Locals That Don’t Exist

So, there I was – attempting to bring on a new representative in the Middle East. Fortunately, my company had a vigorous vetting process. Email questionnaires, phone interviews, and even visits to local facilities. Enter a sudden ‘strong recommendation’ from an existing customer that we should use ‘Company X’ as a local representative … as the deal is about to be inked. Stinks. But we will give it a go.

We asked to meet the principals, and they came by my boss’s hotel. The meeting didn’t go well. I arrived late due to other business and only was able to hear the final exchanges. To go further, we requested a follow-on interview between our legal department and the representative’s legal group. This task, as the regional director, fell to me. But for some reason, we never could get the representative to agree to the call. We moved to Plan B – an onsite inspection by a third-party entity vetted for assessing the reality of a company. Amazingly enough, that also never happened. All the Red Flags flying:

  • Sudden introduction of a representative as the deal was at closure
  • Representative was of a different nationality than the country to be under contract
  • Representative could not or would not present a local brick and mortar office to meet
  • Commission, while admissible, was high – more than a couple percent for such a late engagement and to which they had (apparently) contributed little or nothing

The worst part was dealing with my local employee who was frantic and emotional about getting the representative on board because the local customer had requested it. Hence, an issue – after multiple discussions, my local employee really did not internalize why this whole deal ‘smelled bad’ to our legal department. Fast forward several years: no deal, no business for a couple years; then we find the recommended representative is now on the ‘outs’. Fast forward a bit more, and this country resumed purchases from our company, because they needed the technology and equipment …. No rep.

Moral: Another redline not to be crossed – watch for and respond to potential corruption. The Foreign Corrupt Practices Act is not a joke law. And Offsets are always under scrutiny (just check with Transparency International) …