How can a business owner avoid becoming a victim of raiders?

Thu 11th Jan, 2024

Any profitable business can become a target for seizure by raiders. Using a variety of tactics, scammers can come to you and try to take away your company. The very concept of "raider" itself is synonymous with the more familiar term, "unfriendly takeover," and is actually a more severe and outright illegal variant. Raider attacks are actively spreading around the world as a way for scammers to make money. Attempts to "seize" property have been documented, especially in Latin American countries. This article looks at examples of raider attacks and ways to avoid them.


Who can become a raider?

A raider can be your business partner, a trusted top manager, the head of a regional branch, or a businessman-competitor. This is especially true for people you trust and who know the specifics of the business from the inside out. The danger can be external - from market participants, and internal - from your employees.


What are the most common methods of raiders?

These include, inter alia, the following:

- Purchase of shares from minority holders to obtain blocking shareholding

- Additional issue to "blur" the share of partners

- Bankruptcy (fictitious and real)

- Re-privatization

- Force capture

- Fake documents.


Examples of raider seizures

1. Nationalization of the Colquiri mining company in Bolivia

The role of raider can be played by national governments. This is clearly stated by the US State Department, urging companies to consider this factor as a risk. For example, the Bolivian authorities nationalized the Colquiri mining company, a subsidiary of the well known Swiss company Glencore. This decision was taken after meetings and consultations with representatives of the Bolivian mining trade unions. The nationalization of Colquiri is the third such case involving enterprises that are associated with Glencore, one of the world's largest suppliers of raw materials and rare earth materials. The reason for the nationalization is the president's words that resources should belong to the people and be controlled by the state.

2. Seizure of 4bill international payment system regional office.

Here is a relatively new case, which occurred at the end of 2023. Raiders can be employees of the company. According to the Ukrainian media, D. Rukin, the regional manager of the company, and his associates alledgedly began stealing the company's working capital, in some cases in collusion with the managers of merchants. The stolen funds were transferred to their cards and those of their immediate relatives. This resulted in actual seizure of the 4bill regional branch. Now they are alledgedly trying to operate under the LaFinteca brand, setting up a number of companies in several countries. They have succeeded in establishing four companies to which criminal funds were transferred: Victo Postanova Sociedad Limitada in Spain, Softintegra Holding Limitada and La Finteca Instituicao de Pagamento LTDA in Brazil and Pagos Nacionales S.A.C in Argentina. The Betterbro trademark, which belongs to 4bill, was registered by Rukin in Brazil and Peru for his Softintegra and tried to work in those countries under the brand of his former employers. The owners of 4bill managed to identify the attack in time. The Ukrainian police are currently investigating Rukin's actions.

3. Attack on Kazakh plant Vita Industry

Companies' debts to banks may be used for attacks. The raider attack on the Vita Industry plant was announced by Petr Potapov, its founder and JSC VITA shareholder. He accused the MS LLP private company and one of the Kazakh banks of the raid. According to Potapov, after his company was declared bankrupt, the bank - the main collateral holder - brought a new tenant, MS LLP, to the plant. After that, the latter stopped paying rent and began to promote Potapov's dismissal from the post of director of Vita Industry. At the same time, the businessman tried to get Vita Industry rehabilitated under the Bankruptcy Act, but met with resistance. As a result, the court decided to rehabilitate Vita Industry, and Potapov returned to his post.


How to protect yourself from raiding?

You need to start with protecting corporate information by clearly distinguishing employee access to data, creating archives, tracking information registration information about the enterprise, and court registers. You should prepare response protocols for company employees in case of attempted seizure, including appeals to law enforcement agencies, courts, registration registers, mass media, and social networks. Widespread publicity of raider seizure may allow you to protect the rights of your business.

Other actions are also possible. These include supplementing the charter of the enterprise with the so-called anti-raider provisions, cross-ownership of shares of the company between the parent company and the subsidiary company, storage of corporate documents of the company in a protected place, inaccessible to third parties, creation and storage of the "alarm package" in a safe place, outside the office of the company. The latter contains a set of documents that allows in case of the company's raider seizure to carry out necessary legal countermeasures and minimize losses.

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