Africa’s Agro-Processing Industry

Africa’s Agriculture Processing Industry

Food shortages due to the global pandemic, geopolitical risks from the Russia-Ukraine war, Houthi attacks on Red Sea shipping, famine, and drought in some African countries heightened food insecurity continent-wide resulting in high inflation and people slipping back into extreme poverty. Although Africa exports billions of tons of agricultural products yearly, it relies heavily on imports to feed its people. Gaps in the agro-processing industry are primarily to blame as raw materials are rarely processed into final goods on the continent. The events of recent years have flipped a switch on the agro-processing industry in Africa and become an industry ripe for investment and development. 

Agriculture and the Economy 

Nearly 23% of Africa’s GDP is from agricultural activities, and over 60% of African households rely on small farms for subsistence. The export of raw agrarian materials is one of the biggest drivers of Africa’s export economy, yet very little of that agricultural material is processed on the continent. This means that Africans sell raw agricultural products to overseas markets, which process the material into final products to be sold around the globe, including back to Africans at a higher price than what they sold the material for. 

Adding value chain actors able to process agricultural products in Africa is essential to economic growth. Its exports will fetch a higher price, revenue will be kept locally, and finished food products will be available through the industry on the continent. This will boost local revenue streams and decrease communities’ reliance on imported food products. 

This may help to combat the challenges currently facing Africa’s agricultural industry, such as desertification, land degradation, and losses in productivity. Many of these issues result from poverty leading to unsustainable land use and farming practices. Developing the agro-processing industry on the continent may lead to improved land use due to higher household income. 

Ripe for Investment 

What is holding Africa back from developing its agro-processing industry? One of the biggest obstacles to commercializing the agriculture industry is the lack of adequate infrastructure to support commercial activity. This includes roads, storage facilities, and processing or value chain actors. 

Each phase of infrastructure development requires local businesses and governments to access outside financing. This is a potentially lucrative investment as the demand for processed food goods in Africa is set to increase dramatically due to rapid urbanization and establishing regional and continental trading blocs such as the African Continental Free Trade Agreement, which is estimated to boost intra-African trade dramatically. 

Another challenge to the agro-processing industry are poorly coordinated markets. For the industry to thrive and reach small-plot farmers, local farmers must access markets and buyers who will store and process their products. This also safeguards yields from after-harvest loss, a significant challenge for African farmers seeking to bring their goods to market. As recently seen in Ghana, investing in commodity exchange services is one way to combat these issues.

Areas in Need of Investment

As mentioned above, the investment categories necessary for growth in the agro-processing industry are: 

Also crucial to the growing agro-processing industry are the other inputs to agri-business, such as machinery and equipment, input supplies, technology, and trade and logistics. 

As African states come together with international donors and private investors to enhance the production and processing capabilities of the agricultural industry, the economic impacts will be widespread, especially among impoverished rural communities. 

While most of Africa relies heavily on agriculture, several countries will have an outsized impact through their potential for successful agro-processing investments: 

It is important to note that each country and sometimes regions within countries have different laws, norms, and risks in the form of unrest, corruption, extortion, and terrorism.  

It is essential that general counsels use deep due diligence investigations and risk intelligence to assess transactions before investing in emerging markets such as Africa. Companies seeking to invest in Africa must also navigate a significant amount of risk when doing business in the region. US companies aiming to establish a foothold in emerging markets or seeking out a strategic trade location in Africa should strongly consider putting a due diligence investigations plan in place to assess the basket of risks relevant to a specific investment opportunity. This includes making sure that country-specific risk analysis and geopolitical risk planning takes place before committing significant resources to new ventures. 

Protecting the Board

Board Risks and How to Mitigate Them

The board of directors play a critical role in a company. They represent the company and have a fiduciary duty to its shareholders and assets. While they do not participate in the day-to-day activities and decisions of a business, they do oversee strategic planning and company operations, set overall policy, exercise an oversight role, and review the actions taken by the company’s officers and executives. This puts the board of directors in the unique position of being accountable at the top-most level for a company’s success, but also at a distance that can impact what is happening at ground level. This can cause a set of unique risks to the board, and by extension to the company and employees at all levels. A number of headlines over the last few years, showcase the damage that can happen when a board, and by extension the entire company, is left unprotected.

