How Much Does it Cost And What is The Advantage to Conduct Asset Searches & Investigations in Brazil?

“What makes it possible for the wise ruler an smart military commander to win an obtain extraordinary achievements is the previous information”.

Sun Tzu in The Art of War

There is no doubt that a legal proceeding generates costs that are related to the company's administrative structure like salaries, rents and taxes.

Nevertheless hiring an expert debt collection attorney - therefore, more expensive - and forensic accountants and investigators indicated by him is an investment!

Investment is the acquisition of goods and services that adds value to the organization to make a profit.

You don't have to hire the best professional, but you trust him because you know your chances of success will increase, so the price paid higher is an investment.

This investment will either help in credit recovery or will avoid unnecessary expenses.

If you do not like to risk and prefer to hire the best lawyers, you must have noticed that they do nothing improvised or in an amateur way: They require hiring of other professionals for matters they do not have technical expertise.

One of them is the service of Intelligence of assets searches in the debts collection lawsuits.

Intelligence Services & Investigation increases the cost of a judicial process, but besides the Intelligence Report's intrinsic value, it creates enormous Competitive Advantage.

In the case of corporate disputes, by far is the one that generates more costs of litigation support due to the several stages of the Intelligence & Investigation service, but the consultant shareholder will have an advantage over the opponent. A partner with strategic information always takes advantage over the opponent.

In the case of litigation for debt collection and recovery, investment in assets searches and investigations of "laundering" or concealment of assets, rights and values are lower. However it is almost a requirement, under the penalty of creditor not to even recover the lawyer's fees, he will have an advantage over both the debtor and the other creditors.

Creditor who knows where the goods were "laundered" or hidden receives before others.

Continue with us and we'll tell you how much it costs to invest in Intelligence & Investigation and what is the Competitive Advantage, saving time and money.

Price - How much does an Intelligence service cost

First, it is important to highlight that we are dealing with an Intelligence service performed by highly qualified professionals for complex cases.

It has nothing to do with the credit Intelligence software that delivers automatic reports with public data bases information that anyone can have access to. The Intelligence service we are talking about does not apply to the retail business, non-durable consumer goods trade, or non-specialized technical services. For this high-volume but low-value business demand, companies rely on Experian, Equifax, etc.

We are talking about strategic information that very few people have access to.

This Intelligence service, in which we will reveal the price (average), is the one developed for complex cases or of high economic value. It is the Intelligence service for credit recovery and that demands investigation of sophisticated financial crimes such as tax evasion, "money-laundering" or concealment of assets, rights and values, embezzlement, etc.

The search of assets is the main scope of the Intelligence service, because money is almost always the reason for the problem and where everything ends ("follow de money").

We talked about that in our article Intelligence - Asset Searches & Investigations In Brazil Mission: Impossible

Now let's go to the Price!

A good Intelligence service for asset searches and credit recovery, carried out by a reputable Intelligence service company, costs, an average of R$ 1.2 thousand Man-hour or R$17 thousand per person or organization investigated or approximately 1.5% the value of debt.

You can request a price quote from Montax HERE.

In addition to the political (retaliatory) risks, Intelligence companies also assess the updated debt amount to deliver budgets, that is necessary because locating R$1 million in assets is easier than finding R$10 million in laundered or hidden financial assets.

In 2005, Kroll Associate UK Limited (UK) charged up to £425/hour (director) for Intelligence services of credit recovery in the MG Rover Group Limited Case, which currently amounts to R$ 1,900.00 Man-Hour.

In 2015, according to contract nº 2015/072.0 of administrative process 112.368/15 published in the Official Gazette of April 17th of 2015, the same company charged more than R$1 million of the national Congress only for the "First Stage" of 2 months of asset searches diverted in the Petrolão Case or Operation Car Wash. The Chamber of Deputies has classified the contract as "confidential". The deal was made at the request of its then president, Eduardo Cunha (PMDB), arrested for more than 1 year precisely by the Operation Car Wash.

