One thing we always tell new clients: there is no such thing as a “local” investigation. A Russian guy in L.A. means you could be dealing with a Nevada corporation in addition to Russia and California. An apartment in Miami may be owned by a British Virgin Islands company.

That’s a good thing to remember when dealing with Greece, and especially if you’re counting on the solvency or liquid assets of a business partner. Your business could be in Greece, but your partner’s collateral could be sitting in HSBC in Switzerland, or in Cyprus. While cracking a Swiss bank account isn’t as hard as it once was, it’s no piece of cake even with a subpoena. Cyprus may be part of the European Union, but it’s not a member of the Financial Action Task Force, the OECD’s umbrella group that fights money laundering. We’ve had experience trying to find assets in Cyprus, and our clients don’t find it fun.


As Greece’s new restructuring plan (which The Economist says is doomed to fail) includes plans to sell state-owned assets, it’s easy to envision foreign investors going into partnership with locals to buy up cheap assets. The local participation may be to get around Greece’s legendary bureaucracy, and local partners sometimes put up cash or guarantees. Given what’s been going on in Greece of late, bank balances in euros held in Greek banks don’t seem to be the most secure kind of backing an investor could be looking at.

The Bank of Greece’s own statistics make for sobering reading. In April, Greece’s net capital flows veered into negative territory. The numbers would have been much worse this year but for large injections of money from the EU.

As long as a year ago The Financial Times was reporting that Greeks were shoveling their bank deposits out of the country to Switzerland, Cyprus and other international points. With the teargas and the fragile plans being discussed this week, no asset search of a Greek person of any means should be complete without looking beyond the country’s borders.

Some other tips before concluding a deal with anyone in Greece or any other jurisdiction with risk of capital flight:

  • As part of your standard due diligence, find out whether this person has ever been sued in the places he or she does business, such as the U.S. or the U.K. Previous business partners will have come to know this person and will probably have included associated companies along with the person in their lawsuit. Those companies could contain assets worth going after either as part of a guarantee or to attempt to attach later on.
  • Do a basic verification of the person’s alleged contacts in the home country. We have seen many people boast that they are “very close” to a key minister or other connected official, when in fact no particular bond exists. In countries where relationships matter most, it’s the quality of those relationships that is critical. Such things are seldom written down, but are rather determined by quietly interviewing knowledgeable people in the country in question.
  • Insist on adjudication of disputes outside the country in question, whether you are looking for arbitration or traditional legal remedies. According to Transparency International Greece’s public corruption problem is worse than Romania’s and almost as bad as the rating achieved by India.