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A major medical device manufacturer engaged Kreller to investigate a potential new distributor. Kreller’s local investigator verified the potential distributor’s registration details and shareholding. Government exposure checks were conducted to ascertain any possible touch points with politically exposed individuals. None were found. Reference checks determined the potential distributor maintained an excellent reputation within the business community. However, after a visit to the local court registry, it was determined the potential distributor had been recently indicted on charges of conspiring to fix prices within the local medical device market.
The Chief Compliance Counsel for a satellite imaging corporation received a tip from a business associate that one of their resellers allegedly had a new silent majority owner who was listed on both US and EU economic sanctions lists. Kreller was requested to conduct a corporate investigation immediately to determine if this was the case. Kreller did not find a direct connection between the reseller and the new silent partner through corporate registration and shareholding documents. Because the reseller’s direct shareholders were companies, Kreller researched each layer of shareholding until we were able to establish a connection with the new silent partner through a series of shell companies affiliated with the reseller.
Kreller’s investigator conducted extensive research on both parties. The due diligence investigation revealed the country manager’s brother-in-law owned the local distributor operation. In addition, findings indicated that the country manager was living well beyond his means, owning multiple cars, boats and homes in expensive locales. The medical device/pharmaceutical company dismissed the country manager and he was subsequently prosecuted for fraud.
Complex multinational relationships require powerful and customizable compliance tools to properly vet third parties and intermediaries.