If we consider the price charged to UK creditors in 2005, R$1,900 an hour, and the time devoted to the national Congress in 2015, they accounted for just over 621 of director hours ... Practically 310.5 hours per month ... In thesis, Intelligence service provided by 2 directors for 2 months ...

Although the contract with Kroll Associate UK Limited costing almost R $ 1.2 million for "research and tracking of financial assets" at Petrobras' CPI (Corruption Perceptions Index), for only two months, and the fact that its contractor Eduardo Cunha, then president of the House of Representatives in Brazil, being in jail for more than 1 year, both contract and the UK Kroll report remain a secret.
(Source: Federal Official Journal of April 17 of 2015, Seção 3, fl. 197)

But of course not all companies charge so expensive, especially when dealing with private companies.

Human sources have revealed that the "big four" EY, which in recent years has gained a market for intelligence services in asset searches, charges between US$ 100 and US$ 600 per hour...

The collection by person or organization is not convenient in Brazil because there is a lot of fraud of CPF (individual registration number) and CNPJ (corporate registration number). Some people have more than one CPF - Montax's record is the discovery of 7 CPFs from the same natural person Actor - and many business owners maintain economic groups with 12, 18 and up to 27 companies/CNPJs.

The holding company may be hidden under several layers ... And the debtor's assets may be camouflaged under his name, but with another CPF ...

The hourly charge is the fairer way, despite the resistance of the Latin people to this form of payment. They prefer to pay for the "labor" or for the result achieved.

You can request a price quote from Montax HERE.

Charging commission or success rate is not an option, the price would be too high to compensate the risk and not always the located assets are useful to the the lawyer's strategy.

A good Intelligence service has at the minimum 60 hours, at least for a First Stage of investigation and price compatible with the economic value of the subject.

Continue with us and we will demonstrate why it is worth hiring Intelligence service.

Competitive Advantage – It is worth to hire Intelligence service

Time is money.

The main competitive advantage of hiring Intelligence service is time-saving.

This is even truer when hiring lawyers and legal services who charge either by hour or monthly to monitor a legal case.

Another benefit of hiring Intelligence service is time and cost savings with the maintenance of court proceedings.

Intelligence service reduces time of execution proceedings thus reducing maintenance a lawsuit which is not inexpensive.

Let's see how much time and money we spend and how much we can save with Intelligence.

Time

According to the National Council of Justice (CNJ), in item 3.6 Average Time to conduct legal proceedings in the report Justice in Numbers (2016), the execution phase is the one that most increases the time of conducting legal cases and in State of Justice lasts almost 9 years (!).

Execution is the stage of the judicial process in which the plaintiff's right is no longer discussed, but how the defendant will pay the debt. It is basically the final phase in which assets are searched for judicial auction attachment. It lasts almost 9 years in Brazil because most of the creditors do not invest in Intelligence service in asset searches.

(Read the article Intelligence - Asset Searches & Investigations In Brazil Mission: Impossible On the state's bureaucracy)

The reason for the delay in judicial proceedings is the struggle and difficulty of creditor and justice members to find the debtor's assets.

The violation of bank, tax and vehicle secrecy through BACEN-Jud, INFO-Jud and RENA-Jud systems generally does not solve the problem because the debtor empties companies or transfers the assets to name/CPF of "figureheads ".

Intelligence service for asset searches is the solution to the delay in the execution of legal proceedings precisely because it concentrates efforts on what is important at this phase: Finding seizable assets.

Reduction of legal costs

Hiring Intelligence services lowers primarily the expenses with attorneys.

In Pinheiro Neto Advogados law firm in the year 2000, for example, "the average hour of members would cost US$ 180, and the hour of a partner could reach up to US$ 350", equivalent to R$ 1.2 thousand.

For a millionaire credit recovery, it is wise to hire an attorney and asset investigator.

Hiring intelligence service is no longer an expense but an investment.

