The story
The target was a fast-scaling Indian health-tech distributor, and the fund was a global growth-equity investor preparing to take a USD 60m stake. The commercial case was strong. The complication was the customer base: heavy government-facing sales, which means licences, government-hospital officials and the people who help a company navigate both.
The fund's counsel understood the reach-back. Under the FCPA and the UK Bribery Act, a problem inside the target could become the fund's problem after closing. A clean sanctions and adverse-media screen was necessary but not sufficient; it says who a company is dealing with, not how money moves once the deals are done.
So counsel made anti-bribery and anti-corruption due diligence a condition precedent, and asked for something broader than a database check: a review of the target's compliance programme, sample-testing of its high-risk ledgers, screening of its main third parties to ultimate beneficial owner, and interviews with the founder and the people who ran sales and finance.
NARADism was commissioned to carry out that diligence.
How we approached it
- 1
Reviewed the programme
The target's existing compliance policies and controls were assessed against the applicable standards: code of conduct, ABAC, gifts and hospitality, third-party and whistle-blower.
- 2
Sampled 24 months of high-risk ledgers
Distributor incentives, consultancy, CSR and gifts and hospitality were sample-tested against contracts and deliverables.
- 3
Screened the top 30 third parties to UBO
Ownership of the target's key counterparties was unwound to ultimate beneficial owner.
- 4
Interviewed the founder, sales head and CFO
Management was walked through how approvals and government interactions were actually obtained, and the answers were tested against the ledgers.
- 5
Quantified and reported
The exposure was quantified and FCPA/UKBA reach to the fund assessed, in a form counsel and the deal committee could act on.
The target had no standalone ABAC policy; its code of conduct had never been disseminated and its whistle-blower channel was dormant. Roughly 6.8 cr of distributor 'market development' incentives had been settled partly in cash, with no supporting deliverables. A 'regulatory consultant' on 1.1 cr a year, an ex-official, had been engaged to expedite licences, and the contract post-dated the payments.
CSR had been routed to a trust connected to the target's largest distributor in a key state. Gifts and hospitality to government-hospital officials ran above policy and went unlogged. Two distributors were UBO-linked to a founder's family, and the side letters were absent from the data room.
NARADism quantified the exposure and assessed FCPA/UKBA reach to the fund. The deal proceeded at a revised valuation, with a carve-out indemnity and escrow holdback, ABAC representations and warranties, and conditions precedent: terminate the consultant, adopt an ABAC policy and remediate the incentive scheme.
Those conditions were backed by a 100-day remediation plan that NARADism was retained to build.
Illustrative composite built from sector-typical fact patterns encountered in practice. Names, figures and timelines are indicative; no client is identifiable.