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Investigating Abroad

​CONDUCTING INTERNATIONAL investigations can be difficult, time-consuming, expensive, and frustrating. Companies faced with that challenge must determine the type of investigation, the skills needed, and whether to hire a third party locally to handle it.

Investigation Type
There are three major categories of international investigations—background screening, due diligence, and criminal. The type of investigation will determine what skills a contractor will need.

Background screening. For most background screening investigations, companies should hire a local vendor. Exceptions can be made in instances where the client company has a subsidiary or branch in the country where the investigation is taking place.

A local vendor is required because electronic records can be spotty or nonexistent. Sometimes, investigators must pound the pavement to seek evidence or verify assertions made by the subject. For example, an applicant for a position at my company claimed to have been a member of an elite armed forces team in a former Soviet Bloc country.

The candidate was a great fit for the job, but we had serious doubts about her credentials when she claimed that all her military records had been destroyed in a fire. A contract investigative firm located in the Eastern European country where the fire was said to have occurred was hired to look into the matter. They found that the records in question had, indeed, been consumed in a fire. They also found photographic evidence and ancillary records that proved the applicant’s claims about her work experience. I hired her with confidence.

Due diligence. Background screening and due diligence investigations are similar in that they require a search of public records information, but significant differences exist. Due diligence investigators look for a broader range of evidence, conduct a more sophisticated search, and require access to more resources. Because of these required skills, many companies that focus on routine background checks cannot successfully complete due diligence investigations.

Due diligence investigations require experience and a deft touch. For example, in one such investigation, I hired a local company to investigate a prospective business partner. A visit to the supposed headquarters in a large Asian city revealed a dilapidated apartment building surrounded by laundry and livestock instead of a business. Additional research revealed that not only was the company fake, it was a shell for a local crime syndicate. That information helped us avoid entanglements with that crime boss both at that place and with other companies fronting for him.

Criminal. Sensitive investigations, such as those involving possible criminal activity on the part of employees or subsidiaries, require special handling. While there are usually local firms that could conduct such investigations, this is the one type of investigation that companies should consider managing on their own to protect sensitive or proprietary information. If a company does decide to hire a third party, it should select the company carefully and keep an arm’s-length relationship with the investigative firm.

Companies should consult corporate counsel regarding any relevant laws in the target country. Counsel might advise that the work product be kept confidential and may even want to be involved directly so that documents produced in the investigation are protected by attorney-client privilege.

The first step I take when trying to find a reputable foreign investigation firm is to contact the U.S. State Department’s regional security officers (RSOs) or assistant regional security officers (ARSOs). Companies can contact these sources and inquire about local security and investigation firms. While they are not allowed to recommend any particular firms, they often know which companies have been used by U.S. corporations in the past. This can be a good starting point.

If the country in question has a U.S. embassy or consulate, the company could contact the legal attaché (LEGAT). LEGATs are agents of the FBI assigned to these posts to liaise with local law enforcement agencies and protect U.S. interests abroad. Many LEGATs are lawyers as well as FBI agents and can point to possible investigative firms.

Another tactic is to get references from companies that have worked with local firms. For example, U.S. embassies can provide names of U.S. corporations that are located in the city or region. Large cities may have an Overseas Advisory Council (OSAC) group in place that can provide similar information. Companies might also attempt to find security managers in that particular country by checking with ASIS International or other professional associations.

Once a company obtains a short list of contract firms for consideration, it should vet those firms just as it would any other potential business partner. However, there are several issues of particular concern with foreign vendors, such as report formats the firm uses, its knowledge of and adherence to local laws, and its pricing schedule.

Report formats. When dealing with companies that may not have a native English speaker on the staff, it is critical to look over actual reports the firm has issued. I have found that investigators who are not native speakers of English can produce reports that take a great deal of time to read and digest. In cases where an English-speaking firm was not available, I have been forced to have the investigator call me and read the report to me, stopping him or her along the way with questions as to meaning and intent. This should be avoided if possible.

Laws. The illegal actions of vendors can get the hiring company into trouble. Companies should have counsel research the legal restrictions in a given country and make sure that the vendor’s contractual mission and planned activities will not violate any of these. For example, for an investigation involving countersurveillance, sophisticated equipment is required. But in many countries, such as Egypt, it is illegal to bring such equipment into the country. In other countries, the use of this equipment is considered industrial espionage no matter the intent.

With regard to a background check, some firms may circumvent local laws that restrict access to records to gain data for an investigation. This can land the client company in legal hot water. Vendors who are anxious to garner business may not be forthcoming about how they plan to gather information so companies must ask pointed questions and get written assurances that laws will be followed.

Pricing. While most companies are on the lookout to save money, a low price tag from a foreign vendor could be a red flag. A fee that does not meet generally accepted prices can indicate that the company plans to cut corners or use illegal methods. A lack of an official fee scale can also indicate problems. Companies must ask the vendor about this directly. If the company cannot readily justify its prices, look elsewhere.

Final Selection
A manager must be confident in the final selection of the vendor. To ensure this, managers should get other company executives involved in the selection process.

With information on the short list of vendors, the security manager should call a meeting with representatives from the legal department, human resources, and the risk management team if it is separate from security. This group should discuss the issues surrounding the investigation and collectively make a final selection. As a similar meeting will be held each time an international investigation is launched, all parties will get to know each other and will build on lessons learned from past experience.

Once the final decision has been made, legal counsel should review the contract and the details about the vendor. Its location and any financial details should be provided to the finance department, which should determine how payment will be made to the vendor. Finance should also ensure that it has in place a mechanism for paying the vendor in that country’s currency. It is critical that payment be made in a timely manner. Nothing can be more frustrating for the investigator than to successfully complete a project, only to wait 90 days for a wire transfer. This reflects poorly on the company and can alienate the vendor.

After an investigation is underway, the client company should not meddle in the vendor’s activities. However, frequent progress reports and conference calls are still required.

International investigations are fraught with pitfalls. By knowing what type of investigation will be conducted and how to find the best vendor, companies can ensure that they get the most useful information possible.

Scott Ast, CPP, CFE (Certified Fraud Examiner), is corporate security manager for Agrium in Overland Park, Kansas. He is a member of ASIS International.