A mid-sized infrastructure investment in Peru looked promising on paper: underdeveloped territory with growth potential, a willing local partner, and a sector aligned with regional development priorities. The numbers worked. The opportunity seemed sound. But something felt off.
The client's internal risk team had flagged elevated protest activity and supply chain disruptions, but local partners dismissed these as "manageable" background noise typical of emerging markets. Meanwhile, sparse news coverage referenced recurring transit strikes, allegations of corruption, and whispers of gang-style extortion targeting contractors in similar projects nearby.
Before committing millions in capital and deploying staff into an uncertain environment, the client needed more than reassurance. They needed ground truth. They turned to Pholus for an environmental due diligence review—not the kind that checks regulatory boxes, but the kind that answers a single critical question: Is this survivable?
What we uncovered didn't just save the investment. It may have saved lives.
Investment decisions in politically sensitive, high-crime, or governance-challenged regions where surface-level assessments don't capture the operational reality your team will face once capital is committed and staff are on the ground. You need someone who can distinguish between manageable friction and existential risk.
Pressure from local partners to move quickly despite red flags, conflicting reports, or gut instincts that something doesn't add up. You're being told concerns are overblown or typical of the region, but you need independent validation before exposing your organization, your people, or your reputation.
Uncertainty about extortion risk, labor vulnerability, or criminal exposure in regions where informal power structures, protection rackets, or politically motivated disruptions target foreign-backed projects. The threats aren't always visible in official reports, and you need someone who knows how to surface them before deployment.
The need to assess not just what's possible, but what's sustainable in fragile operating environments where initial success can quickly devolve into security costs, staff turnover, reputational damage, or forced withdrawal. You're evaluating whether an opportunity is worth the hidden long-term exposure.
Situations where declining an investment could trigger backlash, retaliation, or damaged relationships with local partners if not handled carefully. You need to exit strategically without burning bridges, triggering public controversy, or signaling distrust in ways that create new problems.
Pholus conducted a layered due diligence review focused not on hypothetical or academic risks, but real-world operational feasibility. Our approach combined on-the-ground intelligence with open-source data analysis and stakeholder reputation mapping.
We began by mapping the specific sub-regions where operations would take place, using historical data on transit strikes, protest actions, theft, vandalism, and intimidation affecting construction crews and logistics firms over the last 18 months. This wasn't just about crime. It was about contested territory where economic projects frequently become leverage points for political actors, informal syndicates, or community demands that can halt operations overnight.
Next, we conducted a reputation scan on the client's proposed local partners and contractors. While none had criminal records, multiple patterns emerged: previous affiliations with firms that had withdrawn from nearby projects under unclear circumstances, known ties to local officials with documented favoritism and fee-for-access behavior, and unusual labor hiring patterns involving short-term, undocumented workers vulnerable to coercion. This suggested that even if the project itself was clean, the ecosystem was not and would expose the client to elevated risk from day one.
Drawing from public records and anonymized testimony, we identified several recent cases of local extortion schemes targeting mid-tier construction and logistics workers in the area. These schemes included demands for "protection payments" made directly to subcontractors, threats to family members of field staff to extract operational delays or sabotage, and manipulation of transit blockades to extract informal concessions from project managers. In each case, the result was the same: increased security costs, reputational damage, and near-immediate exit by foreign partners.
We consolidated our findings into a concise but high-confidence briefing with a clear recommendation: do not proceed. We emphasized that while some elements could be mitigated with careful planning and additional budget, the fundamental operating environment remained unstable. The extortion risk was not just financial—it was moral, reputational, and legal. We advised the client to decline the investment opportunity, avoid public reasoning that might trigger local backlash or retaliation, and reframe their withdrawal as a result of broader portfolio reprioritization rather than a vote of no confidence in local partners.
This case study includes the complete assessment framework we used to evaluate operational risk in the target environment, how we identified concerning patterns in stakeholder networks and local security conditions before capital deployment, and the communication strategy that enabled a clean withdrawal without triggering friction, reputational damage, or market complications.
If you're evaluating an investment in a politically sensitive, high-crime, or governance-challenged region and need independent validation before committing capital, we can help. Pholus specializes in ground-truth due diligence that goes beyond surface assessments to uncover the operational realities your team will face once deployed.
Whether you're receiving pressure from local partners to move quickly despite red flags, navigating uncertainty about extortion risk or criminal exposure, or need to assess whether an opportunity is survivable long-term, we provide the clarity you need to make informed decisions before the first dollar is spent.