Golden News
Volume 14 Number
33
The Weekly Bulletin of the Rotary Club of
Kowloon Golden Mile www.rckgm.org
February is Rotary World Understanding Month
Birthday Girl!
Patricia Blair - 4th March, 2000
Last Meeting
The formal part of the
meeting began at 1.15 pm with President Cassidy his usual cheerful and
immaculate self. Acting Sergeant Rtn Suzie did the fines
for the first time and did well. I suppose it's a bit like
collecting fees from physical fitness customers when they
are strapped into some kind of rack-like item of equipment
in the gym and can't escape. Then Rtn Kumar
introduced Visiting Rotarian, Lal Hardasani -
Classification Insurance - From Peninsula Rotary Club,
and Rtn Per Larsen introduced Guests of
Rotarians: Rtn Lal - Raju Sabnani and Hiro Khemlani
and Rtn David - Nasreen Ting all from Hong Kong!
Community
Service Director Rtn Silva then reported on KGM's
representatives' participation in the St. James
Settlement family Club's AGM and Chinese
dinner and their presentation of a book
and token. PP Vince next
introduced the several address
lists now available on our Web Page, for KGM members only and
the RCKGM
banner post-card which is somewhere on the Web Page but I forget where Vince
said it was and I haven't been able to find it! Oh dear.
PP Vince then introduced the
Speaker, Mr Peter Gallo MB a former Military Intelligence Officer and
lawyer who gave a fascinating insight into the not so well known world of
corporate investigations. Our speaker very kindly gave me the following text.
I almost forgot, attendance
was quite good. 39!! Better!!!!
HOW AND
WHY CORPORATE INVESTIGATION CASES GO HORRIBLY WRONG
Peter
A Gallo, Director Pacific Risk Ltd
Last time, I spoke about the process of how
a corporate investigation is run.
Today, I am going to cover more than you really want to know about how
& why cases go horribly wrong. It is probably more interesting. With my
background and in this line of business, it is assumed that I work with
characters straight out of a John Le Carre novel. That, however, has turned out to
be the myth I am most keen to dispel…
The most likely reason for
you to want to engage someone like me, is for a “Due Diligence” job. This would
typically involve looking into the background and reputation of an individual or
a company in order to determine whether there is something about them that you,
as a potential investor, might want to know about. The investigator’s role is to expand on
the work done by your lawyers and accountants and try to determine whether there
is anything that we ought reasonably be able to find, which might come as an
unpleasant surprise if it were revealed later. Sometimes this results in a
spectacular disclosure; sometimes I have been able to provide information, which
has alerted a potential investor to a fraud or a money laundering scheme. On
other occasions, however, where there was no information to suggest that the
subject was a major international drug-smuggling killer, the subject might just
turn out to be an ordinary, mild mannered Chartered Accountant; the client has
had the reassurance that they have taken all reasonably prudent steps to
minimise their risk.
With that brief, therefore,
why do things go wrong? In my
experience, things go wrong for one (or more) of FIVE main reasons.
·
clients have expectations
which are unrealistic, or patently even illegal.
More often, however, it is
not the client who is at fault as much as the investigator because
·
he asks
the wrong question or the wrong person, or
·
just fails to understand the problem, and
this is not altogether unconnected with
·
native
stupidity.
This also covers inadequate
preparation, and is also connected to the last reason, which I think is
probably the single greatest handicap that any investigator can suffer from;
·
ego. This manifests itself (dangerously) in
two ways:
one, is thinking that he has the answer before
doing the work, so the “investigation” turns into a self-serving
exercise in proving how correct he was all along, and the other, is in not accepting that his particular source may not have the
correct information.
I have found that you can re-organise
these categories more or less any way you like, certainly the root cause of most
of the problems I have seen is a lethal cocktail of stupidity and ego.
However, let me proceed on
these headings, all of which are interconnected.
UNREALISTIC
EXPECTATIONS
One of the problems that I
encounter is clients having expectations which I consider to be unrealistic.
