Royal Dutch Shell Group .com Rotating Header Image

FT article mentions Royal Dutch Shell spy firm Hakluyt

Fear the secret agent less than the accountant

Extracts from an article by John Gapper

Intelligence has its uses in business, if filtered and edited for plausibility and reliability. Even if information cannot be published or produced in court, it can help a board of directors decide whether to buy a company or enter partnership with an entrepreneur in Russia and other opaque markets.

This is the speciality of consultants such as Hakluyt in London and Veracity in New York – the market Orbis has tried to enter. Hakluyt was founded 20 years ago by former UK intelligence officers, although it now employs others including former management consultants and financial journalists.

Hakluyt has a connection with Rolls-Royce: Sir John Rose, Rolls’ former chief executive, chairs its parent company and Sir Ralph Robins, his predecessor at Rolls, used to sit on Hakluyt’s advisory board. Hakluyt is also reported to have done intelligence work for Rolls-Royce, although it would not confirm this to me.

In general, obtaining information from Hakluyt is no easier than squeezing blood from a stone unless you pay it a lot of money, but here is what I pieced together from others. For about £100,000, it will prepare what it calls a “well sourced and fully assessed” report of 40 pages or so. This advises on, for example, whether to “proceed with caution” on a tricky deal, or forget it.

It operates like an intelligence agency: by picking the brains of a network of informants in whichever unreliable country the client is interested. They might be former spies and diplomats or business people, and they will be fairly senior. It filters the details, cross-checks against other data and research and produces an elegant essay.

Tedious work

This has an alluring mystique – it is a second career that any spy or lawyer might like – but it is a niche. Holdingham, Hakluyt’s parent, employed 66 people and had revenues of £45 million in 2015: there are only so many buyers of highly expensive intelligence.

Much of what is called business intelligence is really due diligence: the tedious work of trawling through records and databases to discover whether it is legal to do business with someone. Money laundering laws such as the US Patriot Act in 2001 have fostered an entire industry of fact checkers.

Many consultants, including Control Risks, the industry’s pioneer Kroll, and the big accounting firms do such work. There is a lot of revenue but the price per job is lower – usually less than £5,000 per transaction – and no one becomes wealthy by doing it.

Higher profits lie not in intelligence but evidence – digging out documents or statements that can be produced in court in commercial disputes between companies or investors. 

A big slice of Kroll’s revenues now comes from investigation rather than transactions. It is more intricate and can often draw in teams of lawyers and forensic accountants to produce evidence of malfeasance. There are millions at stake and disputes last for years, so clients tend to pay well.

But it is as much a data business as a human one: hearing some compromising tales matters less than establishing an audit trail. “It is all a lot more forensic and cyber than it was,” says one risk consultant. “Human intelligence plays a smaller part.”

Goodbye to glamour, then. Corporate intelligence has matured in the same way as other financial services, with a niche for boutiques offering trusted advice at the top and a large band of analysts and number-crunchers below. It has become a more professional, quantitative, boring industry.

Financial Times

Read more: http://www.afr.com/opinion/fear-the-secret-agent-less-than-the-accountant-20170119-gtuogk#ixzz4WIBuAEli

Follow us: @FinancialReview on Twitter | financialreview on Facebook

A link to an article about the close Shell/Hakluyt association will be published here later today.

Comments are closed.

%d bloggers like this: