Client’s Challenge: A Peek Behind the Former Iron Curtain

The call came in from the CFO of a private, diversified financial services firm with more than $70 billion in assets under management and 2,800 global employees. The firm had a robust wealth management book of business in Switzerland, currency operations in the Middle East and an acute interest in a Russian opportunity that had just surfaced. “We are comfortable with the U.S. entity pitching the venture,” the CFO said. “But we would like to know a great deal more about the Russian parties they are proposing as partners.”

Our Solution: Investigating Prominent Russian Investors – With Discretion

Hillard Heintze initiated a rigorous international investigation into two Russian subjects and a related Russian business entity. Undertaken in Russian and other languages, this inquiry was conducted partly through a search of public media records in Russia, Europe and the U.S. but primarily through discreet inquiries with strategically placed sources in the North Caucasus political community as well as its financial and oil industries.

These sources included government personnel formerly employed in former Soviet agencies such as the KGB or the Ministry of Interior and the subjects’ former colleagues in elite senior political and business circles as well as Russian journalists, political observers and media commentators. Factors examined included the subjects’ business, political, and social affiliations, professional histories, past deals and their counter-parties and outcomes, arbitration proceedings, organizational interests and affiliations, and both personal and professional reputations.

Impact on the Client: The Deal Goes Forward

Hillard Heintze did not identify these individuals as overtly or otherwise implicated in any illegal or unsavory deals with domestic or foreign investors. Instead, the investigators confirmed that the Russian partners were sophisticated political and industrial players who had held positions in the highest echelons of the Russian political and industrial establishments, including the Russia State Duma and several of its key committees. Reassured by the findings of this investigation’s detailed report, the financial services firm opened the door to further negotiations with these potential partners.

Unplugged: The Project Manager's Post-Engagement Perspective

“I can’t emphasize this enough… but overseas jurisdictions simply do not have anywhere near the transparency in public records that exists in the U.S.

“The answers – and the information – are there. But they’re hidden, obscured, hard to uncover. And you’ll find that this is particularly true as you move East – in Eastern Europe, the Middle East. In Russia and in China, for example.

This case is a terrific example of the complexity involved in a high-quality international due diligence investigation. It also shines a bright light on the crucial importance of reaching out to many sources in order to create an accurate and thorough composite of a particular subject or business.”

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