Enhanced due diligence
Performing due diligence investigations on an individual or company with a focus on financial resources, competence and reputation can be critical before making business decisions. In today’s fast-changing global marketplace, failure to conduct adequate due diligence can make an organization vulnerable to substantial losses and liabilities.
The scope of a due diligence investigation may cover the legality of the source of investment funds, the transaction or litigation history of a counterparty, or other factual inquiries that may be required to close a deal. These investigations are particularly important if the parties are foreign, or if a proposed venture will operate in parts of the world where business is not adequately protected by contract law, making success heavily dependent on trust and good faith between the parties.
Interfor, Inc., a firm specializing in foreign and domestic corporate investigations since 1979, performs enhanced due diligence for clients who need comprehensive background information about new business relationships and prospective partners in mergers and acquisitions, joint ventures, venture capital investments or large loan transactions. All inquiries and findings are strictly confidential and are pursued in compliance with applicable law.
With extensive sources in Europe, South America, the Middle East, Asia, Eastern Europe and Africa, Interfor’s capabilities are global. All inquiries are conducted with complete discretion and confidentiality by our field investigators, many of whom have been associated with government, defense and intelligence agencies. Interfor’s field investigators are also supported by a sophisticated research division, which draws information from more than 2,000 databases and a network of relationships with law enforcement agencies and other special sources developed over 26 years of business in the investigative field.
Basic Compliance Investigations
Interfor’s basic compliance investigations provide clients with fundamental background checks on parties involved in impending transactions. These investigations include:
• Verification of the subject’s identity (address and social security number check to prevent false identification fraud)
• Civil and criminal background check
• Name screening on government terrorist and criminal lists
• Nationwide bankruptcy search
• Property search
• Worldwide media review
• Reputation inquiry
• Analysis of corporate holdings and affiliations
• Professional license and credential verification
• Lien and judgments search
• Whether the targets of their companies are being investigated by government regulatory agencies
Enhanced Compliance Investigations
For persons or companies that are redflagged either as a result of Interfor’s basic compliance investigation or because of suspicious activity, Interfor recommends an enhanced compliance investigation. This type of due diligence encompasses all of the basic compliance components, but adds two key elements:
• enhanced, on the ground investigation
• a financial profile of the person or company
Interfor has offices throughout the world and has confidential sources in most countries. When necessary, as part of enhanced compliance investigating, Interfor’s field investigators can conduct more comprehensive reputation inquiries by making use of resources and relationships available only at the local level. This includes a verification of all physical assets listed as collateral or otherwise, and contact with local law enforcement personnel, government and industry sources for inside information.
Why Use an Investigator?
The events of September 11, 2001 and recent heightened corporate compliance standards have led to an explosive growth in database software and investigation firms, all purporting to provide the solution to a company’s due diligence needs. There are two problems, however, associated with this “solution.” First, companies often overestimate the scope of information available via databases, and second, most of the emerging intelligence firms do not have the resources and contacts necessary to conduct sophisticated investigations.
Many companies (new and old) are trying to break into the due diligence market by making extravagant promises about costs and results. A close examination of these “due diligence programs” reveals that they simply punch a subject’s name into Lexis/Nexis or a similar database and report back any findings. A single database cannot access the volumes of information available in the public domain, nor can most software programs provide information from foreign jurisdictions.
Also, some firms are selling “due diligence” software to allow companies to conduct their own research. Bear in mind, that any software that is not updated on a daily basis is obsolete. Furthermore, although it may sound appealing to handle these investigations in house, the costs of training employees to the point at which they are experts must not be ignored, and simply may not be possible.
Complex investigations often require techniques and relationships that can only be developed over time, and via experience; they also require field work and face-to-face meetings. These tasks cannot be done by using a database or computer search engine; an expert investigator must be employed. Additionally, internal employees and emerging investigation firms do not have the capabilities and breadth of experience to satisfy the demands of complicated investigations, particularly if the due diligence involves parties overseas.
Institutions should choose their investigative provider carefully, examining the provider’s years in operation, existing client base, and obtaining references from some of the investigator’s clients. Interfor has been in operation for over 30 years and its New York headquarters alone has investigators with over 100 years of experience between them. Interfor would be pleased to provide references upon request.
How Interfor Operates
Interfor’s business philosophy has always dictated that we will not take on work where we are not confident that we can be effective. Therefore, clients are advised to provide Interfor, in advance, with all available information about the prospective target, as well as any concerns regarding the investigation. In return, a detailed written proposal with price and time quotes will be prepared within 24-48 hours. Typically, Interfor will quote a project cost for its due diligence investigations based upon the following factors:
• Quantity and quality of information provided at the outset by the client;
• Number of persons to be investigated;
• Geographical location of the targets (see next page for further explanation); and
• Number of geographical locations.
Interfor can be placed on retainer to handle volume over the year or to investigate large blocks of employees or account holders on a case by case basis. Our fees will be adjusted accordingly.
An investigation of an individual in Los Angeles, California will be much cheaper and quicker than one of an individual in Libreville, Gabon. In order to provide clarity and predictability, Interfor has created a system of geographical zones which rates the ease and speed of conducting investigations in countries all over the world. Please see the chart on the next page for details