Whether we’re doing diligence on a potential executive hire, identifying and tracking corporate fraud, or developing strategies to deal with security threats, the most daunting moment in an investigation often comes at the outset, when we first realize exactly how much information we need to sift through. (As Bruce Goslin recently noted, the wealth of information available on the Internet just makes this harder.)
Most frequently, the first person to take the plunge into a sea of investigative data is the unsung hero of any case: The Analyst. Analysts have an array of tools and techniques at their disposal, but experience and judgment are their greatest assets as they slowly build a case from seemingly disparate and unrelated sources of information.
We thought it would be interesting if we presented an ongoing series of posts in which our analysts share a bit more about how they search, assess, and assemble information online casino bonus into a coherent case.
The first contribution comes from an analyst in our London office, and deals with ins and outs of conducting research via document-sharing Web sites:
Document sharing sites such as Scribd and Docstoc can be useful resources for gathering background information on companies and people you do business with. These sites allow content creators to upload and sell (and content consumers to download or buy) virtually any kind of document, from market studies to academic research to whitepapers. Scribd is one of the most popular document sharing sites, and claims to distribute documents to tens of millions of readers per month.
These document sharing sites are less refined than sites with strong editorial supervision or specific content strategies – they’re full of oddities such as romance novels and travel guides, and usually don’t serve up any damning, Wikileaks-style revelations. But for prospectuses, résumés, annual reports and the odd court case, these sites can be a gold mine.
Scribd and Docstoc are two of the most popular uploading sites, but there are many more out there, including those specializing in foreign language documents (eg. Docin.com for Chinese) and magazines and newsletters (Issuu.com). As with any Web source with virtually unbounded content, it takes some practice to use these sites properly, but I certainly think it’s worth the effort.
Our next Analyst”s View will focus on the differences between online mapping tools offered by major search engines. If you want to be notified as soon as it”s published, be sure to subscribe to alerts from “The Discreet Science” using the tools on the left side of this page.
Intermediaries are a broadly defined category of third parties related to a transaction, such as agents, middlemen, business consultants, JV partners and foreign subsidiaries. They are often used to bring together the public and private sectors, for a fee, with the private sector engaging intermediaries to pay bribes, often for benefits for which they already qualify, with much (but not all) of that money being passed on to public officials. The importance of intermediaries, in the grand scheme of corruption, is second to none.
There are many compelling points that can be brought forward to argue the case of intermediaries being the principal catalyst of corrupt transactions. As is often the case, the point is best made through simple observation.
Over the past couple of years, we have witnessed some record-breaking FCPA settlements: in 2008, Siemens agreed to the highest regulatory settlement in the history of the US Foreign Corrupt Practices Act, amounting to US$ 800 million. Regulatory action by German authorities brought the worldwide total cost to Siemens to settle its cases to US$ 1.6 billion. A year later, it was the turn of a Halliburton subsidiary, Kellogg Brown & Root, to top the charts for the largest FCPA settlement paid by US companies: a combined total of US$ 579 million in fines and disgorgements.
The corrupt practices underlying these regulatory actions are telling of the nature of corruption. In the case of Kellogg Brown & Root, the company’s CEO admitted to having “negotiated bribe amounts with the office holders’ representatives and agreed to hire the two agents to pay the bribes…approximately $132 million to the first agent, a consulting company incorporated in Gibraltar, and more than $50 million to the second agent, a global trading company headquartered in Tokyo, Japan.” This in exchange for the award of four contracts in Nigeria, valued at over US$ 6 billion.
In the case of Siemens, according to the SEC the company “made thousands of separate payments to third parties in ways that obscured the purpose for, and the ultimate recipients of, the money. At least 4,283 of those payments, totalling approximately US $1.4 billion, were used to bribe government officials in return for business to Siemens around the world.”
Numbers like these are, quite simply, staggering. Billions of dollars of bribes paid through intermediaries by just two companies not only demonstrates the size of the corruption problem, but also underlines the crucial role played by intermediaries: it would be reasonable to argue that without their involvement, such proportions of corruption could not be achieved.
It should therefore come as no surprise that intermediaries have caught the attention of regulators from the very genesis of anti-corruption legislation. When speaking about the origins of the FCPA, and in particular about the investigation by the SEC of illegal campaign contributions in the Watergate era, Stanley Sporkin, former director of the enforcement division at the SEC, recalled coming in one day and “asking Bob Ryan of the staff to go and find out from Gulf Oil how Gulf Oil made these payments and how did they book an illegal payment. And he came back within a day and had the whole case. They had set up two phony subsidiaries they called Bahama X and Bahama Y. They put $5 million into each one of them and took the money back to the companies’ offices and put it in the safe of the CEO, and that’s where payments came from.”
More recent anti-corruption enforcement, such as the cases mentioned above, confirm that the intermediary-centred corruption model continues to bear equal, if not greater importance. Further demonstration of the criticality of intermediaries to corruption comes from recent academic studies of anti-corruption reforms.
So what is it that makes intermediaries such a perfect fit for corruption?
There is a generalised perception that companies use intermediaries in order to avoid direct contact with corruption, essentially as facilitators of improper payments. This is obviously true, but also far too simplistic. Intermediaries interact with corruption at multiple levels and reducing their role to that of a mere conduit for bribes would equal to a gross underestimation of their importance.
Intermediaries are the meeting point between relevant parties of a corrupt transaction. They provide an informal forum for the discussion and pursuit of converging interests that, because of their illegal or improper nature, cannot be openly discussed. By virtue of such pervasiveness, intermediaries influence and define the very essence of a corrupt transaction often overlapping with every stage, or ingredient, involved in the process.