You can request a price quote from Montax HERE.

Haven't seen any advantage yet? Let's use a chart to demonstrate Competitive Advantage!

You already know that a legal proceeding in the execution phase (collection) takes 9 years and a good asset research service costs approximately R$ 1.2 thousand per hour.

Now let's compare the most common Intelligence services and prices charged by the market and especially why it can be a huge plus to hire Intelligence service. Let's see:

Intelligence Service	Economic Value	Man-hours	*Price*	*Competitive Advantage*
Asset Searches & Investigation	Debt Value	60 Mh	US$ 32,000	Time-saving Approximately 2/3 of average deadline of 8,9 years (CNJ). Money-saving Approximately 2/3 of the attorney's fees to follow up legal process or if lawyer only charges with success fees, saving part of the office maintenance costs in the development and monitoring of the lawsuit.
Corporate disputes Corporate fraud investigations Conflict of interest	Stock price	60 Mh	US$ 32,000	Money-saving approximately 50% of shareholders' meeting expenses, accounting reports, etc. In case of internal fraud or conflict of interest, the economy is equal to the amount diverted or overpriced.
Due Diligence	Stock price	60 Mh	US$ 32,000	Money-saving Economy of amount equal to the value of companies or their actions, because Buyer avoids business or investment with serious deficiencies hidden by Seller.
Background checks	3 salaries	6 Mh	US$ 3,200	Time-saving Equal to the term of the worst employees, which we estimate in 3 months of employment and wages. Money-saving Amount equal to the average of wages and labor charges paid to the worst employees of the company or of amount equal to the average of losses with internal frauds.
Note Operational expenses with taxes rates such as Notary´s certificates, Commercial Boards, etc. and corresponding analysts and human Intelligence sources are around 7% (seven percent) of the total man-hours (Mh) hired.

As you may notice, a specific Intelligence service of assets searches in case of credit recovery of more than R$ 10 million will cost approximately 1% of the debt. Therefore, the higher the value to be recovered the more advantageous and economical will be the contracting of Intelligence & Investigations service.

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The rule is similar in cases of corporate disputes, corporate fraud investigations and conflict of interest. The higher the company's market value or its shares or the estimated value of losses with fraud, greater are the advantages of contracting Intelligence & Corporate investigations service. Internal frauds require search of assets and investigation because the abrupt and unexplained patrimonial development of a partner or director is usually related to fraud and corruption and because the victim corporation needs to know where the money is to recover it.

Investigative Due Diligence or prior auditing is a process of collecting information about debts, potential damages to the market and environment and other vulnerabilities of a company for sale and that its Sellers wish to conceal. The smart Buyer wants to know everything not just what's in the books and balance sheets. Forensic accountant usually works jointly with the professional of Intelligence & Investigations of frauds in such cases. Investigative due diligence is highly recommended even in the acquisition of high value real estate.

Background checks are not very common in Brazil. Jobs are scarce and usually conquered by indication and we Latins do not have the culture to investigate previously. "Pagamos para ver", en expression in Brazil that means "We sit and wait to see what's coming next..." This explains why justice is overflowing with lawsuits. But checking criminal records, social behavior and previous civil and labor litigations and confirming professional experience listed in the resumé helps in the decision of hiring a candidate for a job vacancy. Montax already discovered "law interns" who were not even enrolled in a university and professionals who hid their previous employment because they had been fired for fraud.

Experience has shown that managers and lawyers who do not give up on hiring Intelligence services are those with the most strategic, comprehensive and long-term vision, they see victory ahead and do whatever it takes to achieve it.

ABOUT THE AUTHOR

Marcelo de Montalvão is director of Montax Intelligence, a company that assists legal directors in investigative due diligences, asset search and corporate investigations.

Author of the book "Intelligence & Industry - Corporate´s Espionage and Counterespionage" (free translation) and several articles on Military Intelligence, Business Intelligence, Compliance and Corporate Security.

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