Concession Negotiations: What to Verify About Your Counterparty First

A concession hands a private party control of a public asset for twenty or thirty years. The verification standard should match the term, not the timetable.

Concession agreements are the highest-stakes counterparty decisions most governments make. They transfer control of a port, a road, a mine, a utility or a spectrum allocation for a period measured in decades, and they are difficult and expensive to reverse. The verification work should be proportionate to that, and it should be complete before heads of terms are agreed.

Establish the corporate chain end to end

Concession bidders are typically special-purpose vehicles. That is normal, and it is also where the analysis has to start rather than stop.

Confirm the SPV in its register of incorporation: date, officers, share capital, filings.
Trace ownership upward to the ultimate beneficial owners, not just the immediate holding company.
Verify the operating parent independently, including its track record in the same sector and asset class.
Establish which entity carries the technical capability and whether it is contractually bound to the concession, or merely referenced in the bid.

A parent with genuine capability and an SPV with no contractual link to that parent is a structure that leaves the state with nothing to enforce against.

Verify financing rather than intention

Ask which institutions are providing debt and equity, and confirm with those institutions directly. Term sheets are conditional documents; treat them as evidence of a conversation, not of committed funds. Where development finance institutions or export credit agencies are named, they will normally confirm involvement on request.

Screen owners, directors and intermediaries

Run all named individuals and entities against the official sanctions sources set out in how to check if you are on a sanctions list, checking ownership and control as well as direct designation. Add enforcement and litigation history, arbitration awards involving other states, and insolvency records.

Where a principal is a politically exposed person, apply enhanced scrutiny and document the outcome. PEP status is a risk category under the FATF standard, not a disqualification.

Examine the intermediary layer specifically

Advisers, agents and facilitators introduced into a concession negotiation should be identified by name and entity, with their remuneration disclosed. Success fees payable on signature, agents whose only demonstrable asset is access to decision-makers, and payments routed through jurisdictions unrelated to the transaction are the features that appear in corruption enforcement cases across sectors.

Check the track record against the counterparties, not the brochure

Where the bidder claims comparable projects, contact the granting authority for those projects directly. Ask whether the project was completed, whether it was completed by this entity or by a differently owned affiliate, and whether disputes arose. This step takes days and it is skipped more often than any other.

Document the file to survive review

Concessions are audited, litigated and re-examined by successor administrations. Every material fact in the decision should have a cited source and a date. A verification file assembled during negotiation is inexpensive; one reconstructed under investigation is not.

Next step

Order a report on the bidder and its principals before heads of terms are agreed.