Editor's Introduction
Where’s the money from? It’s a question that sits underneath almost every due diligence conversation I’ve been part of, usually without anyone asking it out loud. It’s a fair question too. My issue is that for a lot of people the answer has been decided before they get to open their mouths.
I’ve seen it more times than I can count. With someone from the former Eastern bloc or parts of the Middle East, the assumption is old bloc money and government contracts. With someone from the Gulf, it’s oil. With someone from Africa, it’s mining or precious metals. Every one of those comes with baggage attached, and more often than not it’s simply wrong. The money is in logistics, or property, or healthcare, or a family business that’s been going for three generations and has never been anywhere near the sector people have put it in.
Jurisdictional risk is real, and I’ve no problem with institutions assessing it properly. That’s their job. What I want to talk about in this issue is what happens when geography stops being one factor and ends up being the whole assessment, and how much of that happens in person, long before anything gets written down.
What Gets Said Before You Arrive
A few examples first. None of these is one person. They’re patterns I’ve seen play out again and again, and I’ve kept them vague on purpose.
A Gulf family, forty years in healthcare, logistics and property. No energy interests, and they never have had. I lost count of the number of times I heard them introduced as oil money. Nobody checked. It just sounded right.
A founder from the former Eastern bloc who started a software company in the late nineties and sold it to a Western buyer. It had nothing to do with the state and never bid on a public contract. He still gets asked, in one form or another, how he came by his assets in the privatisation years, as if the two things were the same.
An entrepreneur from Africa whose business is telecoms infrastructure and payments. She shares a surname with someone in mining who was investigated some years back. Half the people she meets have made the connection before she sits down, and she knows it.
Nobody in any of those examples was accused of anything. That’s part of what makes it so hard to deal with. There’s nothing to answer.
In the Room
Most of this starts before the client even gets there. Someone makes the introduction and briefs the other side, and in doing that they describe the person in a line. Gulf family. Old bloc money. Mining. They think they’re giving context. What they’ve actually done is tell the other side what to think, and those people come in with the sector already decided and their questions lined up around it.
I’ve heard the same question put to two different people in the same week, and it’s sounded completely different. “Tell us a bit about the background.” With one it’s a friendly opener. With the other you can feel it’s a test. You can tell from what comes next. One gets asked how the business grew. The other gets asked who they knew.
Nobody says the word corruption, or sanctions. It doesn’t need saying. It’s in the pauses, the extra person from compliance on the second call, the co-investor who suddenly needs another week.
The thing I find hardest to watch is how used to it people are. A lot of them come in on the back foot. They bring paperwork nobody’s asked for and start explaining where the money came from before anyone’s raised it. Some cut their own story short because they know which bits will get misread. Some don’t mention where they’re from until they’ve got to know you. These are people who’ve built serious businesses, and they’re sitting there managing an impression somebody else created.
What It Costs
It’s hardly ever a flat no. It’s friction. Things take longer and the bar is higher. Introductions that would be made in a heartbeat for one person get made carefully, or not at all, for another. Advisers turn mandates down and never say why. Board seats and memberships go to whoever needed less explaining. Over ten or twenty years, that adds up.
And it travels. What gets said in one room gets repeated in the next, and sooner or later someone writes it down, in a briefing note or an intro email or an article. By the time it shows up online, it’s been said a hundred times. A lot of what people find when they search someone is just the meeting-room version, written up.
The Pavesen Perspective
Most people’s instinct is to wait until they’re asked and then explain. By that point the other side has made its mind up, and the explanation sounds like a defence. Going out of your way to deny the stereotype doesn’t work much better. If you start with “the family has never had any interest in oil”, you’ve just said oil again.
What works, in my experience, is getting the real story in front of people first, so it’s what they’ve read before they walk into the room. That means the history of the business being out there and easy to find: when it started, what it does, how it grew. It means the companies and roles being described properly wherever people look them up. It means having some decent third-party coverage that talks about the business first and where the person is from second, because the first description tends to be the one everyone else copies. And if the name can be spelled a few ways, it means making sure it all points to one person and not three.
None of it is complicated. It just rarely gets done until someone’s already been on the wrong end of it.
Somebody who has spent thirty years building something shouldn’t be summed up by where they were born. That gap between what’s been built and what gets assumed is a big part of what we look at in the Pavesen Audit, and for a lot of the people we work with, it’s where the real risk is.