There has never been a better time to review your critical business relationships!
2022 was certainly a white knuckle ride in the world of finance. Soaring stock markets in January were followed by the Russian invasion of Ukraine in February. The sanctions introduced in response caused disruptions to economies, turmoil in the markets and immediate effects on investment funds and OFIs. Around the world, equities crashed as global bond yields screamed ‘recession’.
Could things get worse in 2023? The answer, unfortunately, is yes. It's a well-known adage that corporate fraud is 'bred in good times and uncovered in bad times'. A decade of ultra-low borrowing costs has encouraged companies to load up on cheap debt. And debt can hide a lot of misdeeds. They are uncovered when the credit finally dries up. The global financial crisis of 2007-09 exposed fraud and negligence in mortgage lending. The stock market bust of the early 2000s unmasked the deceptions of the dotcom bonanza and the book-cooking at Enron.
2022 certainly saw its share of corporate scandals, including bribery, fraud and stock-manipulation as companies struggled to cope with the reality of changing market conditions and tanking shares. Household names were not immune. Swedish-based Telecoms giant, Ericsson, was at the centre of a bribery scandal, when the company was forced to disclose that it was conducting an internal investigation following allegations of payments to the terror group ISIS. Credit Suisse faced litigious accusations of fraud, money laundering and corporate spying, as well as concerns about the riskiness of its balance sheet. The popular home goods retailer Bed, Bath & Beyond found itself at the centre of a lawsuit over alleged ‘pump and dump’ practices, while electric vehicle manufacturer Hyzon, began the year facing allegations of short selling and by August had been forced to release a communique to the effect that past financial statements could “no longer be relied upon”.
These are but the tip of the iceberg. The fallout from the pandemic ushered in a golden era of fraud in e-commerce. PWC Global’s 2022 ‘Economic Crime & Fraud’ fraud survey showed the highest levels of reported fraud ever in 20 years of research, with online fraudsters employing increasingly sophisticated methods. The KPMG fraud barometer showed an increase of 288% in fraud cases reaching the UK crown courts in the first half of 2022 as corporate money-laundering, triggered by Russia’s invasion of Ukraine, went stratospheric.
We ended the rollercoaster year of 2022 with the 32 billion FTX cryptocurrency exchange scam, widespread ‘energy-shock’ and global economies on the brink.
With little prospect of immediate improvement in the forward landscape as we head towards 2023, there has never been a better time to review your approach to your critical business relationships and pre-transactional diligence.
Sebastian De Bono
Sebastian is the CEO/Founder of Armour Intel.
Armour Intel caters for clients ranging from Private Equity Firms and large Venture Capital Funds (with a need to evaluate hundreds of prospects over the life of a fund), to law firms and High net worth individual investors, often with very specific requirements.
Whatever the needs of a client, Armour Intel offers a rigorous due diligence process. Investigations can include sanctions, legal, AML, financial, reputational and credentials checks (and more) on potential business partners and C suite executives, as well as a similar range of checks on businesses to be acquired.
Other services include cyber security consulting, asset tracing and cyber fraud recovery.
Armour Intel offers a 30 minutes Q&A interview at no charge to deal with any specific question you may have.
Send an email to [email protected] to book an appointment.
