In 2022, a UK law firm was approached by a Client wishing to acquire a coltan mining company in the DRC. The Client had already completed some preliminary research on the local mine and felt that it would be a profitable investment. The law firm was concerned that there might be hidden risks associated with this acquisition. The concerns were that the Client could be exposed to financial and reputational damages as a result of its involvement with the mining of coltan.

The UK law firm approached us to conduct a pre-transaction Due Diligence on the mining company. Our investigations team conducted a review of the DRC company’s financial, legal and operational records and conducted interviews with key stakeholders. A competitive SWOT analysis revealed other concerns which were shared with the Client.

Continuing with the investigation, we uncovered several red flags of which the Client had not been previously aware. We found that the company had a history of environmental violations which included the illegal dumping of toxic waste. The DRC mining company was also facing lawsuits from local communities because the mine had used child and slave labour in its operations.

As a result of this pre-transaction Due Diligence, the UK law firm advised their Client not to proceed with the acquisition. Although initially disappointed, the Client realised that the pre-transaction Due Diligence process had saved them from making a costly mistake.