For several years, a U.S.-based international consulting company had been partnering with a Brazilian entity for engagements requiring work in Brazil.  When the contract came up for renewal, the compliance department insisted that a due diligence investigation be undertaken by a neutral third-party investigation firm with international reach.

The in-house counsel placed a call to Hillard Heintze CEO Arnette Heintze and requested a strategic due diligence investigation – not only of the company itself, but also of its two principals.  “One more thing,” he added just as the call came to a close, “By contract, our window of negotiation with this firm is closing.  I need this report inside of 10 days.”

International Due Diligence Initiatives Like This Require Extensive Capabilities

Within the hour, the Hillard Heintze teams – one in Chicago, the other in Sao Paolo – were in motion.  Within days, key findings emerged.  While no criminal records surfaced related to the company, the team linked it to 16 civil suits over the past three years. With respect to the individuals, the CEO of the firm was confirmed as a 51% shareholder and the COO as the owner of the other 49%.  Hillard Heintze identified the CEO as a defendant in two criminal matters and a party in three civil disputes in the late 1990s. The COO was also named as a defendant in the criminal suits.

Delivered As Promised – On Day 10

This due diligence report was delivered on deadline, on the 10th day following the original case assignment.  This client now relies on Hillard Heintze for U.S. and international investigative due diligence support on comparable engagements on a monthly basis.

Unplugged: The Project Manager’s Perspective

“Eighty-five percent of the work driving the findings in this report were conducted by our folks in Sao Paolo – in Portuguese, of course. Given the very short turnaround, we weren’t able to conduct the number of source interviews that we typically like to undertake.  Which is a key issue, because digital and hard copy records rarely tell the full story. Given more time, we may have been able to surface a much more richly layered profile of this firm and its top executives, as we usually do. But I understand that the client was delighted with our work.  We met – and may well have exceeded – their requirements under some very tough time constraints for an international assignment.”

The ACTION WEDNESDAY Tool Box: Two Key Take-Aways

  1. Take Special Care When a Prospective Partner or Key Hire’s Footprint Extends Across Countries – It’s much easier for an entity or individual to distance themselves from a troubling past or track record merely by moving to a new jurisdiction or country.  Hillard Heintze encounters this regularly in the United States and wherever we conduct one-country or single-jurisdiction due diligence investigations.  But international due diligence are more complex for many reasons – and can help some entities and individuals pull a full or partial curtain across their past.
  2. Don’t Expect All International Due Diligence Engagements to be Completed in 10 Days – This case was an anomaly in this regard.  We were able to meet a very tight deadline, but in many cases tracking down records, interviewing sources on background, and validating findings through independent channels requires a careful, diligent and systematic approach.  And time.  Plan on allowing enough of it to yield actionable intelligence and risk-mitigating due diligence insights.

(What’s it like on the front line supporting the firm’s clients?  What are the challenges the firm’s experts help senior business executives, general counsel, board members and other decision-makers address?  Welcome to ACTION WEDNESDAY.  Every Wednesday, the Front Line Blog publishes a new case study.)

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