Royal Dutch Shell Group .com Rotating Header Image

The Times: Sleuths step out of the dustbins and into the limelight

By Liz Chong
Companies may not admit using them, but private investigators have gained acceptance.
THEIR clients include governments, leading investment banks, hedge funds, private equity houses and FTSE 100 companies, but few would admit that they have ever hired corporate detectives, let alone met any.
It would be too embarrassing to reveal that a company had enlisted the help of a private investigator to dig up the dirt on an opponent or client, or disclose that they had been duped by an employee or partner.
None want to suffer similar humiliation to that heaped on Procter & Gamble, forced to pay a $10 million out of court settlement to Unilever in 2001 after admitting that it had spied on its rival. The investigation involved rifling through Unilever’s dustbins in Chicago.
And yet business investigation and intelligence is on the rise, driven by an array of legislation introduced by the US Congress in an attempt to clean up corporate America. The laws impose heavy duties on directors, accountants and lawyers. Directors, perhaps not surprisingly now that they are personally liable for any financial scandals, want to avoid falling foul of prosecutors, who have zealously pursued white-collar crime in recent years, with the open backing of the Bush Administration.
Bill Waite, chief executive of the Risk Advisory Group, an “investigation and intelligence consultancy”, identified the regulatory burden as “the biggest substantive driver for growth in business intelligence”.
The decision by the US Justuce Department to prosecute the lawyer James Giffen under the Foreign Corrupt Practices Act has also made companies increasingly nervous about the background of prospective partners. Giffen was accused of funnelling $60 million in bribes to the President of Kazakhstan on behalf of several oil majors, including Mobil Oil, Shell and Chevron.
Although the legislation dates from 1977, American authorities were previously slow to pursue any companies or individual Americans who had broken anti-bribery laws.
The plethora of bribery and corruption legislation has made it common practice for investors to hire investigators to look at the hedge funds they may invest in, or for private banks to hire companies that examine the background of a new client from Eastern Europe.
The end of the Cold War has also proved a catalyst for the growth of corporate investigations, as companies expand into new markets, including Russia. Western companies that are unfamiliar with the business culture in Eastern Europe and Russia have nowhere to turn for help but to companies such as Kroll and Control Risks.
Charles Hecker, head of the Russia practice at Control Risks, says: “We are in an environment where investors are being pulled further and further beyond their comfort zones of traditional markets.”
He cited Russia and its lack of transparency. A company looking to enter a joint venture in Russia would be well advised to investigate the political links and background of its partner.
Increasingly aggressive business tactics make it standard practice for private equity houses to use investigators to examine the curriculum vitae of the chief executive of a potential target.
Similarly, investment banks advising well-known businessmen on mergers and acquisitions have been known to conduct due diligence on their past by hiring corporate sleuths.
Lawyers are also a steady stream of revenue for the industry. Gary Miller, head of fraud and investigations at Mishcon de Reya, the law firm, frequently hires GPW, Kroll and their competitors to investigate how a fraud was perpetrated, and trace stolen assets.
Miller has spent the past 15 years building up a database of investigators and has about 400 companies on his list. He takes a pragmatic view of the industry and its techniques: “There is lawful bugging and there is unlawful bugging. You can stay within the constraints of the law if you tap or monitor telephone calls in the office. Equally, dustbins can be quite good. They are very useful.”

MI5 and MI6 discover new market for spies like us

By Michael Evans, Defence Editor
HOW vulnerable are Britain’s secret intelligence agencies to the lucrative alternative job offers now being made by private security companies? Spies with foreign travel experience and analysis skills are in big demand in the private sector — and the salaries on offer can be tempting for Crown servants earning relatively low pay.
There is no evidence of a serious exodus of intelligence officers from MI6 and MI5, but in recent years the private security company business has proliferated to such an extent that the secret agencies have lost some of their key staff.
One intelligence official said: “There’s no question that these companies are now providing an attractive alternative for perhaps the more adventurous and entrepreneurial members of the agencies, and they can get double the salary.”
In the same way that the SAS regiment has been looked on as a potential rich source for security company headhunters, MI6 and MI5 have been viewed in the same light. However, to judge by the increasingly successful recruiting campaigns by the two agencies, there are still enough men and women who prefer to serve their country at a lower salary — and a guaranteed pension.
Nevertheless, there is a market for ex-spies. Although television programmes tend to spice up the lives of the average MI6 or MI5 officer, giving the impression of a secret world unaccountable either to the law or to Parliament, the reality is far more mundane, and more bureaucratic. Both these agencies have to account for everything that they do, and that means form-filling. MI6 also works according to requirement guidelines set by Cabinet Office gurus, and any planned operation that might in any way cause political problems for the Government has to be approved by the Foreign Secretary.
So, for the more maverick- inclined spy, the controls and bureaucracy of the agencies might seem unappealing after a period in either Thames House (MI5) or Vauxhall Cross (MI6); and this is where the private security companies can benefit.
Less bureaucracy and more money are potentially attractive options for someone who enjoys the secret world but hankers after a more free- spirited environment.
A number of private security companies now have former MI5 and MI6 officers on their staff. Indeed, some companies have been set up by ex-spies and have retained links to their former government employers.

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Comments are closed.