An LFJ Conversation with Philippa Wilkinson, Associate Director, S-RM
Philippa Wilkinson is an Associate Director on S-RM’s Disputes & Investigations team, which is dedicated to providing investigative support to parties to contentious situations. She has experience managing asset tracing investigations, as well as litigation and arbitration support engagements, associated with complex corporate disputes. While her practice is global, Philippa specialises in matters involving Middle Eastern parties, having spent several years in the Middle East, living and working in Tunisia and the UAE. She previously worked as a journalist covering finance and infrastructure in the GCC and wider Middle East, and subsequently covering European infrastructure funds. Philippa has an MA in Near and Middle Eastern Studies from the School of African and Oriental Studies, and a BA in Modern Languages from Durham University. She is a fluent Arabic, Spanish and French speaker. Below is our LFJ Conversation with Philippa Wilkinson. What are the most significant obstacles encountered during asset recovery processes, particularly in cross-border cases? The biggest obstacle is usually the cost of recovery. If the prospect of recovery looks weak or complex at first glance, perhaps because key assets are located in jurisdictions which are not enforcement-friendly, or are held through offshore structures, often the matter is shelved because the client or litigation funder decides it is not a good use of funds. But carrying out some light touch asset tracing at this stage can give the decision-makers confidence that a judgment or award can be monetised, and encourage them to move forward with enforcement or make a funding decision. This can also help funders get comfortable on duration risk, if there are assets which are ‘low-hanging fruit’ and the team can map out a clear path to enforcement. An investigator with asset tracing expertise can provide the information the legal team needs to develop a viable, costed strategy for enforcement and recovery, either by identifying specific assets to target, understanding how and where assets are owned, or instead identifying pressure points and vulnerabilities which will be useful in settlement negotiations. S-RM is acutely aware of the client’s legal strategy. We focus our investigations on the jurisdictions where enforcement is going to be feasible, efficient and cost effective, understanding early that are no attractive assets in a certain jurisdiction, so the whole team can rework their strategy and redirect resources to more viable leads to attachable assets elsewhere. Judgment debtors often decide to dissipate their assets to avoid paying judgments or awards. Pre-action asset tracing and ongoing monitoring gives you a baseline against which to track and document asset dissipation, such as the transfer of valuable assets to proxies (who could be family members or trusted employees), the creation of offshore trusts, and other asset protection structures. If you have carried out a thorough investigation into the asset dissipation and can prove that it is likely to take or has in fact taken place, you can seek worldwide freezing orders in common law jurisdictions such as England, Hong Kong and Singapore to prevent further dissipation, and allowing enforcement against proxies. Often compiling this evidence can be challenging, and this is why you need experts, whether it is obtaining hard-to-locate records in far flung places, using source intelligence to understand the adverse party’s financial position, or developing intelligence on assets. For example, as part of an asset trace in support of a freezing order application, we were told by sources that the adverse party, a shipping company, was using nominees to set up front companies to continue operating ships despite claiming it had no assets to satisfy the award. Following up on this intelligence, we were able to obtain the incorporation documents from the Marshall Islands corporate register and transcripts from the Liberian shipping register, which, on analysis, we found contained a correspondence address linked to the adverse party. These documents supported one part of the legal team’s freezing order application. Can you discuss how effective asset tracing can reveal hidden value within a portfolio of claims? A portfolio of distressed debt often sits on the balance sheet of a bank, a fund or other entity, and sometimes they are reluctant either to write it off completely, or to invest in recovery. Asset tracing can triage which of the debts might be recoverable, and allow that recovery effort to move forward by making it more attractive for a funder to either finance or acquire. S-RM takes a commercial approach to triaging non-performing loans, focusing on identifying the viable opportunities for recovery. Based on this we can support analysis of how valuable the portfolio might be in the hands of a proactive legal and investigative team. We recently triaged a portfolio of bad commercial debts in the UAE over which the principals of failed companies had provided personal guarantees. When they couldn’t service the debt, they fled the country. We were able to quickly focus on the guarantors who had connections to jurisdictions such as the UK and the US, and owned valuable residential real estate there. Based on our extensive experience of supporting asset recovery, we then classified the debts which made up the portfolio by attractiveness for enforcement, which supported a commercial analysis of the likely return on investment. Following on from this high-level ‘triage’ asset tracing , S-RM supports more in-depth asset tracing efforts once our clients reach the enforcement stage, to ensure that the recovery is maximised by identifying assets and understanding and documenting ownership. S-RM has for many years supported the National Asset Management Agency (‘NAMA’), created by the Irish government in the wake of the 2008 real estate crisis to consolidate bad debt, with asset tracing across Europe to support and inform their negotiations with debtors and recovery efforts. Having successfully recovered nearly EUR 48 billion, NAMA is due to wind up its operations by the end of the year. We are also on the investigations panel for Ukraine’s Deposit Guarantee Fund, which has a mandate to recover funds from its portfolio of distressed assets originating from failures of Ukrainian banks. How have advancements in technology, such as blockchain analysis and digital forensics, transformed asset tracing methodologies? The biggest shift in my opinion is the increasing availability and searchability of data. Some of that is open source or public data – available on the deep or dark web or via data analysis platforms – and with the help of AI search tools we can sift and interrogate that data. In some cases that might be as straightforward as identifying leaked contact details that then lead us on to social media activity that can be a rich source of leads and contextual information about assets. We can also synthesise that data using graphing tools to map out very clearly the web presence and social media interactions of a company or individual, and surface new leads. This can be very helpful in a challenging asset trace where your subject maintains a low profile, or has learned to be discreet about their assets, whereas their associates or family members might not be so cautious. In some instances, we have been lucky enough to find and download leaked documents published by anti-corruption activists and circulated on the web. We then process them in a safe environment so any malware in the data is contained, and then making them machine searchable and translatable using AI tools. Then we are able to map corporate structures that are deliberately obscured and understand how assets are truly controlled. In one recent sovereign asset trace, this type of leaked data showed that government officials were closely involved in the day-to-day management of a state-owned energy firm, directing managers to sign certain politically important contracts in other countries, supporting our client’s argument that the state-owned entity was an alter-ego of the state. In the crypto sector, blockchain explorers play a similar role, to help you navigate and analyse the enormous amount of public data generated by cryptocurrency transactions on the blockchain. When you are working with the victims of crypto frauds and scams, this is vital to understanding the money laundering activity of the threat actors, and getting the recovery process underway. The essential input for this type of work is a wallet ID or transaction hash as a starting point (for example the victim’s original transfer) – without this there is no way to start mapping the transactions. Any investigations firm claiming to be able to identify wallet IDs without such a starting point should be challenged on their methodologies. When we have access to corporate systems, cloud accounts or devices for our investigation, for example thanks to insolvency practitioners, or court orders mandating a search of some devices, the asset recovery team draws on its skilled digital forensics investigators. As part of digital forensic investigations we can recover and analyse a wide range of digital artifacts to guide our research, and also extract large datasets for analysis. Again, with the support of AI tools that allow you to machine read and translate a huge range of documents, and help identify key documents for analysis, we can do this in a much more efficient and targeted way. What legal and regulatory challenges do practitioners face in asset recovery, and how can they be navigated effectively? From the perspective of a corporate intelligence firm, we work closely with legal teams to understand where there are obstacles in a particular jurisdiction and where is attractive for enforcement, adapting our investigation accordingly. We are also very mindful of local laws and regulations regarding how we can work, including privacy laws, regulations on surveillance, and freedom of information laws. In the US, S-RM’s team includes licensed private investigators in New York and Washington DC, and we make sure that we stay in line with regulations on our industry – the lawyers we work with need to feel confident about using our information in court. The direct challenges we face in asset tracing research often relate to shifting laws and regulations around transparency and privacy. For example, in 2021 US Congress passed the Corporate Transparency Act creating a beneficial ownership registry for US legal entities, which we initially hoped might include public access, as such registers are incredibly useful resources for asset tracing, providing documentary evidence of the beneficial ownership of assets. The implementation of the registry is currently on hold while the Supreme Court decides several cases, and there are currently no plans to allow private sector investigators to access the data. Similarly in 2018 the British Virgin Islands and Cayman Islands were forced to prepare to introduce publicly accessible registers of the beneficial ownership of companies. However, since the November 2023 European Court of Justice ruling that public access to such registers infringes privacy rights, the future of access to these registers has been in question. The UK is also planning a new Foreign Influence Registration Scheme (similar to the Foreign Agent Registration Act in the US, which can be a useful source of data around foreign states’ international commercial and lobbying activities, and how funds are channelled) which was intended to come into force in 2024 under the 2023 National Security Act. This can be helpful for developing in-depth analysis on the extent to which a state-owned entity is an alter ego of the state, by considering its participation in coordinated lobbying efforts. This has been delayed indefinitely and we are still waiting to be able to access the data. We are always monitoring for new resources and changes to the way information is accessible, to make sure we are making the most of transparency and anti-corruption laws. Why is a multidisciplinary approach crucial in asset recovery, and how does S-RM integrate various expertise areas in its investigations? At S-RM, we feel we work best when we are an integral part of the asset recovery team, in regular contact with our clients about strategy and working closely with other advisors. That allows us to target our research efforts most effectively and make sure that everything we do is supporting and advancing that strategy. There is nothing worse than investing a lot of time and hard work into following a lead on an asset, only to find that the client was already aware of it or has discounted it for strategic reasons. This can also include working with forensic accountants or insolvency practitioners who have access to internal documents of an insolvent company, and where we can support their work by investigating the recipients of funds and their connections to the company’s principals, or feed in questions for interviews with company officers. In addition, we regularly work with public relations teams, both defensively (to identify and mitigate vulnerabilities that could be exposed by the opposing party), and proactively, to provide intelligence on vulnerabilities that a skilled PR team can build a media strategy to exploit. In that scenario we are looking for pressure points that could bring the opposing party to the table for serious settlement negotiations. This can be particularly effective when an adversary is at an important inflection point with regards to attracting investment, for example states trying to attract foreign direct investment, a company planning an IPO, or a businessperson setting up a new venture or seeking advancement in their career. In all these scenarios, they will want to avoid ‘dirty laundry’ such as corruption or financial mismanagement coming to the surface at a moment when they most need to present their best image to others. We were recently carrying out an asset trace into a US businessman relating to a decade-old debt he was still refusing to settle, and found that he was developing a business partnership with investors in a new European market. This gave us an excellent opportunity to negotiate a settlement, as when the new partners were made aware of this historic dispute they were discouraged from investing. Again, the ideal dynamic when we work with other advisors is regular, open communication, so that the broader team pull together to focus on the most productive approach and make sure S-RM is providing actionable intelligence throughout. Finally, we have a network of surveillance specialists who have law enforcement or intelligence backgrounds, and can be incredibly important in asset investigations. To make the most of such a resource-intensive approach, surveillance needs to be targeted and timed with a specific outcome in mind, rather than open-ended. In the right circumstances, discreet surveillance can be vital to locate an individual to serve a freezing order, or understand the lifestyle and residence of a debtor without tipping them off. Often we need to set up surveillance at very short notice when we learn of upcoming travel or a court hearing, and having trusted, experienced individuals on the ground already is critical.
