How Negative publications prevent companies from entering foreign markets
The regulatory paradigm pushes for greater openness at the expense of privacy. Financial institutions are not shy about looking up customer information on Google, and negative media coverage in closed databases like World-Check. Opening bank accounts, obtaining a residence permit, buying real estate, foreign exchange transactions, investing in stock markets – all this has become much more complicated. Business simply does not expect a dirty trick from its own reputation.
To do business in the EU and the US, it is not enough to put things in order in the papers. Take, for example, banking compliance practices: an error can even lead to license revocation from a bank, so the compliance service actively uses KYC practices and the World-Check database. All of them include verification of information through open sources.
An important note: the information is needed for the compliance service to form a kind of summary. The issue of cooperation will be decided at a face-to-face interview, but you may not get to it if you fail the correspondence acquaintance.
Foreign companies, regulators and financial institutions are increasingly studying immigrants. This is noticeable by the mood of some customers, and the information background indirectly testifies to this. Suffice it to recall the recent investigation by Al Jazeera with the publication of a list of holders of the “golden passports” of Cyprus.
One European bank refused to open an account for company X. The point is the personality of the founder of the business: many years ago, his name appeared in publications on the corruption scandal. This was written by the media, smaller publications reprinted the material. No charges were brought against him. But the defamation was enough for the bank to consider cooperation as a violation of the compliance policy. Company X’s counter-arguments were answered something like this: “If this is insignificant, why did they write about it?”
Of course, you can also do business through offshore companies, but, they also pay a lot of attention to the issue of disclosing beneficiaries, the type of activity of the company, the source of funds, etc. Registration agents or registration authorities will request not only formal information: the name of the company, what it does, and the charter. They will also ask who the ultimate beneficiary is and where his capital came from. What, aren’t you the beneficiary? And then what are you doing here?
What should be done to “like” the developed market? If you are dealing with a certain paradigm, it is logical to interrupt it with another one. This is how big business comes to positive positioning. For example, it begins to speak louder about its commitment to the ideas of sustainable development and the implementation of the principles of ESG – the development of the company based on environmental protection, a conscientious attitude towards employees and customers, and proper corporate governance. In our international practice, we see how important these factors are, and in no case do we want to belittle the achievements of BD business in this direction. The snag is in a misunderstanding of the logic of Western partners. It is not reduced to a linear scale. Conditionally, company X rated its reputation at 60 points. X decides to invest in sustainability and partner with an ESG project to reach 80 points. No,
It is more logical to compare the thinking of the international market with the scales of Themis. On one bowl – the merits of business, on the other – the risks and controversial episodes. The difficulty lies in the personality of the “judge”. To some, defamation will seem insignificant, and to others – critical. In other words, most of the problems lie in the past of the business.
The market is moving towards a conscious adjustment of the information background. Today, reputation has become a kind of summary of a business – just like a page on a social network. Who among us does not feel discomfort at the sight of our posts from a decade ago? Only we are free to remove them. This is normal, because our priorities are changing, and we want society to perceive our current version.
In this regard, business is more difficult. All companies leave an information trail. Sometimes it interferes with the development and conduct of affairs in the present. This is outdated information, data about old conflicts and resolved issues.
There is an acceptance by the business of its informational image as an important intangible asset. It is not enough for companies to put an extra plus on the scale, now they are also seeking to remove references to past mistakes. And this is a justified desire. If you don’t manage your reputation, then it’s not your reputation or your asset.
I am convinced that the conscious request for the removal of information will grow. The right to be forgotten is a logical evolution of the relationship to data.