Due Diligence in the news

Due diligence is in the news again over the government’s failure to properly vet a candidate for appointment. It was revealed the new Human Rights Commissioner posted some controversial material on social media under an alias that may not have been checked in the vetting process. There is debate about how bad the posts were and confusion about who this information was provided to. Regardless, the vetting process has caused some embarrassment to the government and reputational damage to the individual.

This episode reminded me of the Julie Payette appointment debacle, which I previously covered in a blog post on the value of Pre-employment due diligence.

For those who are considering background checks or due diligence or are responsible for vetting employment candidates, it’s important to consider what your concerns are so the diligence can match the risk. In the case of the Governor General, given the role, there should have been questions asked about her ability to work with others and her temperament, which would have led to inquiries with her previous employer that seemed to have been missed. In the case of the Human Rights Commissioner, they would likely want to know if he had expressed any public views that would have offended or be problematic to the communities he would be asked to serve as a human rights chief.

Due diligence is not a witch hunt or blanket exercise. When I applied to CSIS, I went through a background check for liabilities pertaining to my reliability and loyalty. Were there things I could be blackmailed for that would cause me to betray my country?

What are your risks for partners, employees, tenants, and loan applicants?

• Individuals working in financial services may warrant checks on their personal finances. Through a bankruptcy, lien, or credit check, you could see the state of their finances to ensure there were no financial pressures which would be red flags.
• Business partnerships or tenants may warrant checks for litigation to ensure that past relationships have not devolved into expensive legal battles.
• New Hires may warrant social media checks to ensure that there are no posts that would offend clients and speak to the potential judgement of individuals who will be associated with your company.

Past behaviour is often a clear indication of future performance. Due diligence is the exercise of gathering all relevant information to make risk-informed decisions. Pre-employment background checks, due diligence, and proper vetting can help better understand the potential risks of entering into a financial, business, or personal relationship to avoid financial, liability, and reputational risks. A little checking upfront can avoid protracted issues, headlines, and headaches down the road.