Often, however, there is a good reason why they have such expectations and that
is that they believe what the zealous salesman tells them. More often than not,
however, the blame for this cannot really be laid on the client. The client’s
mistake is in listening to what somebody assured him could be
done…
I said earlier, about the
objective in a DD job - information that ought reasonably to be available. If it later turned out that your JV
partner turned out to be a secret opium-smoking cross-dresser who murdered his
granny, only to be “exposed” on a TV documentary, and I had not reported that in
my DD report, I am terribly sorry, but if it was not widely known, the chances
are that you would not be the only one that was surprised.
There is (sometimes) a
difference between reputation and reality.
Under this category, I should
mention one of Hong Kong’s favourites, which is identifying the directors and
shareholders of a BVI company.
If anyone tells you they can do this, you may find that they don’t
understand the problem! The
BVI is often the investigators nemesis, especially when companies are
incorporated with bearer shares. If
your investigator doesn’t understand their significance, you may not be
impressed with the rest of his work either. I have conclusively proved ownership
of a BVI company only twice; and been unable to do so much more often.
There is a (moveable) line to
be drawn between being successful and being discreet.
I am sometimes asked to
provide a level of information which would require me to have someone so close
to the subject that he would have to be in bed with him, tucked in between him
and his mistress… (and not only that, but to do it in such a way that there was
absolutely no way that the subject
would even know he was there) … Please make your mind up! Very often, I know
where the answer is, but I just can’t get it. I may even know the lawyer in whose
filing cabinet the answer is hidden, but cannot, or will not, proceed any
further beyond that. I am often asked if I can tap telephones, obtain bank
account records or other confidential information. This is a fine idea, and would be
marvelously successful were it not for the fact it was illegal and I would go
direct to jail for doing so. (I
would not pass ‘Go’ and I would not collect $200). However, there is always
somebody who claims he knows somebody who can do the job cheaper, easier,
faster, better than I can. I accept
that. However, let us assume that
one of the givens is the need for absolute confidentiality; consider what is
likely to happen when (on your instruction) some gentlemen are arrested in your
competitor’s office one night and charged with burglary. As the late
ex-President Nixon found out to his cost; this sort of thing short-circuits back
and causes a very considerable amount of embarrassment.
What about the situation
where the case is overseas, say, in Indonesia or Thailand? Let me sidetrack for
a moment and explain that I have only two inviolate ground
rules:
One: Thou shalt NOT do anything which is against the law
Two: Thou shalt NOT do anything which could embarrass the
client
(You are free to embarrass
yourself, but never the client.) So Rule one above answers any questions you
might have about what happens in Indonesia, except for that I don’t have the
time today to explain about sub-contractors and the men-in-black who actually
run about the streets of Jakarta allowing somebody like me to operate
Asia-wide.
ASKING THE WRONG
QUESTION OR THE WRONG PERSON
A common Asian
problem is giving the answer the person thinks you want. Do you know
so-and-so? Is he OK? In my field, I often make the mistake of
tasking the wrong sub-contractor. Unfortunately, you only ever know that after
the event, for example I sent someone to check out a “Dive” shop in Phuket, not
realizing exactly what this meant but learned too late it was a diving equipment
and training outfit which I knew more about than the person I sent which is also
a good example of:
FAILING
TO UNDERSTAND THE PROBLEM
I also mentioned this earlier
in connection with investigators claiming to be able to identify shareholders in
a BVI company. More often, however, the investigator is simply THICK, and
doesn’t understand the industry, for example I have experience of a matter under
investigation which involved “cargo transfer”, which was described as a
“shipping fraud” but had no connection with shipping. Sometimes this isn’t the
investigators fault, because the client doesn’t understand the gravity of the
situation. I myself have been
involved in a couple of these. One such case involved someone who, as a little
“side” business, was involved in a karaoke lounge in Macau. The client had not appreciated what
other peripheral activities that may have involved, or the sort of company you
might keep as a result. On another
occasion, I was involved in a DD case into an individual who ran a small trading
company in the Philippines. He was
a middle-man, supplying military hardware to the Armed Forces, which was fine,
but the DD was instructed by his own principals. In that case, the client sent
me a list of Generals and Admirals who they wanted me to interview, and ask
about bribery and corruption. As if
that wasn’t bad enough, they then expected me to investigate the backgrounds of
these Generals and Admirals. That
was when I began to wonder what it was that they were
smoking…
NATIVE
STUPIDITY
I think it was Einstein that
said the difference between Stupidity and the Universe was that the Universe was
probably finite. In major investigations, one of the reasons things fall apart
is lack of attention to detail, a lack of proper preparation and planning. There are too many examples; too many to
mention:
·
Going to
a meeting where somebody admitted to a fraud; having put the recording tape in
the wrong way round.
