Case Studies

A Western oil “major” was ready to embark on the acquisition of a large Russian oil company. The head of the company’s mergers and acquisitions group asked Kaosco.com to determine the beneficial ownership of several offshore entities belonging to the potential Russian acquisition target.

Kaosco.com launched a discreet process of identifying and isolating the company’s offshore holdings to identify any misrepresentations or non-disclosure of material facts, and embarked on an in-depth investigation of the backgrounds of the target company’s management and key employees. Kaosco.com’s information enabled the client to identify and isolate areas of risk and cleared key personnel of having any links to criminal activities such as money laundering, tax evasion or corporate fraud.

An owner of a group of convenience stores was bringing in an investor group to acquire the controlling interest in his company. The owner requested that Kaosco conduct a preliminary background check of several members of the investor group.

Our investigation did not uncover any substantive findings regarding the lead investor in the group; however, further investigation revealed that there was a passive investor in this transaction who was a convicted felon, recently released from prison for money laundering.

A technology company had acquired a similar firm in a different locale. Within two months, the acquired company lost half of its customers. Kaosco was retained to locate and interview those former customers in an effort to ascertain the circumstances surrounding their leaving the company.

Interviews with former customers revealed that they had been unhappy with the company’s service and support for some time. We also learned that the company’s sales staff made promises and provided incentives to customers to stay on until the acquisition was completed. Our inquiry further ascertained that employees had been given a script by the company’s owner which set forth how the employees were to “lie” to customers.

Kaosco was subsequently contacted by the company and we recommended that some preliminary employee interviews be conducted. We immediately determined from these interviews that two important changes had taken place within the company during the prior four months: the CFO had assumed responsibility for opening and reviewing all mail before turning it over to the office manager, and the CFO had resigned just after the independent auditors arrived, claiming he was taking a position with another firm.

Further investigation determined that the CFO had formed a company six months earlier with a name nearly identical to that of our client. We also determined that he had been ordering and paying for 100 computers at a time and returning 50 to the supplier, who in turn mailed a refund cheque to the company. The CFO, now in control of the mail, was removing the cheques and depositing those proceeds into the account of his newly created company.