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Summer 2002

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Issue 43

The corporate ex-spook business

Corinne Souza

In its Supplement 'Corporate Security', the Financial Times (11 April 2002) provided private security companies with a five page 'advertorial'. If they are thought of as a service industry, the puff may have done the companies some favours. If they are thought of as consultancies, however, it merely reinforced the emerging superiority of specialist boutiques, some of which have an international relations bias, and those associated with the integrated communications companies which are themselves locked into the large insurers. In addition, the article's focus was exclusively Anglo-American, as if these companies have the field to themselves, when the reality is the emerging dominance of various home-grown security assessment groups that are not, for want of a better term, 'Anglo-Saxon'.

Those interviewed did not seem to have an understanding of their corporate clients' commercial environment. This is not, as the private security companies would have us believe, battling computer viruses, ensuring 'clean' money, or protecting staff and premises from terrorism etc.; because, although the stakes are high, this is actually no more than up-dated but routine corporate 'house-keeping', which in any event, parallels similar international policing activity. (1)

The corporates' real activity is, firstly, to protect their brands; and secondly to promote them in existing and new markets. Looking at these separately, 'protection' means anything that damages 'reputation': for example, if there is a suggestion that a product is faulty, or if a subsidiary is found to have supported child labour or spoiled the environment. This damages overall business activity and can undermine licence to operate. Resulting action, sometimes including regulatory and legislative action, can cost millions.

Although the personnel interviewed in the FT 'Supplement' seem unaware of it, this is the reason their clients retain huge banks of financial PRs, journalists, litigation and public affairs lobbyists and so on. More importantly, it is the single most important motivation behind what is known as corporate social responsibility.

Corporate Social Responsibility (CSR)

CSR is regarded by many as an EU joke. However, it is a reflection of the EU's wider social agenda, which is itself a response to transnational public opinion. A perceived absence of corporate social responsibility does not pay. Anything that hits profits, has to be taken seriously. The private security companies, while claiming to have 'shrugged off the last vestiges of shambling amateurism and emerged as highly professional' did not even mention CSR. This is not surprising. The ex-spooks in the industry are former government servants. They are unused to being accountable for their actions. That is why they were employed in the first place. But accountability is what CSR is all about. (2) The ex-spooks were useful when, say, the financial PRs, retained by one side or another in a mergers and acquisitions battle, wanted dirt. They were similarly useful when, say, a client's overseas subsidiary was having trouble with a local thug, and they could find a better thug, to out-thug the thug.

However, CSR has changed the rules, leaving present and former spooks behind. Reputable corporates can no longer be seen to be in bed with 'thugs', no matter how arm's length. As a result, until their governments have made them safe physically and/or reputationally, the corporates are pulling out of dangerous areas on: a) cost grounds - dealing with thugs, no matter how large the possible market beyond, comes expensive: far better the taxpayer - accepting that commerce pays tax too - pays for the clean up; b) anxieties about possible corporate manslaughter charges if employees, or those to whom work has been sub-contracted, come to grief; c) damage to corporate reputation.

In areas where it is safe to operate, corporates burn the midnight oil not with ex-spook security consultants, but with compliance directors (a real, sustainable, professional growth area) so that their companies do not trip over local laws; or, in applying them, do not break regional or supra-regional laws in the process. They do so knowing that public administration everywhere is weak, with the attendant corruption that this can imply and that they have a reputation (and therefore share-holder value) to lose if they become embroiled. As importantly, because of non-commercial pressures, such as the influence on government of non-governmental organisations (NGOs), they are also being expected to act as corporate role models, with their personnel sometimes performing an educative or altruistic function.

All of this is of far greater relevance to corporate clients than 'house-keepers', playing upon (sometimes) legitimate (and usually Anglo-Saxon) fears.

Corporate Citizenship

'Corporate citizenship' was not mentioned in the FT 'Supplement' because the only reason why some in the private security business may know something about it, is because its absence is where they make their money. As the industry counts 'business intelligence' as an area of expertise, there was something highly ironic about the industry personnel demonstrating their ignorance of CSR, and its importance to their clients, in the corporates' house journal, the Financial Times.

Corporate citizenship is the 'pinafore' that those in reputable businesses put on to keep their 'suits' clean. The problem for the private security business is that because the corporates are required by law to report on community, social, ethical, and reputation issues, they will, increasingly, expect their security consultants to wear them, too. This impacts on spook and ex-spook alike since, no matter how at arm's-length their conduct, it can effect their clients' balance sheets. The mistake the ex-spooks in the private security business have made is confusing 'kit' - such as sophisticated gadgets and technology - with 'clothing'.

