Looking for the assets of a former business partner? Perhaps in context with an arbitration case under a bilateral investment treaty (BIT)? No worries – even if you don’t have the power to subpoena third party records, here is how asset tracing works when professional investigators deploy the power of open-source intelligence worldwide.
Some background (skip if you are already familiar with BITs):
Bilateral investment treaties are the rage. They a popular tool for investors to protect their money in emerging markets, namely countries where the local court system is not entirely trustworthy or easily influenced by domestic businesspeople and politicians. So, when investors are faced with investments-gone-wrong in such a country, they can often claim protection under a bilateral investment treaty. They take the case to a private arbitration tribunal and sue their former business partners for damages.
When trying to win cases in arbitration, the facts and history of the investment or joint-venture matter greatly. But what is equally important, especially if investors not only want to win but also collect damages, is finding their opponent’s assets.
No assets, no damages – it is that simple. What’s more, often the opponent’s assets are well hidden in multiple jurisdictions, some even under a veil of offshore companies and covert proxy arrangements.
But much can be uncovered with the powerful tools of open-source intelligence worldwide. Here is how in-depth investigations of assets work:
Truly Global Databases
What if you could find a good portion of someone’s shareholdings, shell companies and real estate holdings worldwide just by typing their name into one central database? Well, commercial tools like that exist. To be sure, these databases are not cheap, and professional investigators subscribe to more than one to cover all five corners of the globe. But then an investigation goes on steroids. Combine the results of these commercial tools with the official primary sources in each country – for instance, a given country’s company and property registries – and you get a powerful tool to uncover someone’s assets on a truly global scale.
In many countries around the world, real estate ownership is recorded in registries that are publicly accessible. In some countries, even other tangible properties, such as cars, motorcycles, boats, and aircraft are included in such property registries. That is why it helps to run a global property search when looking for a wealthy person’s assets. The commercial tools mentioned earlier allow for searching either a person’s name or the name of a (shell) company and produce truly international results. These results should then be followed up with searches in the official primary sources in the respective countries.
Some businesspeople are familiar with the term “OPM”, Other People’s Money. That is the money that’s always more fun to spend than your own, of course. Investigators, by contrast, are fond of “OPSM”, or Other People’s Social Media. These are the social media profiles not of the target individual but of those affiliated with them, like friends and family. Wealthy individuals often do not use social media themselves, for fear of being too visible or because they are from an older generation that grew up without social media. But friends and family are often less discreet.
Investigators often find pictures of vacation properties, boats, aircrafts, or other assets posted not by the target themself, but by their friends, spouses, or cousins. If there is an epic dinner party in a mansion overlooking the ocean, someone is bound to post a picture of it. And investigators will find it if they look long and hard enough.
Aircraft and ship registries
If the individual you are looking at belongs to the ultra-wealthy category, investigators also want to check for ownership of aircrafts or yachts.
Often, they are not held in the individual’s name, but registered to shell companies. That’s why in an asset investigation it is important to identify a target’s shell companies early on to find assets tied to them.
Shell companies used to be a tough nut to crack for investigators. Not so much anymore. Besides the above-mentioned global databases of secondary and primary sources that supercharge an investigation, there are countless “offshore leaks” to search. From hacked fiduciary offices such as the Mossack & Fonseca leaks, the PortcullisNet leaks, to the hacks of national company registries of the Bahamas, Panama, and Malta, to name a few.
Once the target’s shell companies are established, they can lead to aircraft and vessels registered in their names.
Even if discounting offshore leaks, shell companies can never entirely stay under the radar. They sometimes sue or get sued by business partners, clients, or fellow investors somewhere in the world. And those court cases are sometimes filed in jurisdictions where court documents are a matter of public record. You may not know it at first, but the European target individual may have been sued in a Hong Kong or Canada court in context with other business deals that went sour. Suddenly the investigator sees the name of one of their shell companies in the court filings – opening a whole new host of investigative possibilities.
Amidst all the electronic research, let’s not forget the physical world. If there is a lot at stake during an asset investigation, it may make sense to include good old-fashioned surveillance into the mix. Surveillance can be very helpful to determine on what properties a target, or their family, is staying on a regular basis.
When assets are held by proxies (middlemen/women) and are thus well hidden, which is often the case with oligarchs, the use of human sources during the investigation may become indispensable. They may be disgruntled former employees, combative ex-wives, or estranged former business partners. In any case, it is often worth the effort to identify and locate these individuals and ask them to share their inside knowledge about the location of properties.
The bottom line
If you want to see the big picture of a person’s assets, a systematic worldwide search is indispensable.
Sebastian Okada is head of Investigations & Fraud Prevention White-Collar Crime at Corporate Trust in Munich. He has traced assets of high and ultra-high net-worth individuals for over 15 years.
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