Don’t be Sloppy with Metadata or You’ll Get This

Kroll’s sleuths are more Clouseau than Columbo

Inspector Clouseau is alive and well, and he works for Kroll Associates, the corporate spies who are supposed to specialise in finding, and keeping, company secrets.

…in fact, it is so boring that after downloading it I took to reading the ‘metadata’ concealed with the electronic document that tells you who wrote the report, why and when.The results were considerably more interesting than you might imagine. The report’s ‘properties’ field listed three Texas-based oil and gas exploration companies and the names of seven men – none of which has anything to do with the North Carolina Highway Patrol. What is more, the subject line mentioned the term ‘due diligence investigation’, which is corporatespeak for the type of inquiry often carried out by firms like Kroll when a company is considering a takeover.

Inter-Corporate Onwership Searching III

The Inter-Corporate Ownership data produced by Statistics Canada contains information on the structures of Canadian enterprises. It provides the names of all holding and held companies (both domestic and foreign) in Canada and their respective ownership percentages.

The information is collected by Statistics Canada under the Corporations and Labour Unions Returns Act (CALURA) and is supplemented with information from international publications. In 1998 the act was amended to remove the labour unions component (Part II), leaving Part I of the Act unchanged. The revised Act, named the Corporations Returns Act, is equivalent to CALURA part I.

All the reporting companies must have gross revenues of at least 15 million dollars or assets exceeding 10 million dollars.

The updated data is reported quarterly. This data is the most accurate, timely, and complete data on inter-corporate ownership in Canada. It also provides detailed information of multi-national enterprises that have some component in Canada.

Inter-Corporate Ownership Searching II

Corporate Affiliations

The Corporate Affiliations database appears on LexisNexis and Dialog. It can also be purchased as directories and on CD. According to the Dialog Bluesheet, it covers about 184,000 U.S. and non-U.S. companies. This includes private and public companies, both parents and their subsidiaries and major divisions. All major U.S. domestic and international stock exchange listed companies are included. U.S. privately held companies must have reported annual sales in excess of $10 million and foreign privately held companies must have reported annual sales in excess of $50 million to be included in the database. Each record includes the executive names, director names, corporate family hierarchy. Net worth, total assets, and total liabilities sometimes appear in the record.

I have never found this resource particularly useful because it has a high threshold for inclusion of companies. It is also US-centric. It shines for researching large enterprises with a large component in the U.S.A..

Inter-Corporate Ownership Searching I

Finding how your subject company fits into a large enterprise structure may turn into an avocation with some companies, but I’ll tell you how to get started.

Begin by understanding the terminology, then in the case of Canada, realize that you will have difficulty recognising interlocking boards as you may not search corporate filings by director name. This leaves you with the immediate subject company as your starting point.

Typically, I start with Dun & Bradstreet Canadian Market Identifiers (DMI). The advantages of the DMI databases (there are several DMI databases) are the number of companies in the database (over 1.2 million), and no sales or asset threshold for inclusion in the database.

The most useful fields in this database are the Dun’s Numbers for the company and its Parent and Ultimate Domestic Parent. This identifies three levels of the overall enterprise to explore in one record. You will have the information on the subject company, and further searches will identify its immediate parent and the ultimate domestic parent.

I then search the D&B Who Owns Whom database for the Ultimate Domestic Parent to identify the foreign parent if one exists. If I find an Ultimate Global Parent, then I determine what my record cost will be by listing the companies in the family tree. Usually, I end up paying the lowest amount as there will be 25 or fewer companies in the family tree. I have never had to pay the full record cost because I have never come across an enterprise family with over 200 member companies.

Virtual Office Scams

Regulators: ‘Fund Manager’ Was a Fraud
By Matthew Goldstein, Thursday May 1, 01:28 PM

[Robert J. ] Sucarato and other potential scam artists are using so-called virtual offices [BusinessWeek, 3/27/08] to make their operations appear larger and more established than they really are. A virtual office is a more elaborate version of an old-fashioned post office box, in which tenants — for as little as $100 a month — get access to a telephone answering service, a reception area, and conference rooms for meetings, along with a mailing address. Sucarato used a virtual office on Wall Street in New York and in Chicago to allegedly induce investors into giving him money.

This is a classic example of poor due diligence by investors. We specifically search addresses, telephone numbers, and fax numbers to help identify this type of problem. If what I find is the least bit suspicious, then I call the neighbouring businesses and the building management to get more details about the type of office the subject company maintains.

I once found a fax number used by 47 different businesses and 18 businesses using the same suite number. You have to ask if such a situation is appropriate for the type of business you think you are dealing with.