AmCham Receivables Management Workshop 11 April 2006 Warsaw

1. AmCham Receivables Management Workshop11 April 2006Warsaw Iris Paeschke Consultant Control Risks

2. What is this presentation about? Focus is not on the legal requirements and procedures. But on operational issues of debt recovery. Subject Especially when the debtor is either insolvent or resides in remote jurisdictions debt recovery becomes problematic in pure practical terms.

3. Agenda Define the problem Questions and objectives Tools in detail

4. To cope with the task: define the problem Solution Use your information resources or a consultancy to enlighten the circumstances. Flash Point You are facing a major problem: substantial losses of assets, e.g. information, goods, money, tender etc. Definition Define the problem and narrow the issue down in-house.

5. What should be done first • A first step to asset recovery is business intelligence • Collect more information on the debtor. Identifying addresses, obtaining rudimentary corporate filings gives you first data you can work with. This work can be done in-house if the creditor has installed a bad debt policy and spent time on training its team. • However, an "easy on bad debt" policy is just as severe as an "easy on corruption" or "easy on fraud" policy. Bad debts have a tendency to become endemic and thus threaten the financial health of a company.

6. Questions arise … Operational objectives: • Who is the ultimate beneficary of a company when the debtor 's company shields its assets through shell companies and off-shore entities? • Does a company still own some assets although it has filed for insolvency? • Are there indications of fraudulent behaviour? • Do law-enforcement agencies need to get involved? Tactical objectives: • Even if civil litigation against managers of debtor companies might look promising: How realistic is it that these managers do have in fact have assets to pay off the debt? • If the debtor asks for a settlement: What is his maximum ability to pay, in contrast to his maximum willingness to pay?

7. Our experience with asset tracing and asset recovery in Poland, Germany and Eastern Europe show some principle guidelines, how to cope with the practical issues of bad debt collecting: Bad debts follow similar patterns and bad debtors use similar methods of shielding their assets. Owners of insolvent companies have a tendency to shield assets prior to the default. These assets are often not very well hidden and can be identified. If there are any signs of fraud, there is almost always an opportunity to cooperate with law enforcement. This holds true even for remote places and countries. The costs of collecting have to be monitored carefully. There is no point in chasing potential claims that will never materialise. Where the money goes

8. Tools in detail Open Sources Research Searching of Files / Workshop IT Forensics Close Questioning / Interviews Special Techniques

9. Open Sources Research What information do we use? • Internet • Chat rooms • News boards • Public Registers • Press & Business Databases • Other Special Databases

10. Workshop / Internal Files It is important that all files related to the task are included into the inquiries. Internal files, such as • Personnel file • Reports of internal auditors / lawyer • Letters • Notes Special information, e.g. • Holiday / Sickness list • Itemised bill (fixed and cellular) A workshop can reveal other important information, which become useful later on. Berlin London New York Los Angeles Shanghai Mexiko City Djakarta Sydney Melbourne

11. Computer Forensics What are the targets? • Personal Computer • Server • Network What are we looking for? • Hardware • Software • User • Configuration • Internet History, server files • Emails (you have to read them all !) • Keywords / Documents • Pictures Berlin London New York Los Angeles Shanghai Djakarta Sydney Melbourne

12. Close Questioning / Interviews When most of the information are gathered a close questioning of the suspects is suggestive. Questioning should be done by external experts only. Why? • Suspects do not know us. • We are trained on questioning. • We are not involved in the day to day business. Berlin London New York Los Angeles Shanghai Djakarta Sydney Melbourne

13. Special Techniques In extraordinary circumstances we use special techniques to retrieve the information. In dependence on the issue, we have a wide range of methods we are able to use. However such methods are • Used as ultima ratio only. • According to the local jurisdiction. Berlin London New York Los Angeles Shanghai Djakarta Sydney Melbourne

14. Dos and Don‘ts Don‘ts: • Don‘t use obscure or illegal methods. • Don‘t seek for revenge. • Don‘t let you put off the problem and do not be frighten. • Don‘t wait too long. Dos: • Structurise and standardise the bad debts collection process. • Your employees should be trained on it. • The process should be initated under any circumstances. • It should be embedded into a legal process, together withthe legal department and/or lawyer • Check for fraudulent behaviour.If so: involve internal auditors or external consultants. • At the end: use your cases for preventive measures.Improve your know-your-customer-policy.

15. Contact Control Risks ul. Koszykowa 54 00-675 Warszawa T: +48-22-630-8240 F: +48-22-630-8569 www.control-risks.com Iris Paeschke Consultant Iris.Paeschke@control-risks.com Alle hier vorgestellten Ideen und Vorschläge sind geistiges Eigentum der Control Risks Deutschland GmbH und unterliegen dem Urheberrecht. Jede Vervielfältigung im Ganzen oder in Teilen sowie die Weitergabe an Dritte ist nicht gestattet. Für den Fall, daß es nicht zur Auftragsvergabe durch den Partner (Adressaten) kommt, dürfen die hier vorgestellten Ideen und Vorschläge nicht verwendet werden.