It was my decision to start this blog with articles about basic background screening of private persons. With no doubt it is a regular business task for every PI or Risk Management corporation. My mission was simply to inform you about legal procedures and types of data which can be collected by Russian local PIs without in-depth investigation or illegal activity. I can assure you that I will continue this theme in my future articles.
Today, following recent international projects, I plan to show you first steps of legal body background screening process in Russia. I believe this data will be helpful ether for professional investigators and competitive intelligence specialists interested in effective and legal cooperation with Russian colleagues.
As usual, my first words will be about the Law and its requirements.
Every Russian PI agency is regulated by the “Federal Law about private detective and security services” (21.03.2002 N 31-ФЗ, 10.01.2003 N 15-ФЗ, 06.06.2005 N 59-ФЗ, 18.07.2006 N 118-ФЗ, 24.07.2007 N 214-ФЗ, 22.12.2008 N 272-ФЗ). This Law is a subject of constant debates between PI professionals and police authorities of Russian Federation. In general, the problem is in comparatively poor effectiveness of investigations leaded by the Ministry of Internal Affairs and numerous offences of Russian private agencies. Thank god this law is regulating mostly means of investigations (follow-up services, eavesdrops etc.) and doesn’t limit the scope of investigations. Uncommon for the world practice is that this law also regulates “marketing researches, negotiations support and credit status checks”. There are several hundreds of marketing companies in Russia (including representative offices of well-known foreign companies) acting without PI license and in my opinion this section of the Law must be treated as “recommended but not required”.
“Trade secret protection Law” (29.07.2004 г. N 98-ФЗ). This Law is similar to EU regulations. The only difference is that the victim can apply to the Russian court only if it had “trade secret protection regime” and acted in compliance with its regulations when the trade secret was stolen.
“The law about State secret” (06.10.1997 N 131-ФЗ, от 30.06.2003 N 86-ФЗ, от 11.11.2003 N 153-ФЗ, от 29.06.2004 N 58-ФЗ, от 22.08.2004 N 122-ФЗ, от 01.12.2007 N 294-ФЗ, от 01.12.2007 N 318-ФЗ 27.03.1996 N 8-П, 10.11.2002 N 293-О, 10.11.2002 N 314-О) regulates protection and management of State secrets. It is important to know that private company can have the license to work with governmental secrets (most shipyards, ammo factories, some software developers etc.). In this case your request will be mandatory declined by every reliable professional.
STEP 1 – IDENTIFICATION OF THE SUBJECT
Background screening project usually starts from the subject identification. Today we will limit the scope of the article to the case where the company corresponds to the only legal body. In fact it is rare for Russian business. Most Russian companies have several legal bodies united by shareholders or even unaffiliated.
If you know legal name of the Subject – you can proceed to Step 2.
Our aim is to find indicators which can help us to identify the legal body. In Russia these indicators are Tax ID (INN, ИНН), legal name and type of ownership. If this data is unavailable, the only 2 methods we can use are OSI and database screening. Usually if the company is acting and duly registered, at least one legal body can be identified by the OSI. Most Russian companies place their Tax ID and legal name on their Internet sites.
I BEG YOU NEVER EVER MAKE THE FOLLOWING CONCLUSION: IF THE SUBJECT HAS A GOOD WEBSITE – IT IS A DULY INCORPORATED COMPANY. THERE ARE NUMEROUS RUSSIAN FAKE SITES DESIGNED WITH THE ONLY INTENTION – TO ASSURE YOU THAT THE COMPANY REALLY EXISTS. THESE SCAMERS ACT MOSTLY IN INTERNATIONAL OIL&GAS BUSINESS, BUT I SAW ALSO SCAM DISTRIBUTORS AND EVEN SCAM DETECTIVE AGENCIES SITES.
If OSI can’t help in the Subject identification, database screening is the final chance. In case the company has a unique name, it is possible that you will succeed, if it is not (for example the name of the company is “Omega”) you will have to consider in-depth investigation as the only chance to identify the Subject.
STEP 2 – DATABASE SCREENING
When the Subject is identified, the process of basic background screening is simple: check and cross analysis of legal database records.
- SPARK (System of Professional Analysis of Markets and Companies) This database includes records about Russian, Ukrainian and Kazakhstan companies
- Database of National Credit Bureau Comparatively with SPARK it has stronger financial reporting system but Ukrainian and Kazakhstan companies are not listed in this database.
These databases are formed by data exported from Federal Statistics Service, Federal Financial Markets Service, Federal Tax Service data. These informational sources with no doubt are very reliable, but at the same time they limit the ability of investigator to get up to date information.
E.g. by this time SPARK gives accounting data issued by the end of 2009 (for several companies even 2008!). The problem is in traditionally poor reporting system of Russian companies and delays in information analysis. Even now many Russian companies have double reporting system: first (legal) for taxation, second (informal) for internal control and financial analysis. That’s why even if the structure of the subject financial balance in above mentioned databases is strong; in fact the company can be on the edge of bankruptcy.
Anyway these databases can give us reliable and comparatively up to date information about:
- Short name of the subject
- Full name of the subject (Russian and English)
- Foundation date
- Reg. Number (OGRN)
- TAX number (INN)
- OKPO Code
- Type of Ownership (OKFS code)
- Legal form (OKOPF code)
- Line of business
- General Director
- Legal address
- Affiliated bodies
- As it was mentioned before, accounting balance is also available.
STEP 3 – ARBITRAGE RECORDS SCREENING
Among reliable open for public databases the database of Arbitrage court is one of the best. During basic background screening it is reasonable to check if the subject was claimed as unreliable debtor or even in the process of bankruptcy.
Every regional court has its own database. Probably later I’ll publish its links in this blog.
SEVERAL HINTS FOR PERSONS WHO WISH TO MAKE BACKGROUND SCREENING FREE OF CHARGE
- SPARK and National Credit Bureau has limited free access. You can check if the company was duly registered and the name of the general manager
- There are simple methods of bank account and TAX-ID validation. Some of them is available for free at the Internet
- Old data is available on several illegal on-line databases. If you’ll be lucky you will find one before it will be erased from the Internet.
- If the subject is a Joint Stock Company (Russian OAO) it is obliged to disclose information about its shareholders and affiliated bodies. It is a good and legal source of important information.
I’m sorry that my post is much longer than usual, but I hope this data will be interesting and helpful.
As it was mentioned before it is rare when the company (business) has only one legal body and it is hard even for “Russian made” professional to identify the whole structure of legal bodies involved in the business of the company. That’s why I’m sure that when you’ll face the challenge of Russian company background screening you will make a good decision and won’t try to do this without professional support.