Not aware of the potential dangers to the board, and hence the company at large, many businesses fail to have the proper safeguards in place to mitigate potential hazards. Risks include damage to finances, reputation, employee morale, incurring government oversight and fines, and even complete collapse. Fortunately, once aware of these risks and what measures to put in place, companies can easily establish proper protective measures.

Learning from Others

Elizabeth Holmes, founder and CEO of Theranos, a medical technology startup, had promised to revolutionize blood testing with the ability of her company’s product to test blood with only a few drops. This device would make testing easy, quick, and convenient, and would one day be available in people’s own homes.  It was even claimed that this blood testing equipment would be able to identify 200 health conditions. The problem was, it didn’t work. In February 2022, Elizabeth Holmes was convicted of four of eleven charges of fraud brought by Department of Justice (DOJ), and her company, once valued at over $9 billion, dissolved in 2018.

The boards of directors of Walgreens, Safeway, and even Theranos’ own board all fell prey to the allure of Elizabeth Holmes and her imaginary technology. Some board members had years of experience and numerous accolades, so how could things have gone so wrong, and what could have been done to protect these boards and their corporate wards.

Theranos

Fortune called the Theranos’ board “the most illustrious board in U.S. corporate history.” It included big names, such as James Mattis, a retired US Marine Corp general, former Secretary of State Henry Kissinger, William Perry the former US secretary of defense, former US Senator Sam Nunn, retired US Navy Admiral Gary Roughead, former US secretary of defense William Perry, Richard Kovacevich the former CEO of Wells Fargo, former director of the Centers for Disease Control and Prevention William H. Foege, heart and lung transplant surgeon and former US Senator William Frist, and the chairman of the board for the Bechtel Group Inc. Riley P. Bechtel.

All seem to have been taken in by the sincerity and confidence of the oddly charismatic Holmes and her promise to save lives. When interviewed about what he thought about Holmes, Mattis replied “integrity” and “competence” – “both technical and scientific but also focused on human rights in the most classical sense of what human rights are about.” The promise of a righteous cause can often lead people down the wrong path without vetting either the cause or the source.

Boards need to ask tough questions and press the issue if the forthcoming answers are evasive or tenuous. One board member, Avie Tevanian, lifelong friend of Steve Jobs and former Apple chief software technology officer did just that. In return, he was asked to leave the board under specious litigation threats. Holmes brooked no opposition and wielded the threat of lawsuits against anyone she deemed a threat.

In March 2008, two employees approached the board chair. They had evidence that Holmes deceived the board about the efficacy of both Theranos’ blood testing technology and its projected revenue. The board decided to replace Holmes as CEO, but when they went to give her the news, she changed their minds. Homes, less than two weeks later, fired both employees who had spoken up. No one on the board looked into the firings, if they were even aware of them.

Directors are fiduciaries and are responsible for the oversight of a company’s compliance function, ensuring the activities of the business comply with the applicable industry, legal, and regulatory frameworks. The United States Sentencing Commission (USSC) sets out the requirements for an effective compliance program in the Federal Sentencing Guidelines. §8B2.1 of the guidelines reads:

“The organization's governing authority shall be knowledgeable about the content and operation of the compliance and ethics program and shall exercise reasonable oversight with respect to the implementation and effectiveness of the compliance and ethics program.”

Clearly, the board had little to no oversight program in place, which is something that is particularly prevalent in startup environments and emerging businesses. No-one conducted any due diligence on the principals of the company even when investing millions of dollars at early stages. For Theranos, there was no monitoring system in place for compliance with medical and laboratory regulations. Holmes consistently flouted regulatory issues and directly lied about the efficacy of her product. Her blood tests were unable to run the analysis she touted them as being able to, going so far as to hack commercial blood analyzers to clandestinely run tests on them instead of her own product.

