Forecasting of target company’s activity

Just a short note to give readers of my old blog a chance to ready my new article.

The report of my blog’s death was an exaggeration.

It’s was a long time ago when I posted my last article to this blog. There were days when even I wasn’t sure that I'll continue updating this resource. What was the reason? - You probably would like to ask. The reason was obvious – I was spending almost all my free time on development and support of our corporate blog that is much more valuable source of information comparatively with this self-made simple blogspot site. But finally I came to the conclusion that there are and there will be themes and problems I would never be able to publish on our corporate site.

One of these themes is development and promotion of corporate site of private intelligence agency. I suppose that for the next 2-3 month all my posts will be dedicated to:

• Structure of corporate intelligence, due diligence and background screening services. How market leaders and small companies present their services to the target audience.
• What instruments of Internet PR proved to be effective for promotion of background screening services? What shouldn’t be done even if it seems to be most promising type of promotion?
• Web-site and CRM. Privacy vs management.

I’d like to thank all my subscribers and readers for patience and kind feedbacks. Since today new content of this blog will be slightly different comparatively with old posts. If you would like to stay informed about background screening procedures please visit and subscribe to our new corporate blog www.backgroundscreeninginrussia.com

I’m looking forward to see if I’ll be able to share something valuable on new theme of this blog. Hope to get back in 3-4 days with a new article.

Wish you all the best and please take care.
Dmitry

Identification of Russian citizens – hidden data of Russian passport

Several weeks ago I was asked to check if domestic passport mentioned by Russian citizen in his Power of Attorney was valid by the date of signing. In fact it is rare and suspicious if Russian citizen brings international Power of Attorney with domestic passport stated as identification document. But let’s start from the very beginning.

Every Russian citizen has domestic passport – the main document used for identification of a person. This document is used also for internal travel and includes main data about the person: date of birth, registered address, place of birth, marital status, kids (if they are under 18), military service (for men). Every person in the age of 14 gets his first domestic passport and it should be renewed at the ages of 20 and 45.

Domestic (internal) passport number of Russian citizen has 10 digits.
First 4 digits help us in identification the region where the document was issued. For numbering regions Russian authorities use OKATO codes, available on the net (e.g. at http://www.klassifikators.ru/okato).

6 last letters – unique number of the document. Comparatively with INN (TIN) of the company, passport of a private person can be hardly checked for validity because there are no control numbers in the document. Recently it was proclaimed that domestic passport of a Russian citizen can be checked in open for public governmental database but yet this source works with limitations (my passport is still mentioned in the database as invalid).

Anyway, if you need to check validity of Russian passport follow these simple rules:
1. If the document was issued before the owner was at the age of 14 – it is definitely a fake
2. If first two digits doesn’t correspond to the place of issuing – it is a fake
3. If the person is 46 year old or elder but his passport wasn’t renewed – this document can be claimed as invalid
4. Deeper examination requires professional support and you are welcomed to check if I can help you with the case

International passport is used for traveling abroad and commonly known for every foreigner who makes business with Russians. General description of this document can be found at Wikipedia http://en.wikipedia.org/wiki/Russian_passport. I think this explanation is good and there’s no reason to repost this article.

Also if you are dealing with historical background or human due diligence researches, there is a chance that you will face a challenge of Soviet passport validation and analysis. Soviet passport format was pretty complex: eg. XXVI-AK ######. Latin numbers and two letters indicated the region of issuing (but it is hard to identify the region because several combinations of letters were used for identification of central regions). May be in my next posts I’ll share instruments of uncovering hidden data in Soviet passport.

Future of background screening in Russia (part 2)

It is good when single article has several parts. There's no need to think about the name of a new post - part 2 is the best decision you can make.

Previously I shared my vision of future trends of background screening, now it is time to discuss how these trends and innovations will help in creating value for the client.

Development of Background screening as a service. 

When we discuss background screening services we usually speak about SOURCES (Public, Databases, HUMINT etc.), TASKS (Identity check, Education check, Pre-employment screening, Creditability check etc.), GEOGRAPHY (Local, Regional, Global). I think that it is reasonable to change the point of view and assume HOW the client will be able to apply contractors/employees background screening results to his everyday work. What a junk! – you’ll probably think – Isn’t it obvious?   

While I was preparing this post I checked about 50 internet sites of leading background screening companies and find out that mainly these companies present their services as tasks (see figure above), sometimes these tasks accompanied by articles about best practices of regular background screening procedures implementation. Why even with strong financing these leaders prefer to sell TASKS? I think that the reason is in remarkable differences between the way background screening results can be applied by shareholders, top-managers, functional and linear managers. If we assume that the client is a well-structured enterprise with optimized business-processes we should identify decisions and data required for decision making.