In my next few posts, I will be deconstructing the role of intermediaries touching upon the various levels and stages of their involvement with corruption. Ultimately, I hope that this analysis will help to better understand the nature of the beast and, by doing so, improve our ability to address the issues that arise from it. Be sure to stay tuned!
1 – “Intermediaries and corruption” by Kevin Hasker and Cagla Okten
2 – “How Middle-men can Undermine Anti-corruption Reforms” by Kjetil Bjorvatn, Gaute Torsvik and Bertil Tungodden
¿Qué hace exactamente K2?
Me gusta que me hagan esa pregunta, pero es difícil responderla en pocas palabras.
Suelo decir que recopilamos información para ayudar a nuestros clientes a tomar decisiones informadas sobre sus empresas. Y dentro de eso, entra todo, desde realizar una inversión, hasta cerrar una operación o, incluso, lanzar un nuevo producto. Podría hablar de lo importante que es, a la hora de tomar decisiones, disponer de información correcta, precisa, completa y fiable, pero la mayor parte de quienes la solicitan ya conocen los fundamentos de la investigación.
Lo más complejo, y lo que supone un reto diario para nosotros, es administrar toda la información que recopilamos.
Cuando empecé en el negocio, no teníamos internet.
Sí, lo sé.
Aunque a la nueva generación de investigadores le pueda parecer increíble, nosotros no nos precipitábamos a internet cuando empezábamos con un caso. En mis comienzos, ni siquiera disponíamos de ordenador. Teníamos procesadores de textos de escritorio. El simple brillo verde de sus pantallas ya supuso un avance para nosotros, pero incluso la mayor parte de las pantallas ATM de hoy día son más complejas. Por lo general, lo más que podías hacer era teclear. Se podían realizar algunas búsquedas limitadas en medios de comunicación, había registros y bibliotecas corporativos, un montón de índices en papel para revisar, todo ello recopilado laboriosamente a mano.
Todo ha avanzado muy rápido y ahora todos nosotros tenemos acceso a ingentes volúmenes de información de un sinnúmero de fuentes y perspectivas. Prácticamente todo y todos están en la red en alguna parte, y el crecimiento dinámico de la cantidad de información disponible solo complica aún más las cosas.
Casi cualquier cosa que se publique hoy está inmediatamente disponible en internet, y lo publicado en el pasado se está escaneando y subiendo a la red muy deprisa. Dentro de muy poco, la expresión “descatalogado” o “fuera de imprenta” significará que el impresor no está online, y poco más.
Si antes los analistas y los gestores de casos tenían que vérselas con un pequeño goteo de datos procedentes de los ordenadores, ahora debemos lidiar con un auténtico torrente de información. Debemos seleccionarlo todo, evaluarlo, decidir qué información es buena y creíble, qué intereses puede haber detrás de cada información, cuál es el contexto, cuándo debemos seguir buscando y cuándo hay que decir “se acabó, ya tengo bastante”. La gestión de la información es lo más importante a la hora de planificar el volumen de nuestros casos.
En los próximos números abordaré la forma de explorar esa explosión de información y de gestionarla. Comentaré los problemas y los retos que se nos presentan, examinando las técnicas y los enfoques que estamos probando y señalando algunas de las tendencias que vemos en el sector.
Information, information everywhere and not a drop to…
In my previous post, I touched on the evolution of the investigations industry, specifically the ways in which the Internet, by making so much information readily available, presents a certain kind of challenge to investigative professionals. Pre-Internet, the challenge was finding information; now, the challenge is sorting through it, deciding when you have enough, and determining what is good, bad, useful or distracting. We in the investigative and business intelligence sector are great at discovering information about people, companies, groups and organizations, but what separates good investigators from the pack is the ability to filter, focus, and stay on track.
My years of investigative experience have taught me that one of the most important ways to start a case is to set concrete goals. It seems obvious, but sitting down with your team and defining what you’re really looking for up front is vital to the success of a case. This discipline is particularly important nowadays, when search engines are so important to our process but inevitably suggest words and phrases that threaten to send investigators off in different directions and on unpredictable tangents. (It’s about to get harder, too: Google’s latest “real-time”search technology, while impressive and useful, has the potential to be hazardously distracting. Every letter you type reveals a new set of results, so by the time you’ve typed “John Smith”, you’ve had to avoid clicking on links about Jet Blue, Jones Beach, John Mayer, Jon Stewart, and Captain John Smith.)
Ok, I know — exploring those tangents and wandering off in different directions does get interesting at times, but we will talk about that in another post. Bottom line: if you don’t spend some time talking and thinking about search parameters and investigative goals, you may be unpleasantly surprised with the results.
The first filter we apply as results start to flood in is an analysis of sources – for example, we might glean some information about a subject’s business from Facebook, but it probably won’t be as reliable (hence as valuable) as a set of online SEC filings. In other cases, the opposite might be true.
We also need to question the information provider’s motivation. Who provided the data, and when? What was the ostensible purpose? This is not to say that you should discount apparently biased or distorted information — you just need to look at it more closely because it adds to the context of your search.
Even authoritative sources can lead to “false positives”, or complementary results that create the illusion of substantiation. In many cases, several independent sources will seem to separately confirm a piece of information, when in fact they have both relied on a single primary source. (Think about two news sites that base breaking news articles on the same erroneous wire report.) That’s why we at K2 Global spend so much time on deep analysis — it’s the only way to turn an ever-increasing abundance of raw information into useful knowledge.