Gulf firms in the spotlight as due diligence steps up

Western firms demanding better transparency from local players, says Nardello & Co
Gulf firms in the spotlight as due diligence steps up
(Getty Images)
By Karen Leigh
Tue 25 Jan 2011 02:07 PM

Due diligence firms have found rich pickings in the Gulf as wary Western firms seek increased transparency from local players following the global financial crisis.

Nardello and Co, which has offices in New York, London and Milan, said the Middle East now accounts for 20 percent of its global revenue.

“Our business has been increasing all over [in MENA] because of the increasing importance of transparency,” Daniel Nardello, principal of Nardello and Company, told Arabian Business.

“In the wake of financial crisis people are being more careful before they enter into significant financial partnerships. Our caseload in this region has outstripped elsewhere.”

The current MENA team is based out of London, but Nardello said it was likely he’d open an office in Dubai in the coming year.

“Our business here has been in growing and increasing,” he said. “For Western and US and UK clients, we do a fair amount of pre-transaction due diligence, aimed at establishing the reputations of [their] potential business partners in the region.”

For a Western investment bank looking to invest in the UAE, for example, “we'd look at the people they're doing business with and make sure there’s no criminal or regulation issues, no involvement in corruption.”

Another hot topic for potential investors is sounding our any possible terrorism links, he said.

“Another issue is financing terrorists, directly or indirectly,” Nardello said. “We've been involved in cases where there are allegations of terrorist financing, and as often as not we find the allegations to be baseless.”

In the Gulf there can also be confusion when names sound – or are – the same.

He said that as a Western firm – with the partner overseeing Middle East operations a native of Lebanon – Nardello is equipped to understand both perspectives.

“European and US investors want transparency in their business dealings and are increasingly investigating regional companies before deals, particularly now that they are operating under increasingly strict regulatory regimes including the US Foreign Corrupt Practices Act and the new UK Bribery Act,” he said.

“The rules are so tight in many jurisdictions now that companies need to show they have full knowledge of their partners.”

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