·
Surveillance team walking
around a cargo pier in suits, carrying shoulder bags.
This often manifests itself
in making pretext phone calls, which are simply not credible. People often fail
to realise that a simple lie, like an investigator trying to pass himself off as
a journalist, might be successful if the person on the other end of the phone is
even thicker than you, but it actually takes a lot of back-up. You probably all know the case, which
happened about a year ago, where an investigator sent an e-mail message from a
hotmail account, which identified the company whose network it had been sent
from…
EGO
For reasons I have never
fully understood, many people in the investigation business have massive egos,
which would be fine, of course, were it not for the fact that their role is
supposed to be to slide in and out of places without making a fuss and
thereafter NOT to mouth off and tell the world everything about
it.
A large ego and a small
intellect are a very dangerous combination.
The reason I single this out
as a major fault is that it impacts back on my first point, about clients’
unrealistic expectations. Where did
they get such expectations in the first place? More often than not, it turns out, from
the investigator who assured them he was so brilliant that he could do the job
without breaking a sweat. Often, this over-confidence is sign of other problems
just waiting to appear. One of
these is that the investigator believes he knows the answer because really, he
is smarter than you, the client. He
has already decided what the answer is, so the work that he does is very far
from impartial and (subconsciously or otherwise) he is trying to justify his own
preconception. Several of the examples I have already mentioned can be
attributed to the person running the case putting too much faith in his own
contacts - the “My Source” syndrome.
Everyone likes to think they have a good network of contacts, the problem
(especially in the investigation business) is when your ego will not accept the
possibility that somebody else may have a better one, or you won’t accept that
your guy is wrong. Reality : You are only as
good as your least bad mistake.
CONCLUSION
The downside, as in much
investigation work, is that making a mess of a case usually puts the client in a
worse position than he was at the beginning, worse even than had he done nothing
at all. I hope I haven’t left you with the impression that this is a business
where everything goes wrong all the time.
The reality is that we have spectacular successes, saving clients their
reputations or millions of dollars of their money on a regular basis, but the
nature of the business is such that I cannot then go on TV or take half a page
in the newspaper to tell the world all about it. You, as the client, may chose
to do so; my experience is that you won’t. I am pleased to say that none
of the examples I have quoted have been mine, but don’t think that means I have
never made a mistake. I sometimes get it wrong as well, but I do make a
committed effort not to. At least I am proud to say I have never had a case that
ended up on the front page of the Morning Post. I would like to say I have never
had an unhappy client, but that is not technically true; but I have only ever
really had a problem with overseas investigation firms I was sub-contracting
for. (Sitting in New York, of
course, means you understand the subtleties of how to get jobs done discreetly
around Shanghai much better than ever I will…).
Following a lively session of
questions very skillfully and truthfully answered PP Bryan Van Dale gave the
vote of thanks.
Next
Meeting
12:30 p.m. Wednesday 28
February, 2001
Speaker:
CIP Bob White - "Crime
Prevention"
On Vocation!
With
Rotarian Per Larsen
Classification, Trading, Consumer Electronics
As a child I was brought up in Denmark and Spain,
and also lived 1 year as an exchange student in Germany, which has given me a
good understanding of languages and cultural differences. I have attended a
Spanish, an English School and American College while living in Spain and a
German highschool. In 1992 I graduated from the Copenhagen Business Academy with
a Bachelor in International Marketing, and already the same year I started the
company STOCKSHOP OF DENMARK A/S, which is the foundation for the business which
I have today.
