S-RM’s Sam Taylor, the consultancy firm’s head of corporate intelligence in the Americas, talks with Global Finance about the changing nature of corporate investigations.
Global Finance: Your portfolio is broad—at any given time your work can focus on corporate M&A, international asset tracing and recovery, or sanctions compliance. Much of it involves uncovering hidden wealth. How does one hide assets?
Sam Taylor: It’s complex. One can use another person to hold assets on your behalf, and then obfuscate any connection you have to that person. But that raises trust issues. Once you create a bank account and it’s in the name of someone else, they now have legal control over it and could do anything to it. Another way is through layering—creating layers and layers of shell companies, many of them incorporated and established across jurisdictions that are not transparent.
GF: What’s your take on cryptocurrencies?
Taylor: Cryptocurrencies are risky, but they are another effective way to hide assets. Currency can be transferred completely hidden from the traditional banking system. It’s made things more difficult from an asset tracing perspective. However, we’ve developed strategies to work around the inherent challenges, that combine bespoke tools with a great deal of domain expertise.”
GF: And hard assets?
Taylor: We come up against hard assets a lot. We had a project years ago where we identified a yacht owned by someone whose assets we were pursuing on behalf of a claimant. Their child had posted a photo on Instagram of a party on said yacht. We were able to track the flag of the yacht and then reverse engineer from where the ship was registered back to our subject.
GF: It seems corporate investigations have greatly expanded. Is there just more fraud and misbehavior out there?
Taylor: It absolutely is expanding. The internet, digitalization, globalization—all these things converged in the early 2000s, and the world became ‘flatter’. In the 1970s or 1980s the investors you dealt with might be from Ohio or upstate New York, now they’re often coming from places like the Gulf or Southeast Asia. We have more complex cross-border disputes.
GF: We’re seeing more geopolitical polarization these days, too. Is that making your work more difficult? The Assad’s family’s hidden wealth has been in the news. Will it be more difficult uncovering those assets today than it would 10 years ago, say?
Taylor: Ten years ago, it may have been easier. In the past decade sophisticated players have become much better at obfuscating their assets. People were more careless earlier. Social media was less locked down. We were sometimes able to find assets because someone thoughtlessly posted a piece on social media. People absconding with assets are savvier today.
There are more tools now. You’ve heard about Pegasus and some of the other kinds of spyware that’s going around the world. It almost seems that we’re in an era where technology has been adapted for the powerful and those trying to stay hidden —to counteract what was a wave of openness of the internet.
That said, there’s also new tools that we have. While the Corporate Transparency Act in the US is currently paused in terms of its application, Europe now has similar laws that require companies to disclose beneficial ownership information. Maritime records are now much more available (should transponders not be turned off on ships). There’s a lot of data out there for us to interrogate. So, it’s hard to know where to come down on in terms of a macro position as to who’s winning and who’s losing. I would just say that both sides are more armed and the cat and mouse game continues.
GF: Do cultural differences shape your investigative approaches in corporate intelligence?
Taylor: Absolutely. In the US we can often operate by phone or by email. There’s a basic trust about business and the US has a long commercial history. People are more willing to speak with you. That’s often flipped around in the developing world. There isn’t always a deep well of public records, or easily obtainable information. You really need to rely on well-placed sources.
Timing is an issue too. A US-based investor client wants to close something in one or two weeks. But if we’re gathering intelligence in a place like Brazil, things may not happen so fast. Try doing Brazil in the second half of February or the early half of March during Carnival. Same with the Middle East or Asia during some holiday periods.
GF: Many believe the incoming Trump Administration will deregulate many government agencies. Will that lower demand for your services?
Taylor: Shifting administrations means shifting priorities. I certainly understand that and I’m concerned about the potential effects to the business from reduced regulatory enforcement, particularly at the US Securities & Exchange Commission. But my gut feeling is not to overreact or panic. When one door closes, another opens. It’s possible that the president might be stronger in terms of enforcing some laws against countries not viewed as friendly, or take other retaliatory measures.
GF: What are some of the biggest governance mistakes that your ‘targets’ make?
Taylor: Undisclosed interests come up quite a bit, particularly in cross-border work—places like Mexico, sub-Saharan Africa, the Middle East. Maybe a relative of an executive at a company is a minister of government and that wasn’t disclosed.
GF: To return to cryptocurrencies, you were quoted last year with regard to the FTX cryptocurrency exchange collapse, words to the effect that from that scandal a stronger, healthier crypto market might emerge. Do you still feel that way, especially in light of the recent meme-coin hype?
Taylor: Regarding FTX, maybe I was too optimistic. It was an opportunity to really clean up that space. Look, there is value in having a decentralized ledger technology. I get that. I don’t see the value in the number of different coins, the amount of speculation, or the fraud that has occurred, however. There was an opportunity for that entire industry to step up and make important changes and work with the government to create good regulation and legislation to enforce it. It hasn’t happened.
GF: Do you accept work on behalf of governments?
Taylor: Yes, but anything that we would do for a government would first be elevated to our risk committee, and it would be assessed for legal risks, conflicts of interest, as well as reputational risk. I would add that this does not encompass a broad swath of our business, but we have done so and we would do so again depending on the mandate and depending on the government client.
GF: A recent study showed that most of the 40,000 mergers and acquisitions deals of the past 40 years failed. That’s often because the parties were fed partial or faulty information. Would more of those transactions have succeeded if those deals had been better scrutinized?
Taylor: When firms like ours are engaged, we’re likely to find information that’s going to be relevant. It might even be information that could kill a deal. We can raise serious risk concerns about a transaction, but people might still go ahead and do the deal anyway, especially if the market is frothy. The nature of information has changed in the past ten years. Everyone is being armed to the hilt with as much information as they can gather. But outcomes still depend on someone using the information provided, and that often has a lot to do with market sentiment.
