In order to clarify some aspects  surrounding due diligence, I decided to write down some of the most dangerous situation one may encounter in his business life.

The list below refers to third parties.

  •  Introduced by a public official as it may represent an indirect bribe,
  • Seems not to have sufficient staff and/or means to carry out its tasks (you should evaluate personnel qualifications, avoid companies  relying only on virtual offices or whose address is a simple mailbox),
  • Recently incorporated and lack of references,
  • Prefers working without a written agreement,
  • Unjustified advanced payments requests (if cash is explicitly requested or wire transfers shall be made to other entities, you should really worry),
  • Unusually high/low commissions compared to standard business practices,
  • Inaccurate invoices (description of services provided, fiscal information don’t match the information provided in the contract, expenses not documented),
  • Hidden subcontractors (you should always be informed and, eventually approve them after appropriate due diligence),
  • Charity, offsets, sponsorship requests,

Michele La Neve explains how to spot corruption risks in the due diligence

Besides the aforementioned, you should also pay attention to the way your counterpart communicates with you:

  • Refusing written communication is highly unusual,
  • Persons not mentioned in the company registration data seem to be in charge of the organization,
  • Promises of success even when inappropriate (i.e. public contracting),
  • Lack of anti bribery and corruption policy and training.

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