The KPMG, SAP, Trillian, McKinsey and other similar sagas have shed light on one of the most potentially devastating risks in business: The risk of undesirable associations and uncompetitive business practices by competitors
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ENHANCED DUE DILIGENCE SERVICE

Undesirable existing and potential future associations, as well as uncompetitive business practices, inherently increase risk exposure to decreased shareholder value and stakeholder confidence, damage reputations, create unwelcome perceptions about an individual or organisation, and are disposed to turn into media scandals.

These impacts are often uncontrollable, irreversible, even devastating.

Appropriate crisis management must follow the presence and absence of preemptive preparation.

 

Introduction

The KPMG, SAP, Trillian Capital, McKinsey and other similar saga’s have shed light on one of the most potentially devastating risks in business: the risk of undesirable associations and uncompetitive business practices by competitors.

Undesirable existing and potential future associations, as well as uncompetitive business practices inherently risk exposure to decreased shareholder value and stakeholder confidence, damaged reputations, create unwelcome perceptions about an individual or organisation, and turn into media scandals.

These impacts are often uncontrollable, irreversible, even devastating.

Typical M&A due diligence checklists fall short of proactively identifying and appropriately addressing these risk factors.

The Enhanced Due Diligence Service is primarily based on assessments of the following risk areas:

  • existing associations;

  • possible future associations; and

  • uncompetitive business practices.

The Enhanced Due Diligence Service culminates in contextual recommendations for the appropriate reporting and management of assessed risks.  

Longer term accountability and thereby, sustainability, can thus be ensured with greater certainty.

Application of the Enhanced Due Diligence Service

There are various scenarios in which the Enhanced Due Diligence Service could be relied to identify and manage these association and business practices risks:

  • Identification of possible risks when appointing directors, executives, employees or consultants;

  • Identification of possible risks when considering a proposed merger or acquisition with specified subjects, industries or areas;

  • Identification of possible risks when selling or purchasing securities from specified persons;

  • Identification of possible risks when appointing a supplier;

  • Identification of possible risks when competing against a specified person;

  • Identification and evaluation of conflicts of interest;

  • Evaluating possible uncompetitive conduct and other hostile business practices;

  • Evaluating the possible leaking of confidential company information and breaches of intellectual property rights;

  • Evaluating risks relating to past, perceived and threats of fraud, bribery or corruption;

  • Evaluating public and stakeholder sentiment towards an information set (e.g. a person, situation, narrative, state of affairs, etc.);

  • Evaluation of cyber and data security and integrity risks.

Fields of information considered in the Enhanced Due Diligence Service

  • Criminal or SAPS records (including foreign jurisdictions);

  • Professional registrations and good standing certificates;

  • Political views, expressions and exposure;

  • Membership of institutions;

  • Qualification and accreditation check;

  • Credit checks;

  • Directorships (past and present);

  • Trust interests held;

  • Whether the subject or any related person or business has been blacklisted by government or otherwise as Restricted Suppliers;

  • Members of Parliament declared interests (companies and related person/s);

  • Public procurement bids awarded to  a subject or related company;

  • Inquiries to journalists and published media;

  • Citation or references in reported and unreported litigation;

  • Assets owned by the person or related persons;

  • Marital status and family interests;

  • Known associates (primary and secondary networks);

  • Proven or alleged scandals or dubious conduct;

  • Hypothesis guided investigations into potential instances of unlawfulness or transgressions;

  • Media and social media;

  • Personal and professional references;

  • Records, archives and online sources;

  • Sanctioned monitoring of inner company information flows;

  • Other sources of information likely to yield the insights the client may require.

Approach to information gathering
Through the combination of open source and other investigative intelligence.

Enhanced Due Diligence Report and Proposed Intervention Strategy (roadmap)

Our lawyers, investigators and risk consultants draft an Enhanced Due Diligence Report according to the approved brief, aimed at placing the client in a position to make informed decisions regarding specific risks.

The report weighs and balances evidence (knowns and unknowns), taking into consideration the credibility and relevance thereof, from which an assessment is made regarding the identified risks.

The report concludes with practical suggestions for dealing with the risks, which could range from legal and practical interventions to doing nothing. Most importantly, the recommendations are contextualised for the client’s unique structures and scenarios.

Implementation of intervention strategy

After consuming the report, if required by the client,  we can make further proposals to the client for the implementation of the intervention strategies.

Costs of an enhanced due diligence

A proposal based quotation will form the basis of appointment following professional consultation, referencing resource requirements and time estimates for completion of the agreed scope of services. Variations of scope are subject to client approval.

About Argumentum

Argumentum provide corporate counsel on demand to various organisations across various industries. The globally expanding role of corporate counsel include enhanced due diligences, reputation management and other forensic services.

Some of the solutions are provided in association with specialist sub-consultants.