now or previously. That’s the elephant in the room and they’ve clearly ignored it in this statement. But the question won’t go away. NI hoped it would, but it won’t until you deal with it properly and, most importantly, are seen to do so. There’s a real opportunity for papers to win trust, and maybe new readers and advertisers, by being seen to make sure they have clean hands over this.
  My fear is their action here is driven by a fear that there are secrets to be dug up and that, rather than getting them out now and heading on the road to recovery as soon as possible, they’re taking the short-term view of doing the minimum and hoping everyone will forget about this. But this topic won’t go away any time soon, especially with the forthcoming inquiry into journalism on the horizon.
• It doesn’t include any clear denial of the allegations.
• It sounds bureaucratic. A review of “editorial controls and procedures” doesn’t sound very reassuring — a key element of crisis management.
• It’s easily accused of being a case of closing gate after the horse has, potentially, bolted.
• It can easily be read to be a defensive legalistic wording which may reassure the financial stakeholders that there’ll be no new problems in the future which could affect the share price and ability to service TM’s massive debt. But as far as reputation management with wider stakeholder groups, such as readers and advertisers — whose trust is vital for future revenues and profits — it could be seen as too limited.

Balanced against all that you have to look at the cost to the organization of holding an investigation when you have no clear evidence of wrongdoing. Is it worth the cost for the sake of PR? It depends how much you rely on your reputation to compete in your market. DMGT’s response is, arguably, worse. Simply asking staff “Have we done anything wrong in the past?” clearly isn’t enough. Does anyone think they’d come forward and volunteer that? Ok, so far there are no allegations that DMGT titles have been involved in any of the “dark arts”, but if it turns out they have, this will be seen to be insufficient and more than a little complacent, if not incompetent.
In both cases, only time will tell.