If the sudden firing of the whistleblowing employees was not a red flag, the departure of CFO Henry Mosley in 2006 should have come under more scrutiny. Mosley was fired by Holmes when he questioned the “reliability and integrity” of the Theranos’ blood testing systems and equipment.

There were numerous other egregious actions by Elizabeth Holmes that the board appeared to be unaware of. One example took place in 2015, when Centers for Medicare and Medicaid Services (“CMS”) conducted a surprise lab inspection. They found unqualified lab staff, mishandled blood samples, and expired testing reagents. CMS also required that the company void up to a million tests results ran on the Theranos equipment and in 2016 banned them from running a blood testing laboratory. The board was unaware of this as well.

Safeguarding the Board

The Theranos’ Board wanted to do good. Unfortunately, goodwill and a powerful cause is not enough. In this case, the board needed protection even from itself. Why is protecting the board important and what can be learned from Theranos and similar cases?

Protecting the board is important, because the board plays a critical role in a company and can be a tremendous amount to a company, its employees, and shareholders.

What Can be Learned

Take Away

A Board of Directors plays a critical role in any corporation and safeguards should be established to guarantee that they steer the best course for the company.  Theranos provides a substantive lesson in how many things can go wrong in a company. The lives, finances, investments, and jobs of many people were negatively impacted by the unethical acts perpetrated by Elizbeth Holmes and Ramesh “Sunny” Balwani. The board was taken in by Holmes, as were many others outside of Theranos.

This does not mean, however, that other companies are free from malfeasance or are safe from bad actors. Just because board members or some executives and employees have integrity, does not mean all do, and without establishing an ethos of integrity and accountability with proper safeguards and measures in place, a company has no way of protecting or mitigating risk. This starts from the top down.

Protecting the board, is establishing measures to safeguard the whole company from investors and shareholders to employees to clients and partnerships. Fortunately, setting up the proper oversight, due diligence, compliance, risk management, accountability, and culture of integrity can safeguard their success and indeed the future of the corporation.

“Heroes and Monsters”

An Artistic Dive into Due Diligence Through the Brush of Art Fraud

Art. The word has spawned the question: “What is art?” It is a fairly modern question. As Sir Roger Scruton says in his documentary Why Beauty Matters, “At any time between 1750 and 1930, if you'd asked educated people to describe the aim of poetry, art, or music, they would have replied beauty." That changed in the 20th century. Scruton explains, “Beauty stopped being important, art increasingly aimed to disturb and break moral taboos. It was not beauty, but originality, however achieved, and at whatever moral cost.” So, while the answer to the question of “What is art?” varies among individuals today, the amoral and illegal act of forgery remains the same. On June 25th, the Federal Bureau of Investigation (FBI) seized 25 pieces of art from a Florida exhibit where the reigning question was, “Are they authentic?” They are now the subject of investigation for possible conspiracy and wire fraud.

Days later the CEO of the museum was let go.

Background

The 25 paintings were part of the Orlando Museum of Art (OMA) exhibit on the life and legacy of Jean-Michel Basquiat entitled “Monsters and Heroes.” The paintings were said to have been retrieved from a storage unit in Los Angeles where they had purportedly been stored for 30 years before being discovered when the contents of the storage unit were auctioned for nonpayment of rent and then sold. The mixed media artwork done on scavenged cardboard was said to have been painted by Basquiat in 1982 and sold for $5,000 to Thad Mumford, the Emmy award-winning screenwriter and producer of M*A*S*H and such shows as Good Times, and Home Improvements. Mumford passed away in 2018.

Mumford’s stored items were bought, according to a New York Times article, by art and antique dialer William Force and retired salesman Lee Mangan for $15,000. If authentic, the paintings would be worth around $100 million dollars. Pierce O’Donnell, a trial lawyer based out of Los Angeles bought an interest in six of the 25 pieces of art.