Regulation

Aware that it has to do something about its reputation, the industry claims, as proof of respectability, that it is no longer invisible. In fact, like all spooks everywhere, it is being stripped of its invisibility - it is not a voluntary process - because of:

a) exposure of links to public officials and government depart-ments; b) a need to promote their companies; c) scandal, such as tax/national insurance evasion, corruption, civil rights abuses etc; d) health and safety standards; and e) farce. (3)

The 'pinafore' private security industry is offering to wear is (UK) government regulation. The motivation behind this, however, is not a desire to prove respectability but self-preservation. That is to say, ex-spooks have discovered that, although they may be regarded as 'insiders' when it suits officials, they become 'outsiders' when it does not. (4)

Not that officials and other interested parties, are silly enough to regulate. As with the similarly unregulated lobbying industry, regulation of the private security sector could lead to other unravellings, such as a journey through Lloyds of London, private banking, the Department of Social Security, the police, MI5 and so forth. 5 Therefore, no regulation. This leaves the industry scratching around trying to find other means of proving its respectability.

This matters because its clients have to protect their own reputation and cannot be seen, for example, employing those who are not 'respectable'. If they do not minimise all possible risk to their reputations, their insurers will pull the plug. That is to say, the demands of the insurance industry are the source of much of the business flowing in the direction of the various service industries, including the ex-spooks in the private security one; just as it is the insurance industry that is applying pressure on the standards their clients have to demand from their security consultants. Not that the FT interviewees mentioned the insurance industry........(6)

Commercial Environment

The private security industry is also seeking to present itself as essential political, and political risk, consultants to its clients. Really I would have thought that 'the European Union's demand for full-scale privatisation of public monopolies across the world as its price for dismantling the common agricultural policy in the new round of global trade talks',(7) would be far better handled by lawyers than ex-spooks. It is lawyers who will carry forward/fight/horse-trade WTO proposals..... It is not that ex-spooks cannot get to grip with political-commercial issues. Some can. What they cannot do is liaise with a new generation of non-spook bureaucrats and diplomats, who are, albeit slowly, replacing the old; and who are too petrified about their own careers and reputations to have anything to do with them. (8)

What else?

What else dominates some corporate agendas? Answer: minerals. Here, it is not private security companies which assist the corporates, but, in some parts of the world, the 'military consultancies', with all the evil that these can imply.....

What else dominates corporate agendas? Answer: the competition. Here private security companies are out of their depth. At the moment, their clients' most highly prized staff (as opposed to external consultants) are those with specialist and sector knowledge, executive experience, languages and a senior business qualification. However, one of the difficulties faced by those who have been trained by the business schools is that they know nothing about international relations; and even less about the cultures, faiths, traditions and aspirations of the many people in whose countries, or with whom, they will be operating in the future. In order to remain competitive, they require non-Anglo-Saxon sophisticates who are part of, or empathise with, a myriad of other cultures and value systems. The advance of these is temporarily obscured because some commercial markets are currently determined by those to whom the USA offers patronage. This is a position that the USA will be unable to sustain indefinitely, for various reasons, including: the emerging dominance of wealthy diaspora; the creeping commercial expansion of China and India; the eventual maturing of some post-Soviet and post-communist regimes; the emerging clout of some countries of the British Commonwealth; the sophistication of some organisations such as the Arab League; the expansion of the European Union, and its eventual expansion beyond the Levant, as well as around the rest of the Mediterranean, pushing into the Middle East and North Africa. (9)

All of these will have their own agenda, and will only employ those with the appropriate focus to service them; in the same way as corporates from competing hemispheres will require similarly focused sophisticates to counter them. This excludes British/US spooks whose private security companies, give or take a few ex-KGB bods, are all Anglo-Saxon, with personnel institutionalised by specific national agendas, including the commercial. This not only conditions a mind set, which includes belief in racial and other dominance, but leaves them unable to cope in a market-place where: a) the 'prestige' (for want of another word) of former CIA or SIS employment may be a hindrance rather than a help; b) they have to compete with sophisticated others, including diasporas who have years of pooled knowledge of the western security agencies; c) previously they had everything in the market that they wanted to themselves; and d) racial and other arrogance may no longer turn people into snitches. (10)

Intelligence Sources
According to the FT, private security personnel can 'call upon a tight network of local primary sources, sub-contracted investigators and analysts.......' The ex-spooks are asking us to believe that, now in business for themselves, they have suddenly acquired primary sources, where previously, when the teaxpayer paid their salaries, they had none, as evidenced by September 11. As for 'subcontracted investigators and analysts', this means that, although the spooks are passing themselves off as 'consultants', they are in fact having to employ real consultants to do all their work for them. This work, at inflated prices, they are then passing off as their own. I know this because ex-spooks do not change: i.e. when they were employed by their governments, the 'subcontracted investigators and analysts' were called 'agents', whose analysis they also passed off as their own, depersonalising those who provided it into 'humint' (human intelligence). 'Subcontracted investigators and analysts' can be charged out at a higher fee than can an undefined mass of 'humint'.

