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Fraud investigation in $500m private debt transaction

The Challenge

Greyhawk was instructed by the general counsel of an electric vehicle manufacturer to investigate a suspected fraud. The client had been approached by the directors of an Abu Dhabi-based investment fund run by a member of the ruling family. The fund was offering to lend our client $500m. The client’s internal due diligence had included face-to-face meetings with the lenders. The investment fund’s promotional literature and press coverage included photographs of government ministers from the UAE and Ukraine signing loan agreements with the fund. When Greyhawk was contacted, the client was about to pay the first of two “administration” fees of $1m.

The Solution

On our advice the client immediately stopped the administration payment. Over the next five days we combined a variety of investigative approaches to assess the legitimacy of the fund and its directors. Discreet enquiries with sources close to the ruling families in the UAE established that the ruling family member held a very minor role and that some of his representations to our client were not true. Analysis of open sources in the UK found that another director of the fund was implicated in a VAT fraud. He was also being pursued by creditors in Switzerland. We made discreet enquiries with officials in Ukraine which found that claims regarding a previous loan deal in that country were also untrue.

The Result

Our investigation left no doubt that the fund was a fraud and that its representatives would disappear as soon as it received the $2m “administration” fees. Our client immediately withdrew from the transaction.