Due Diligence

India's Exclusive Full Spectrum Business Risk Solutions Enterprise

“Third-party due diligence must be robust, thorough, impeccably documented and preserved.” — Former U.S. Department of Justice Fraud Section Deputy Chief Mark Mendelsohn (2005–2010), FCPA Conference, November 2009”

Due Diligence forms the basis of informed decision making in environment where information is either too scarce or far too much, depending on what one is looking for. The Sarbanes Oxley, FCPA, UK Anti-Bribery Act & Patriot Act now make it incumbent upon all US, UK companies to exercise rigid due diligence in doing business with entities located both within & outside of respective countries. The Paris based Financial Action Task Force (FATF) also enjoins all its members to do likewise. The fig leaf of "did not know" is no longer admissible in situations where companies are found culpable of transacting with undesirable / criminal elements.

Corporate governance is increasingly being benchmarked against the quality of due diligence that an enterprise undertakes. Due Diligence is therefore no longer a ponderable but almost a statutory necessity. Vigilant & law abiding companies necessarily conduct objective third party due diligence prior to formalizing business partnerships, JVs in new geographies, vendor selection, M&As, buyouts, divestitures, real estate to name a few. Security of investments by Private Equity, Venture Funds, Angel Investors remains another area where Due Diligence has a critical role to play. South Asian markets exciting that they are, tend to be opaque & turn out to be a virtual minefield for new entrants. The hangover of cronyism still obfuscates business deals in India.

TACT specialises in accessing primary source data through its painstaking research abilities rather than limiting itself to on-line searches. India is yet to evolve robust electronic databases covering economic crime. Even bank details of Indian citizens are not in public even if some service providers may claim the opposite. TACT India has successfully completed numerous complex due diligence assignments for Fortune 100 clients in India & South Asia, that surfaces irregularities in the claims of prospective business partners, vendors & consultants.

TACT India has been helping clients protect their business from fraud, misconduct and non-compliance, and reduce reputation risk and commercial loss. TACT provides independent, proactive and responsive services through our investigative and accounting capabilities.

Following services will come under Due Diligence

1. Third Party / Vendor Due Diligence

Employing a third party - be it a supplier, agent, distributor, lawyer, accountant, or consultant - comes with many risks and regulatory requirements. Corporate Governance for Global Companies are increasingly being benchmarked against the quality of Due Diligence that it undertakes. Companies have to ensure that their third parties protect confidential IT information, avoid unethical practices, maintain a safe and healthy working environment, mitigate operational risks, and more. At the same time, they have to monitor third-party compliance with regulations such as the Anti-Money Laundering (AML) requirements, the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act (UKBA) to name a few. Meeting these obligations requires companies to implement robust third-party risk management processes, policies, training programs, controls, due diligence processes, audits, and timely issue remediation.

If these processes are not effective, third-party risks could snowball into serious issues that will ultimately affect the profitability and credibility of the company who hired the third-party. Unfortunately, many companies are struggling to implement these due diligence measures due to the increasing complexity and vastness of the third-party network, as well as the high costs of compliance management, and limited visibility into due diligence. TACT India’s services in the area of Business Risk Management customized to suit client requirements and help address issues including business loss, asset protection, brand protection, as well as product, partner, vendor, franchisee, supplier, distributor and employee due diligence .

2. Pre-Transaction Intelligence and Analysis
Integrity Due Diligence

Entering into any kind of relationship without an appreciation of the possible downside can expose organisations to financial and reputation risks. TACT's Corporate Intelligence team can assist firms in identifying any hidden factors or red flags that may impact their business negatively and can help put them in a better position to make informed decisions when: investing in a business; acquiring or merging with a business or hiring senior management personnel. TACT gathers public and nonpublic information to provide insights into the background, track record, reputation and associations of any potential business partner United States Foreign Corrupt Practices Act (US FCPA) / UK Bribery Act Due Diligence

Assessing a target’s compliance with FCPA/ UK Bribery Act can be a potential challenge during a pre-deal due diligence process due to various factors including multiple suitors for a target, unwillingness by targets to open up for detailed scrutiny etc. However, companies need to focus on the threat of ‘successor’s liability’, as one might inherit legal issues of the newly acquired company and may become liable for acts/ violations committed in the past. This makes it imperative for companies to conduct a due diligence process to determine any undisclosed violations. We help clients conduct FCPA/ UK Bribery Act due diligence on their target companies and third parties to help ensure that there are no hidden red flags.

Environment Due Diligence

One of the criteria for global corporations is to ensure that they do not invest in companies having historical (or even current) environmental and social liabilities. TACT India conducts environmental due diligence reviews to help these corporations ensure that their investments are in ‘clean’ companies and the estimation of the potential risks involved, if any.

TACT provides the following services:

Corporate Intelligence
• Background checks/integrity due diligence to assess integrity and reputation of a local management and promoter
• Assessment of their business practices
• Timely warning of inappropriate or potentially illegal activities and links
Environment Due Diligence
• Help conduct environment due diligence reviews to ensure that investments are in clean companies.
• Highlight the gaps and risks of non-compliance to environmental regulations
Anti-Bribery and Corruption Compliance
• Help assess the level of compliance with anti-bribery and corruption regulations
• Assist in determining any undisclosed anti-bribery and Corruption violations and hidden red flags