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And now, due diligence on your due diligence (for real)

An interesting face-off is currently taking place between the UK’s Parliamentary Home Office Affairs Committee, chaired by Keith Vaz, and the Serious Organised Crime Agency “SOCA” over the latter’s failure to publish a list of 92 institutions, firms, celebrities and companies who have allegedly obtained illegal private information from rogue private investigators. Unless SOCA publishes the list by next week the Committee threatens to release it, despite SOCA’S concern that publication may prejudice ongoing investigations.

The face off takes place against the backdrop of the UK-government’s proposals to regulate the private investigator industry through the Security Industry Authority and a new licensing system that will require existing and putative sleuths to confirm their identity, undergo a criminal check, train and qualify as private investigators.

Amusing as it may sound, particularly for Sam Spade fans, obtaining legally sourced due diligence information has now assumed critical importance for global compliance professionals and in many jurisdictions, it may no longer be sufficient to rely on a lack of knowledge as to how information was obtained. Carrying out a form of documented primary due diligence when deciding to retain a private investigation agency is probably now essential to avoid a charge of willful blindness as to how information was obtained.

For companies, particularly smaller ones, having to carry out a form of due diligence of a private investigator to be retained for the purposes of carrying out due diligence may appear over the top, but basic inquiries along the lines of those now set out in the UK-government’s proposals: namely, qualifications, identity, past criminal record and to obtain assurances or undertakings that information will not be illegally obtained and an outline on how information or investigations will be obtained and conducted should not be particularly burdensome.

In the absence of such an exercise, there will be a substantial and increased risk of a company becoming an accessory to the illegal activity being performed on its behalf. Instances of such activities are given in an entertaining and well informed Private Eye article No.1348 p.32 which incidentally, points out that accountancy firms and head hunters will be exempt from the UK’s new regulatory system and that a public register of private investigators might be somewhat counter-intuitive.


Alistair Craig is a commercial barrister practicing in London.

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