Questioning Authenticity

The authenticity of the paintings came into question when it was discovered that on the back of the cardboard canvas paintings there was printed on it “Align top of FedEx Shipping Label here” in a typeface not used until 1996, six years after the artist’s death, as published in the New York Times.

Red Flags and Due Diligence Investigations

The two main sources for the alleged origin of the paintings are Lee Mangan and William Force. They both served time, under different names, in federal prison for felony drug trafficking.

As reported in the Times, Force, in 1973, going by the name William Parks was arrested and “pleaded no contest to conspiring to import more than half a ton of marijuana from Jamaica to Miami by boat.”

Lee Mangan, or Leo Mangan, in 1991 and 1979 was convicted twice on federal cocaine trafficking charges. Then in 1996, Mangan, along with 6 others, including a former Securities and Exchange Commission (SEC) attorney, was arrested for securities fraud. According to The Wall Street Journal, their goal had purportedly been to “gain access to stock of two publicly traded companies, inflate the market price by getting favorable television coverage and then sell the stock to the public at a significant profit,” while attempting to avoid “regulatory scrutiny by taking advantage of securities regulations allowing unregulated stock to be sold overseas and issued by consultants.” In 1999, Mangan was convicted and banned for life from securities trade work.

In February of 2008, Mangan and his wife Michelle Tucker agreed to a $390K settlement with the Federal Trade Commission (FTC) for “charges alleging that they violated federal law by falsely claiming that they could reduce consumers’ credit card interest rates or the amount of their credit card debt.”

The third owner, attorney Pierce O’Donnell, as reported in the Times, has a criminal record as well. In 2006, he pleaded “no contest to violating campaign finance laws in 2006 and pleaded guilty to a second such charge in 2011, resulting in a 60-day prison sentence.”

While it is true, that past criminal conduct or civil litigation is not proof of current, as the lawyer Richard LiPuma who represents Mangan explains in the New York Times piece, “the fact that the owners were once in trouble with the law was irrelevant to the question of whether the works are genuine,” it does raise substantial red flags and begs the question of whether or not the OMA conducted any due diligence investigation on Mangan and Force. Anytime a business partners with someone, due diligence investigations are the first step in protecting against fraud and malfeasance. It is important to know who you are doing business with, who you are partnering with. Uncovering a history of malfeasance should also underscore the need for deeper levels of due diligence on the people, or in this case the history of the artwork. It is not enough to identify whether the art is an original work.

In a reply to the New York Times, O’Donnell, expressed he was willing to cooperate fully with the FBI and noted it was over 20 years ago that “[his] misdemeanors for campaign finance law violations occurred.” He also stated in his email to the Times that “the paintings are authentic. Five experts conducted extensive due diligence.” But, did he conduct any due diligence investigation on Mangan and Force?

While O’Donnell is assured of the authenticity of the paintings and supported in that claim by now ex-museum director and CEO of Aaron De Groft, the FBI, and others, are not.

CEO Aaron De Groft

On June 28th, within days of the FBI raid on the OMA, De Groft was fired by the museum’s board.

The FBI found in searching De Groft’s email correspondence found he had told academic art historian Jordana Moore Saggese at the University of Maryland to “shut up” when she said she did not want her name associated with the exhibit and would consider it defamatory if they continued to use her name.

De Groft replied to Saggese via email writing, “You want us to put out there that you got $60 grand to write this? OK then. Shut up. You took the money. Stop being holier than thou. You did this not me or anybody else…. Be quiet now is my best advice. These are real and legit. You know this. You are threatening the wrong people. Do your academic thing and stay in your limited lane."

De Groft was only appointed in February 2021 to head the OMA, but how much did they know about De Groft 16 months ago when they hired him?  Did the OMA do an executive background check on De Groft?   Executive due diligence investigations look into behavioral patterns in addition to many other areas of concern.  His behavior and actions have subsequently caused significant reputation damage for the museum.