As mentioned, I started my own business just after I graduated
from the business academy . During my education I had been working in a Danish
food export company selling to mainly Russia. I had been on various business
trips to Russia and had noticed the huge volume of electronics been sold there.
After my suggestion to the management to start a consumer electronics division,
which was rejected, I decided to start my own business specialised in the export
of consumer electronics to Russia, which later has spread to almost all markets
in Eastern Europe. In 1998 my company was on the TOP 50 list for the fast
growing companies in Denmark (no. 42) in terms of turnover, income, development
in sales to other markets etc.
As I am traveling a lot there has not yet
been time for further family planning, as one earlier marriage taught me that
you need time for each other. My business has somehow developed into being
my hobby, but whenever I have the possibility I also do some sports. My
preferred is tennis which I played since I was 8 years old.
From the Webmaster
1) On the very top of the KGM web site, I have added a new
link called "Utilities". When you click on this, a
new window will open where you will find further links to many Useful Utilities
on the web.
You can track a package sent
through any of the major courier companies; find worldwide
telephone directories; find out "who's who" in any
government in the world; convert languages;
convert one measurement into another measurement;
calculate the distance between any two cities on
Earth; find out what major things happened on any given
date etc.
This new feature (which will be continually expanded),
combined with the existing "HK Links" and our
standard "Rotary Links" should be a valuable source
of information for just about anything you need to know. Cool stuff, huh ?
2) By the way, if you want to make KGM
your "home page" (i.e. the web page which automatically appears as soon
as you open your browser, then click on the little house at the top right hand
side of the KGM page, then click "Yes" (this only works if you use Microsoft
Internet Explorer).
Hence the KGM web site is more than just a pretty face, just
like your Webmaster ! :-)
3) Finally, the RI web site at
www.rotary.org has
gone through a major transformation, and it is now better organised and has a
far more attractive look & feel about it.
Unfortunately, during the "upgrade" process, they managed to
change ALL their internal links, without telling me or any other of the hundreds
of Rotary Webmasters throughout the world. As a result, all of the links I had
from KGM to RI suddenly stopped working !! The Phantom was not a happy
camper, especially since this occurred while he was in Manila !
Anyway, I frantically managed to restore about 95% of the
links to RI while I was in Manila, but a few dead links remain. I have sent a
brickbat to the RI Webmaster and I hope I can have the links restored to 100% by
the weekend.
In the meantime, if a link to RI does not work, please don't
yell at me, OK? You'll hurt my tender feelings.
The Phantom
Presidential
Quotation
"To Profit from good advice requires more
wisdom than to give it."
John Churton Collins
Weakly
Humour
Contributed by Eric, my
son: What did the man say to the owner of a scrap yard, as he walked
in one morning?
Answer: What y'reckon?
A banker speaking sometimes sounds like a business
typhoon,
which reminds me of a major bank in the world that made a
bucket of money last year and is trying to justify charges on current account
next year.
A maid at a famous hotel once was fired because she couldn't
turn down a bed.
A bigamist is one who has loved not wisely but two well
Brain
Teaser
Problems worthy of attack,
Prove their worth by fighting back.
Found in a book about Paul Erdos (the o has a " over it)'
a math genius!
You might not know that Pythagoras was a bit
eccentric, in fact a vegetarian who refused to eat beans because they reminded
him of testicles. Ofcourse you've all heard my joke about the Cannibal who lived
to 140 years and claimed it was because he ate beans every day. When pressed for
details as to what kind of beans he replied, "Human Beans!"
But, I digress. Pythagoras did a lot for mathematics,
(so did Erdos). He also had an uncanny feel for individual numbers. For
instance he considered 220 and 284 friendly. Hello there two how are you? I'm
fine thank you number 9. I suppose we could think of situations where such
conversations could take place, "Come in number ten your time is up", but can
anyone work out what is the special relationship that led the big Mr P to call
these numbers friendly? This one isn't easy ... but I'll give you a clue ... it
has something to do with their divisors.
URCHIN