Red Flags on Other People’s Facebook

How an animal testing lab almost hired an animal rights activist. Thankfully, the internet never forgets and this useful circumstance led to a key finding that prevented the hiring.  

Selling pre-employment screenings to clients in Germany is quite challenging. Many companies have concerns regarding data privacy (GDPR), others do not see the value of such background checks, especially in a tight labor market where precious few qualified candidates are available. Nonetheless, the results of hiring the wrong person can be devastating. Corporate espionage, sabotage from inside, reputational damage; these are just some of the dangers that companies might run into. Although pre-employment screenings alone will never fully avert these dangers, they might at least provide indicators on security and integrity risks.

I was tasked with the following pre-employment screening last year and I would like to briefly describe the methodology that led to a key finding.

A pharmaceutical company was in the process of hiring a new laboratory assistant in the department responsible for animal testing. The final candidate agreed to a background check. I received his CV and started my research. For the sake of simplicity, I will refer to the candidate as Stefan.

Stefan did not have any notable social media presence, nor could I find him in press or media archives. Replies that I received from his former employers and his alma mater backed the claims in his CV and were full of positive appraisal. I could have stopped here, but I choose to take a closer look at Stefan’s social surroundings. While Stefan was not on Facebook, he did have an inactive profile on a German social media site called StayFriends. This site enables people to connect to former classmates. Users are categorized and linked to each other via their graduation classes.

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The picture above is not related to the case and just gives an overview of StayFriends. On the left I have chosen a school, the middle section lists each graduation class (by year) for that particular school, the right panel lists all user profiles for a specific class. Another interesting aspect of StayFriends is that most users post their birthdate and year openly, thus proving another breadcrumb to follow.

Stefan’s graduation class of 2011 had roughly 15 profiles listed, most of them with a profile picture. In some cases, classmates had married and their profiles included the maiden name as well. I was able to find most of the classmates on Facebook and started looking through their profiles using IntelTechniques to “dissect” each Facebook profile. Since Stefan was not on Facebook, I assumed the greatest chance to find him would be in pictures. I concentrated on pictures posted by his classmates from the time around the graduation (plus/minus 2 years). For this, I mainly used the following queries: “Photos By User, “Photos Of – Tagged”, “Photos Interacted” and “Post by Year”. Given enough time, I could have used other queries as well. In my case, these seemed to be the most promising.

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A profile belonging to a female classmate had multiple links to animal rights organizations such as PETA. Going through this profile, I actually found old pictures that included Stefan. Luckily, his appearance was distinct and had not changed much over the years. The pictures showed the then young Stefan and his classmate at a demonstration organized by an animal rights organization. This was exactly the type of red flag that Stefan’s current employer would certainly not be happy with.

We obviously change as we grow older and maybe Stefan changed his views on animal testing. My client discussed the issue with Stefan and it turned out that Stefan was reluctant to renounce his old stance against animal testing. Stefan was not hired and this background check truly proved to be worth its money.

Matthias Wilson / 12.04.2019

How a Corporate Takeover Went into a Tailspin within Days

When companies change ownership, key employees often get busy looking for new jobs. Some also take intellectual property with them on the way out the door. Here is how a real-world case unfolded – and how investors can prevent such calamities from happening.

The moment the investment started sputtering and stalling was the day the head engineer quit his job. His resignation letter, hand-delivered to the CEO in the morning, hit the new private equity investors of the company like a bucket of ice water. They had only recently acquired the southern German plant manufacturer for a load of cash. The engineer, a key figure in the company, had assured the new owners just the day before, again, that he would stay on in the new era.

As the news of his sudden departure reached the asset managers, they instantly realized the momentousness of his decision. But before they could even discuss how to deal with the consequences, more resignations turned up within hours. Three senior sales people and service technicians quit by lunchtime, a serious upheaval in the midsized company. According to the grapevine emerging that day, they did not believe that their future was golden under the new ownership.

The acquisition had been rather expensive in the first place. It was after all a seller’s market in the German corporate world. Potential investors from all corners of the globe – Europe, the Middle East, China, the U.S. – were lining up around the block to buy up German “hidden gems”. Midsized, globally successful, family-owned businesses.

The backdrop to this phenomenon was fast-growing private wealth, which to this day has been giving private equity investments a massive shot in the arm. Whereas PE assets under management totaled approx. $ 30 billion worldwide in 1992, they had reached $ 4,000 billion (=4 trillion) by 2015, according to the private equity marketplace Palico based in Paris. By 2020, Palico predicts the PE market will have doubled to $ 8 trillion. But the demand for attractive investment opportunities already far exceeds the supply. And thus investors are jumping at the chance to snatch up, among other things, successful German engineering companies. They are seen as solid and reliable, like the plant builder in southern Germany.

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When the Music Stopped Playing

We were hired as investigators to look into the sudden personnel departures and found that the head engineer had started a new Ltd. company in a neighboring country not far from his previous job. The financier of the new venture was a local entrepreneur with deep pockets. Meanwhile, a first wave of customers began canceling their contracts with the plant manufacturer and signed up with the brand-new competition, who were offering competitive prices for their services.

We scrutinized the laptop computers left behind by the departing staff. A breadcrumb trail of bits and bytes showed that customer lists and tens of thousands of engineering documents had miraculously left the building in recent months. Most of them in the last two weeks before the resignation wave.

Also, part of a business plan was discovered, outlining the new Ltd.’s strategic direction. The document’s time stamps suggested that its creators had lied about their intentions for quite some time.

Armed with the assembled proof, the plant manufacturer filed a criminal complaint, a likely breach of competition law, with the local prosecutor’s office. The case is now a government investigation that will probably drag on for years, outcome unknown. It is unclear, too, whether the plant manufacturer’s business will continue to flourish as it did in the past forty years. All it took was a data breach and a few disgruntled key employees to turn a rock-solid investment into a liability within a few days.

Investors beware: prepare for such scenarios. Because cases like this happen every week.

Collect background information about key personnel before the takeover, so that there are no surprises. Look into the IT situation: how well protected are the company’s ‘crown jewels’? Are there any open barn doors that may be used to squirrel away intellectual property? And finally, talk to the key personnel early in the game and keep your promises to them. They will judge you by your actions, not your words.

Sebastian Okada / 28.01.2018