Evidence

According to an affidavit in the FBI warrant Elizabeth Rivas, an FBI special agent, stated in the affidavit that Thad Mumford, who Mangan and Force claim bought the artwork from Basquiat, told her he “never purchased Basquiat artwork and was unaware of any Basquiat artwork being in his storage locker.” Mumford had told Rivas that one of the owners of the artwork had, according to the affidavit “pressured him to sign documents” claiming that he had owned the collection, which would help establish the paintings’ authenticity, and offering in an email to give him a “10% percent interest in the net proceeds.” A 2017 affidavit he signed stated he never had met Basquiat. In 2018 Mumford passed away.

Mangan, however, claimed to have met Mumford with Force in 2012, according to the Times, and Mumford had purportedly told the pair about his 1982 purchase of the Basquiat paintings and it was such a memorable encounter that he had typed up a poem that Basquiat had initialed. The poem allegedly penned by Mumford was included in the exhibit at the OMA. Relatives and friends of Mumford say he never expressed an interest in contemporary art, and Sheldon Bull, fellow screenwriter, and producer, who had worked with Mumford say Mumford wrote on a legal pad, never typed, and didn’t own a computer.

The Indispensability of Due Diligence

Had a suitable risk management program been in place, a due diligence investigation firm could have discovered any potential behavior risks before OMA onboarded De Groft and made investigations into Mangan and Force with whom they partnered

A due diligence investigation would certainly have uncovered the litigious backgrounds of Mangan and Force.

It could have also uncovered the discrepancies between the various experts asked to authenticate the artwork that came up in the reports and which purportedly De Groft had not disclosed to the board.

Due diligence investigations are designed to detect hidden and unclosed information. An executive background would check criminal history, financial and legal issues, civil litigation issues, relationships with other companies and entities, reputation issues, shell company involvement, evidence of fraud, signs of money laundering, financial impropriety, conflicts of interest, drug, alcohol and human trafficking, anti-competitive behaviors and numerous other serious issues. Open-Source Intelligence (OSINT) investigations are an important source of information in addition to publicly available records.

Takeaways

Business entities of any type are not safe from bad actors from within or without. Identifying these bad actors helps to protect any for profit or nonprofit enterprise from the harm they can cause. Due diligence on key executives and business partners will help to protect your organization from criminals and fraudsters.

While perhaps the definition of “What is art?” is up for debate, the question of “How do you define integrity?” should never be. Integrity will always remain the most important quality of anyone you hire or do business with. Just like the title of the exhibit “Heroes and Monsters,” you always want to go with the heroes and forgo the monsters.

 

 

Top 5 Things You Should Know About Protecting Investors

Investors play a key role in the success of many businesses. They invest their capital into your business to provide the money necessary to fund your ideas, visions, plans, and products. By doing so, they allow new businesses to start or existing businesses to grow and flourish. At the same time, they are taking on great risk; if your business succeeds, they should get a substantial return on their investment, whereas if it fails or does poorly, they stand to lose money or their entire investment.

There are numerous examples of people investing in companies, only to lose significant amounts of money. In many cases, some have even lost everything. A few famous examples include:

The Enron scandal - The founder, CEO, and Chairman were found guilty of corporate abuse and accounting fraud. Other charges against executives included money laundering, securities fraud, wire fraud, mail fraud, conspiracy, and insider trading. Enron’s shareholders lost $74 billion during the four years leading up to the company’s bankruptcy. Employees lost billions in their pension funds.

Stanford Financial Group of Companies - Investors lost a total of around $7 billion US dollars in a Ponzi scheme run by Allan Stanford who is now serving a sentence of 110 years in federal prison. Many of his victims were retirees who were promised “safe investments”, and not all of these losses have been recovered.

Clients of Bernie Madoff - Stanford comes in second, however, to Bernard Madoff. Madoff was involved in widespread fraudulent activities that wasted the investments of thousands of investors. In November 2008, prosecutors estimated the fraud to be worth $64.8 billion.

