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Buyer Beware: Do an Integrity
Check Before Conducting Business
in the Middle East

By Habib Khan, LLM ( habib@crigroup.com), Corporate Research and Investigations LLC

It’s a proven fact that what may seem like gold in the international business arena could quickly turn to rust if all the parties involved are not properly vetted. Here’s a case in point:

An investor in the United States was interested in purchasing a major jewelry operation headquartered in Dubai. The jewelry business painted a rosy picture of itself on paper as one of the region’s most profitable companies, and this attracted the eye of the US investor. But an intensive due diligence investigation conducted by a professional background screening company based in Dubai and retained by the US investor told another story. The examination unearthed numerous red flags that portrayed the jewelry business as not only a risky investment but also a potential liability.

In the course of the investigation, which involved international public records searches and local hands-on interviews to look into the financial liabilities of the jewelry operation’s directors and primary shareholders, it was discovered that the jewelry company was in the midst of liquidation proceedings, a major factor not previously disclosed to the potential buyer. Further research conducted at a local level revealed that the company’s principals were involved in several bankruptcy cases, and that the company had been issued warnings by local regulatory agencies concerning a host of collusive business activities.

Because these discoveries would have been nearly impossible to uncover using conventional internet-based search methods, the potential buyer stood to lose his entire investment had it not been for the business background investigation conducted by the screening firm.