Integrity due diligence is a careful examination of the potential or actual business partners of a company in the view that there may be a risk that these partners engage in illegal or dubious business practices. Specifically,integrity due diligence tries to ferret out instances of corruption. On one hand due diligence on the integrity of a business partner is a step that helps to ensure compliance with the many legal norms. On the other hand, Integrity Due diligence is a measure to safeguard assets and protect the reputation of the organization, the latter being an intangible value.
In mergers and acquisition / investments - Regulatory compliance and establishment and preservation of reputation is a primary concern for every organization. In the present era, investors like the PEs and the angel investors prefer to avoid getting embroiled in regulatory inquiries caused by illegal practices followed by a potential joint-venture partner.
IDD examines the target company’s operations to identify issues that might pose major, but unquantifiable financial or reputational risks to an acquirer. Examples of major focal points in this phase of the investigation include:
- The existence of any PEPs (Politically exposed persons) connections between the business and any of the directors
- Evaluation of the company and its key principals relating to bribery, corruption, money laundering, large-scale tax evasion, fraud or asset stripping, etc.
- Any alleged connections between the company and organized crime or terrorist groups/SDN (Specially designated nationals) or broader risk of exposure to such groups
What is third party due diligence?
Netrika conducts due diligence of third parties also. In the anti-corruption lexicon, third party due diligence is often used to describe the process for on-boarding a new third party in the scheme of things.
Who can benefit from Integrity due diligence?
Netrika can help national and international organizations, private companies and other organizations with the process of integrity due diligence. Any organization that is thinking to get into a merger or acquisition will benefit from the integrity due diligence process.
How does background checking help in Integrity due diligence?
Netrika conducts assiduous background checking to determine if there are political connections, conflict of interest or hidden beneficiaries. Netrika can also unearth instances of organized crime, fraudulent third party business deals so that the company hiring us is always apprised of the integrity of the investigated company.