Blog

 

 

Due Diligence helps tell the bad guys from the good guys

So, what is this Due Diligence stuff all about? There is a great quote by Albert Einstein, going like that “If you can’t explain it to a six-year old, you don’t understand it yourself”. I’ll take the challenge and try to sum it up in the six-year-old style: “We work for the good guys. The good guys want to team up with other good guys. Sometimes the other good guys pretend to be good guys but are actually bad guys. We find out who the good guys are, and who the bad ones are.”

blog-2409

Now, let me come up with a more adult-like definition, a.k.a. boring academic stuff. The so-called “due diligence defence” was used in the USA to protect stock brokers from being sued for failing to disclose relevant information and business risks to their clients, usually investors of some kind. All in all, the broker was not liable for non-disclosure of information that was not discovered while performing the standard investigation before the deal.

As years went by, the term evolved into more of a voluntary investigation rather than a legal obligation and most basically reflects the initial review of a potential business partner and the assessment of all the potential risks involved.

Our team focuses on the really dirty, negative kind of stuff – bribery, corruption, organized crime, money-laundering, embezzlement of public funds – all that scary words we hear every day on the news all around the clock. Shortly put, we step in to prevent bad business things happening to our clients like signing a gazillion dollar contract with someone who has been laundering money for the last decade or two and rips off the hell out of you. The “scientific” definition for what we do is “to prevent shit from hitting the fan”.

Let us break the whole thing into a couple of smaller bits to identify the main roles. Firstly, who are the above-mentioned gazillion dollar people for whom we do research and sacrifice our sleep? These enigmatic creatures are called Clients. They are the people who have in their CVs stuff like Executive Director, Chief Executive Officer, Managing Director, Founder, Owner, and so on. The last thing they want is the company they manage or own, to go down the drain with a call from the Department of Justice, asking why they are selling nuclear weapons somewhere in Iran. What they do want to know is what the probability of such a call is. So they come to us.

…Which leads us to the next question – who are we? Well, we are some ordinary guys and girls, who in the process of being involved in DD, have become not so ordinary. The thing about DD is that you can’t do a university course in it or study it at high school. What we have as background is usually knowing some languages and having some idea how to put things together so they could make sense (you know, like sentences and stuff). This is what we start with. Here is a brief prima-vista type of list of what we end up with in about half a year:

  • Knowledge

    of the legal procedures and the judicial systems in a bunch of countries across the world;

  • Understanding

    how corruption, financial fraud, embezzlement of public funds and bribery of public officials and political leaders work;

  • Competence

    to identify any potential risk deriving from any interaction with any given government at any level, anywhere;

  • Stamina

    to go through enormous quantities of information, be that media articles, court filings, official lists of any sort, press releases, sanction programmes, or the blog that your neighbour writes in the dark secrecy on Wednesday nights in his underwear;

  • Doggedness

    in untangling complex corporate ownership structures that take you from wherever you are, spin your head, give you a headache, and leave you off on another planet;

  • Know-how

    of the way massive closed databases or open search engines (like Google) do their job, and being able to squeeze out from them all the relevant information that we need to describe and sum up the above. Sounds easy enough, right? Well, it is not;

  • Ability

    to switch off and have a beer like a seemingly normal person;

  • Doing

    all that while hanging from a cliff upside down. In the rain. Of falling lava.

Alright, I got a bit carried away with the last one, but you get the idea. So, again, what is this Due Diligence stuff all about? Well, from the business side, our job is to protect our clients from bad decisions and to make sure that they have their good night rest after a hard day of work. From our side, it is about challenging and improving ourselves. I think it is a pretty good deal.