Broker, Trader, Lawyer, Spy - Eamon Javers [120]
The climate of scandal makes it difficult for Benöhr to talk about his industry. Today, he says, he’s taking some time off between gigs. He brushes off requests to discuss specific cases, and proclaims that the investigative business is rather boring: “There’s very little James Bond, and a lot more librarian work,” he says.
Benöhr didn’t get his training in an intelligence school. Instead, he’s a lawyer and an MBA. He started his business intelligence career in Frankfurt, at the headquarters of Kroll, the American investigative firm. There he learned that with regard to conducting business intelligence operations, Germany was a different place from what many of his American and British colleagues at Kroll expected. For one thing, most court records are sealed—even routine civil matters. That makes due diligence investigations much more difficult than they are in other European countries. Gathering information for a routine background check on an executive takes a few seconds in the United States, and can be done by anybody with a computer. In Germany, it takes much longer. To find out if an executive has ever been sued, gone bankrupt, or been arrested, Benöhr can’t just dip into an online database. He’s got to tap into his long-developed network of German business and legal contacts. Connections are everything in Germany.
Culturally, too, Germany is a trickier place to conduct investigations than other western democracies. The country has recent, searing memories of life under a police state. People have an aversion to anything smacking of intelligence, informants, or secret files. “Because of German history, when it comes to anything to do with intelligence, people are very sensitive,” says Benöhr. Calls to an executive’s former colleagues—a standard part of a background check in other countries—often meet with grim silence or even a disconnection. All this also makes corporate investigations in Germany much more expensive than elsewhere.
As a result, Benöhr says, the investigations industry in Germany is dominated by financial firms: “They have huge pockets, and when there’s a big deal pending, there’s so much at stake that they will spend what it takes. And if you do it right, it’s going to be expensive.”
Ironically, two American business trends are driving the German corporate intelligence market: the increasing aggressiveness of the Securities and Exchange Commission (SEC), and the ratcheting up of prosecutions under the Foreign Corrupt Practices Act (FCPA), which prohibits American companies or their foreign subsidiaries from engaging in bribery overseas.
“Until 1999, German companies could deduct bribes they paid abroad from their taxes,” says Benöhr. In Germany, executives have a “different mind-set when it comes to what constitutes criminal activity.” Now that so many multinational companies come under the provisions of the American FCPA, Benöhr says, companies that have had problems with bribery are increasingly investigating themselves. Also, American private equity investors that own pieces of German companies need to make sure the German employees aren’t bribing third-country officials to ease environmental, customs, or other regulations. Investigators like Benöhr are brought in to make sure executives know what happened in a bribery case, and what the company’s legal exposure is. They ask basic questions: Who knew? Was upper management involved? Was it a one-off case? Was this the usual method of doing business? “You have to be particularly thorough,” says Benöhr. “Your job is to make certain that you’ve really looked into this and that everybody who was involved is gone.”
There’s an additional international wrinkle for investigators doing business in Germany: American private equity companies own many German companies, making them subject to the SEC’s disclosure regulations. The burdens of disclosure are much higher in the United States than in many other places, and Benöhr says American investors