Theranos - Elizabeth Holmes CEO and  COO Sunny Balwani perpetrated a massive years long fraud according to the SEC. Executives at Theranos claimed the company's innovative blood testing technology was successful.  Theranos raised $700m in venture funding from prominent investors. Yet the product did not perform as expected, it was surrounded in secrecy and access to the main lab was locked to prevent anyone from exposing the real situation. They further claimed $100m/year in sales which was a substantial misrepresentation of the company's financial situation.

These are just a few notable mentions. Many other cases of mismanagement of funds, fraud and outright theft - big and small - can be found. During the dot com crash, many investors learned the hard way that the tech companies they invested in were only fronts with empty desks where no real work was being performed. The damage done by these fraudulent companies was very real, and had a ripple effect on legitimate businesses when their investors pulled out of companies with strong potential for fear of being stung by additional fraud.

Anyone with a serious mind to success is interested in protecting their business. They also realize how important it is to protect their investors who want a fair return on their investment and who you want to be there for the long-term. So, what steps can you can take to protect yourself and your investors? Let’s take a look.

The rise and exposure of litigious behavior within companies has  been the cause of scandal, lost profits, and reputational damage. Thorough "deep dive" due diligence could have mitigated, if not prevented, many of these situations and losses.

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that you'll do things differently.” ― Warren Buffett

1.    Choose Your Executive Hires and Business Partners Wisely

Some people choose their dinner items or coffee more carefully than their business hires and partners. From the entertainment field to the political arena, some of the biggest scandals to rock businesses have been a flood of accusations and cases of misconduct, ranging from sexual allegations to criminal activities. This brings to light the fact that even though those involved in malfeasance may have been experts in certain fields, they were also people of less than upstanding character.

Bad choices in hires and business partners result in a number of damages, including lost productivity, potential legal charges, reputation damage, and scandal. This can also have an impact in the form of revenue loss when clients and customers choose to go elsewhere. Additionally, there is the more subtle form of capital loss: money bleeding out due to the poor attitudes and conduct of employees, internal waste, poor morale, and bad work ethics. In larger companies, this may be less visible than in smaller ones, but it is still important. Your guiding principles regarding investors is to first and foremost safeguard those investments - something you should want to do in any case, since making a good profit in an ethical manner, for your company, yourself, and your employees should also top your list.

What are you looking for in your partners and hires? Is character and integrity at the top of your list? Are you working with people that are hardworking? Team players? Honest? Focused? Solution-oriented? Positive? If not, you need to invest in finding out more about the people you are entrusting with your hard-earned money.

How can you choose wisely when it comes to executive hires and business partners? Create a list of your top priorities and make the process integral to your hiring and partnerships, no matter the current trend in hiring practices.  Make sure you know who you hire by working with an investigative firm who will conduct executive due diligence on executive hires and business partners, rather than routine background checks, so you can protect your investors from regretting their investment.  Remember that investors can and may pull their money out if your company is rocked by fraud or corruption, sexual misconduct, loss of morale and productivity, misconduct or malfeasance, or reputation loss. Proper due diligence and wise choices are important.

“When cost is number one in importance, you’ve already lost.” Jim Rembach, Six Sigma Consultant

2.    Create a Culture of Integrity

Company culture has been lauded for the last decade or so and is increasingly important with Environmental, Social and Governance (ESG) investment  and social responsibility concerns taking center stage in the last few years. Understandably, different companies can take on different cultural tones. For example, a company that makes surfboards will have a different cultural feel to one that focuses on accounting. However, whether your product is high-tech, ecofriendly clothing or traditional banking, the most important aspect of any company culture is integrity.

Why is integrity so important? Because in any legitimate work environment, the primary focus is to create a successful business that is honest, fair, and focused on getting the job done.  Furthermore, more and more consumers prefer to spend their money and do business with companies that are committed to integrity as a core value, and are committed to great workplace culture. Integrity can also mean being more aspirational in your company's vision and/or mission, such as having a commitment to social values such as environmental sustainability. In the past, these values were often relegated by companies as “nice to have, but not essential to bottom line profits”. This is changing fast as more employees share personal workplace stories on social media and people have better access to information on workplace culture and values.

