The spectre of Libya as an attractive market opportunity for foreign investment in the aftermath of regime change does raise difficulties for verifying the sort of information and procedures necessary to protect investors from FCPA and Bribery Act infringements; indeed, to protect them from losing money and reputation.

Post-conflict countries, examples in the last decade also include Afghanistan, Iraq, South Sudan, have obvious issues affecting the business operating environment including stability, security, basic infrastructure and transportation.  The less obvious issues include a lack of public information, the absence of corporate governance and the difficulty of authentication - primarily of people’s backgrounds, their business activities, reputations and associations. Whilst larger companies may have the capacity to handle these issues due to better resources to place people on the ground,  they will still require third party expertise and assistance to complete the due diligence process. Some NGOs may gather a lot of information but often it is not specific or objective enough for foreign investors.

A foreign investor needs to authenticate the same two fundamental things as in other markets: namely people and the investment opportunity. However, the normal tools of due diligence require enhancing in post-conflict emerging markets, otherwise the information is meagre at best and inaccurate at worst. This enhancement comes from utilising human sources; and to make them credible there must corroboration. This must come from using more than one source and not from the same tribe, business background, political affiliation or extended family. This is challenging. The solution lies in a layering of sources managed by someone with knowledge of the local situation in the country; it requires knowing how to extrapolate information and how to identify what questions to ask of each different source.

Once the country has experienced a few years of transition and foreign investment forays, as in the case of Iraq, then the process of due diligence begins to become easier; people are more willing to talk: the one- party or police, military state mentality has been diluted, enabling people to become more individualistic and in so doing they leave a ‘trail’ for the could-be due diligence gatherers. However, the full protection for foreign investors may still be absent when, as in Iraq’s case today, the country is not a signatory to the New York Arbitration Convention which is one of the key instruments in international arbitration. The New York Convention applies to the recognition and enforcement of foreign arbitral awards and the referral by a court to arbitration. Without this comfort the foreign investor remains exposed, a hazard that even enhanced due diligence cannot mitigate.