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The Due Diligence Team, part 2: The beauty of digging for dirt

The beauty of the job is to analyse the information you’ve found, to get into the big picture, lead analyst Velimir Dimitrov notes. When you run into a controversial story, you have to decide what is simply not true or irrelevant, to find the most reliable sources, to base your decision on sound grounds.

The job widens your knowledge of corporate dealings, market trends, the latest political and economic developments, senior analyst Anna Pavlenko says. “You are like a micro news agency with all the reports and updates you produce. When you hear about a company, you already know everything about it.”

A team is more than numbers

“The coolest team I’ve worked with,” Anna points out and it’s not empty rhetoric. She is a Ukrainian with 12 years of employment history in Bulgaria, only two of which with A Data Pro. “I have the feeling that I’ve been in due diligence for seven or eight years because I can draw on the know-how of the whole team. When something goes wrong, we get together, brainstorm ideas. Decisions are usually made from the ground up, not from the top down. Everyone matters.”

“We feel spellbound by the project. It makes us stick together, have fun, share our triumphs,” lead analyst Ilina Tsoneva says. Recently they started doing a new type of reports with a lot of entities (individuals related to the investigated business). 

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The moment the report was put together and sent, they were all jumping for joy and opened a bottle of champagne. “Nothing can compare to the exhilaration of challenging limits and achieving your goal as a team,” Ilina adds.

Can you guess what bothers them? – Idle times, the slowdown in work, lead analyst Georgi Branekov says. “On the contrary, dynamics brings you closer to the team, makes you follow everyone’s progress, lend a hand, get leads,” Anna adds.

Irina Zhecheva and Ilina Tsoneva remember a case when they discovered that they were writing two separate reports about people who were related… by marriage. Ilina was investigating the biggest playboy in the history of Bollywood and Irina an Indian actress who was not less famous. The reason they were “entities” of due diligence reports was that they both had been politicians. The two analysts were able to follow their relationship in detail and share some “nice bits”. The affair started while they were filming a love story. The man paid a boy to distract the actress during the love scenes so that he can hold her longer in his arms during the reshoots.

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However, an analyst’s beat is not simply geography, it’s also understanding the set of mind, culture, regulations, political vagaries. Knowing the local language helps a lot and with time they learn to find their way easily, scent trails, disentangle complicated cases, become experts in country-specific malpractices.

“Countries do business in different ways, but none are free of bad practices. The question is how to find reliable information about them,” Velimir says laughingly. “For example, the Balkans are notorious for the close ties between the private and public sector. Most companies rely on political backing to win procurement orders”. He was investigating a Romanian firm whose reputation seemed solid until some checks on its CEO were made. He turned out to be a political figure involved in corruption schemes and blackmail, which made the company an investment risk.

The issues with African countries are a bit different – human rights violations, poor working conditions, Velimir adds. The Sub-Saharan region leads the ranking for corruption and serious crime, analyst Fatme Ismailova notes. Checking Nigerian entities is an experience in itself. Favouritism, kickbacks, bid rigging are rife in winning tenders in the energy sector, especially for oil mining licences.

Fatme’s “favourites” are the American investment companies. You don’t have to search very hard for adverse information. Sanctions, million-dollar fines for money laundering, fraud, etc. Generic drug makers come next – patent wars, drug recalls, reimbursement disputes.

“Russia and Latin America are among the busiest beats,” George says. “Latin America is rife in corruption, embezzlement, etc., but has a very complicated judicial system. On the other hand, Russia’s system (courts, instances) is quite straight but it is not functioning well.”

One of the problems with Russia is that a lot of companies are registered under the same name. Try to find a firm called “Медицинская компания” and Google will return at least 20 companies of the same name and a lot more derivatives, George goes on. It is difficult to identify a company with an offshore registration because they are usually named after mythological creatures – Pegasus, Orion, etc. He believes that taking a common name is a trick to remain anonymous.

Writing reports on Russian companies and court proceedings, you will inevitably encounter some interesting personalities, George adds. A Russian tycoon, a real freak, operating in real estate, made a bet in a televised interview that if the heavily-hit market didn’t recover to pre-crisis level in a year and a half he would eat his neck-tie. After two years, things went really fine and the TV presenter reminded him of his promise. The “dude” said he was wrong only for a quarter of the period and will eat only a quarter of his tie and did it!

The same guy, involved in concealment of funds, was hiding on an island in Cambodia. The Russian authorities chased him and one night three boats approached his house but he jumped into the sea and fled into the jungle. Finally he was caught but it turned out that Russia and Cambodia have no extradition agreement and he remained there.

The saga doesn’t end here and George and the team have a lot of stories to tell. Just ask them, they don’t need much persuasion.