The simplest case is contractor screening before signing of the contract. In most mid-sized Russian enterprises the contractor will be screened by security department (check if the company was duly registered, shareholders, affiliated bodies) and if there were no red flags the contract will be forwarded to the chief accountant and general director for signing. But can we declare that above mentioned red flags is exactly what chief accountant needed for decision making? Not at all. Russian tax authorities is very strict when the company signs contracts with so-called “odnodnevki” (financial agents for tax reduction or cashing) and for identification of these financial agents tax authorities use special instruction based on the data available during basic background screening. None of Russian risk-management companies ever presented or analyzed data this way. Should I mention that chief accountant can read the balance of the contractor much deeper then security professional? 

The  same problem can be seen with arbitrage records and background check for legal department. Analyzing civil court records staff lawyer can assume how the contractor protects himself, if it is good in corporate law etc. Sometimes I add this section in my reports but I never even tried to sell background check for legal department as a separate service. 

Public media search… We often screen open media to dig raw data but have you ever heard about check of the influence of the contractor’s public reputation on the image of the company? I haven’t yet, but most top-managers of public companies pay much attention to this indicator. They forced to assign staff managers to do this job for them. 

Summarizing the above, I think that it is time to review our background check reports to identify a list of target-oriented services and probably add valuable data form legal sources to help managers of different level to make good decisions.

Future of background screening in Russia (part 1)

New Year fiesta is a period of high hopes. Traditionally during these days divination is very popular and (if true believers don’t cheat) more reliable. That’s why I decided to send this post at the very beginning of 2011.

What trends will change the face of background screening and due diligence in Russia during 2011? Can we expect that in the nearest future dealing with Russian companies will be less dangerous with the help of background screening, due diligence or risk-management professionals? 

 

Let’s play that I’m the Delphi oracle (who also was said to be “not quite good in Greek grammar”) and listen to my answers.

Development of Background screening as a service. The strongest disease of background screening in Russia is that it is still treated by mid-sized enterprises as a kind of semi-governmental, partially-legal (i.e. corrupted) activity which is aimed on gathering data about partners and employees in militia’s databases. The funniest thing is that in most cases (except for identity and criminal records checks) these databases are useless for the client. I expect that in 2011 most innovators of the market will at last understand that if background screening won’t be considered as a service which brings value to the customer they will be forced to leave the market. What’s in background screening report will bring value to Russian customers? – The answer will dramatically change the face of Russian background screening market in the year 2011. 

Changes in informational structure of Russian databases and availability of information. Until 2009 there were no open for public official databases in Russia. Ones I had a chance to ask reliable informant “Why we keep all the data classified? Isn’t it reasonable to move towards the US or European practice in management personal and corporate information?” The answer was simple “we simply can’t define what should be kept classified and what should be opened for public. That’s why we protect everything we know”. Some news in current legislation of Russian Federation, development of Electronic government and infromatization of State agencies brings hope that in 2011 we will see new opened for public databases. By the end of 2011 these databases will cover 20-35% of standard background screening report of regular Russian risk-management company. There still some questions (including reliability of these open for public databases) and it shouldn’t be expected that in general background screening prices will be reduced but I assume that newcomers of the market will use these new sources to start damping of the  market. With no doubt these databases will simplify remote background screening of Russian companies by foreign professionals. 

Aging of illegal databases and decrease of small-sized background screening companies. As you have probably seen in my previous blog posts, there are several illegal databases available at the black market and torrents of Russian Federation.  Until 2008-2009 these databases (also known as Cronos databases) were widely used by small and mid-sized market players in background screening processes.  It is obvious that without regular update these databases are aging every day. If it was acceptable for regular customer to buy 2007 expired information during 2008-2010, in 2011 it won’t work.  At the same time I can’t decline that these illegal databases will be extremely helpful in enhanced due diligence projects mostly related with origin of capital. Being offline source these databases can’t be edited by politician or businessmen’s wish. Anyway, Russian companies relying on illegal offline databases will be forced to search for a new source. Will they find free of charge databases? I doubt. 

Rising of legal background screening. I know that most of my readers are skeptical and hardly believe that in a short period Russian business will become more transparent and legal but in my opinion this exact market has a strong potential of legal growth in nearest future. I think that during 2011 we will see the rise of innovating companies who will use only legal procedures in background screening projects. Doing my part in 2011 I’ll try to show simplest methods of legal gathering of information on my blog. 

I wish you all the best and good luck in 2011!