Due Diligence

"Look for who really controls the business, both day to day and strategically."
A well-structured and transparent due diligence programme creates an unambiguous and auditable trail of research and analysis. It is an essential element of modern business. European and US regulators, along with a host of NGOs and the media, are increasingly active in their efforts to uncover any business connections to:

  • Money laundering;
  • Financing of terrorism;
  • Organised crime;
  • Tax evasion;
  • Sanction-busting;
  • Corruption and bribery;  and
  • Fraud

Not only do YOUR actions count, but also what others do on YOUR behalf, regardless of whether you directed it. That is to say, YOU are considered responsible for the actions of your subsidiaries, intermediaries, associates, and partners.

Identifying and categorising hazards is the foundation of risk management. US, UK, and European regulators advise a proportional investigation based on geographic and sectoral factors that includes, at a minimum, the analysis of:

  • Agents and other 3rd parties; 
  • State-owned customers;
  • Joint ventures, teaming, or consortium arrangements;
  • Customs and Immigration issues; 
  • Taxation issues; and
  • Official licenses and permits.

A good business decision is based on well-organised information and is supported by clear analysis. The cost of not performing sufficient research can be massive. In recent cases, household names such as Avon, HSBC, Morgan Stanley, Pfizer, IBM, Oracle, HP, and Walmart have spent millions of dollars, often hundreds of millions,* JUST TO INVESTIGATE possible cases – even before any prosecution, or settlements, or fines! Regulators in the US, UK, and Europe are becoming increasingly active in their pursuit of even perceived wrongdoing.

Beyond the financial and legal issues, corporate reputation can be severely damaged by even the suspicion of corrupt practice. The infosphere requires no court to convict by suspicion and association alone and there is no limit to from how far back mistakes may be dragged into the present.

* Sources: US Securities and Exchange Commission filings; Wall Street Journal; The Guardian