How do you define integrity? “Integrity is defined as the quality of being honest and having unshakable moral principles, situated at the intersection of consistent actions and strong values,” according to Learn Loft. As part of building a culture of integrity, you will want individuals who are team players, and who do the right thing at all times, even when no one is looking - and even when it is difficult.

Your leaders should also lead with integrity. A team that pulls together with leadership that is based on clear values, good character and guiding principles, will help instill integrity into the fabric of the company’s culture. No company culture should expect or accept less.  A company owes it to its investors to create a company culture that is based on integrity, fair, and equally applied policies that favor no one group or person over another. A company culture that fosters fair decision-making and does not allow internal or external pressures to negatively influence those decisions holds enormous value for executives, employees and investors.

One way to reduce the risk of hiring a leader who may not fit with your culture of integrity is to run due diligence checks on all new executive hires. Additionally,  routinely running due diligence checks on leaders can help ensure that any significant life changes or circumstances do not negatively impact your business or your investors.  Deep due diligence protects both you and your investors.

“It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.” ― Warren Buffett

3.    Protect Your Business and Your Investors by Choosing Due Diligence Investigations to Mitigate Risks

Deep dive due diligence is significantly different from typical background checks. Standard background checks are often run when new executive hires come aboard. These standard background checks can miss numerous underlying issues that deeper due diligence investigations will catch.

Standard background checks generally uncover only a cursory level of information (less than 1% of serious issues), while executive due diligence investigates 30 components of public record information, in addition to in-depth reviews of media and news sources along with a deep, dark web and historical internet search, yielding 20% serious issues. Deep dive due diligence can uncover vital information that is unattainable in routine background checks.

Information reviewed in deep due diligence checks includes:

Criminals, imposters, and con artists abound in every society and are difficult if not impossible to detect using only basic background checks.

Finally, it's important to remember that people’s situations can change over time and as a result, so can their actions. This means that due diligence should be conducted more often than just at the start of a new hire coming aboard. How often due diligence should be conducted can be determined by your company’s unique situation, risk tolerancee, and with the advice and guidance of a professional investigative firm with international expertise that is well informed on regulatory compliance requirements.

"Whoever is careless with the truth in small matters cannot be trusted with important matters." – Albert Einstein

4.    Select an External Investigative Firm with Due Diligence Expertise

Not all investigative firms have the same degree of experience, expertise, or ability to perform deep dive due diligence investigations. In protecting your company and investors, it is critical to partner with an external firm that can perform individual and company deep-dive due diligence checks. The investigative firm you work with should have global resources as well as long-term expertise in the investigative field. Partner with an investigative firm that not only does deep due diligence investigations well, but one that does deep due diligence uncommonly well.  You can only mitigate those risks that have been identified.

“The secret of success is to do the common thing uncommonly well.” — John D. Rockefeller Jr.

5.    Be Willing to Invest and Commit to Vetting Business Partners

Just as your investors choose to risk their investments with your business, a smart business is committed to investing time and money to protecting those investments, along with protecting the company itself, its reputation, and its success.  This commitment is especially important in larger business ventures, Joint Venture Partnerships, international business ventures, and in M&A deals. As many as 35% of international suppliers have corruption related issues; basic due diligence may only reveal 5% of these serious concerns.

Fraud in international supply chains has been well documented with numerous companies incurring substantial fines. Every year, the fines for Foreign Corrupt Policies Act (FCPA) violations continue to rise. In 2020, the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) imposed an astounding $6.4 billion+ in financial penalties for violations against 12 companies.

Since deep dive due diligence requires specialized expertise, this type of commitment involves a comprehensive analysis of all available public records data, augmented with detailed field intelligence, and deep web investigations to identify known and, more importantly, hidden and undisclosed situations.

Protect your investors who are investing in you early on. Be prepared. When you invest in a robust due diligence program and risk management maintenance plan, it is always an investment that yields a high return.