So who are these 'primary sources' and 'subcontracted investigators/analysts'? If they are any good, why are they working for the private security industry, rather than the various policing agencies, looking after - one presumes - the wider public good? To say they are working for both, or that the ex-spook private security industry passes over to the public agencies what it considers important, is an unsatisfactory arrangement for many reasons including conflict of interests. Moreover, are the interests of our country, and the citizens of others, best served by good 'primary sources' working for a ragbag of ex-CIA, ex-KGB, ex-Mossad and ex-SIS personnel who have formed a company?

On the other hand, if those the private security companies are employing/sub-contracting have been spurned by the national/international policing agencies, what are the reasons? Is it perhaps because the ex-spooks are doing little more than employing and/or reinforcing old elites at the expense of emerging, although not always better, ones? It is pretty easy to recruit old pals only too delighted to be recycled. Might this not, on the one hand, undermine a new breed of Foreign Office and SIS personnel, who may have different focuses, including ethical endeavour overseas; and, on the other, might it not mean that we could end up closing our eyes to the reassertion of collapsed empires, even if this is at the expense of those communities which have tried, and in some cases succeeded, in overthrowing them?

Of course, it is always possible that some 'primary sources' are hot-shots, some criminal, with whom the national and international policing agencies cannot be seen to have a connection. Enter the pragmatic private sector, which will share any relevant information anyway. However, the problem with 'hot-shots' is that, by their very nature, they always know their worth. It is legitimate, therefore, to ask whether because they are employed by the private sector, they are inflating prices knowing that the British/US taxpayer will subsidise them; and weighting the information they offer in favour of the lucrative, rather than the necessary. In addition, they are just as likely to continue to exercise autonomy in traditional, as well as new, fiefdoms. These can work for the greater good of vulnerable communities. The reverse, however, is also true.

The FT 'Supplement' also says that the private security industry can 'call on freelance journalists to draw up intelligence reports on the challenges and potential dangers of countries affected by terrorism.' If this is true, and given that its 'Supplement' will be scrutinised worldwide, did the FT not think that it had a duty to all journalists, whether or not 'free-lance', and whether or not working for the private and/or public sector spook industry, not to draw attention to this fact? And since the ex-spooks cannot mean local journalists in, say, Central Asia, because there aren't any; or in Kurdistan because the Turks have locked them all up; (11) or in various Muslim countries where association with CIA/SIS is not likely to do life expectancy much good, they must mean other nationals then, including payroll British ones.......

The corporate spook industry may have 'formally reached maturity on September 11 2001'. The problem with bonanzas is that the complaints start rolling in with the profits, pretty well simultaneously. A veteran private security man quoted in the FT may take pride in his boast that '......this industry is unique in terms of personalities and skills. It is a bit like rounding up cats', but he made the industry sound old-fashioned - precisely what the industry did not want.

Those who wish to demonstrate their 'maturity' will have to move away from the 'cats', including the cult of the individual founders, into the modern commercial culture of management, teamship and partnership. Not to mention 'corporate citizenship'. 'Cats' probably do not know much about this......but watchdogs might - if the private security industry could be persuaded to give it teeth and a long leesh. Regrettably, and despite its grand title, the newly established Security Industry Agency (SIA) does not cover the industry as a whole. Designed to put 'clear water' between, say, those private security companies supplying night-club bouncers who come under SIA remit, and those, say, employing forensic accountants, who do not, all that the SIA has done, is to inadvertently concentrate minds on the lack of regulation at the top-end of a locally-based, (but not for tax purposes) government-approved international market.

At the risk of repeating myself, on the assumption that our government will not legislate/regulate, the only way to demolish at source those parts of the private security industry that cannot be defended, is for the insurers to set the standards their clients demand; and for those clients, additionally, to take CSR seriously. That is probably why no FT interviewee from the private security industry mentioned either.

The private security industry's clients not employing insurers, and actively disengaged from CSR (e.g. the SIS, as well as dodgy corporates) on an ad hoc/occasional basis will continue to employ the lousy parts of the industry when need arises. (As well as, in the case of the SIS, presumably taking advantage of the reputable part at huge taxpayer expense.)

The disreputable had better take their profits while they can, because that part of their market will wither on the vine. Not even the 'CSR-proofed' SIS can, indefinitely, continue to be associated, let alone sustain, quite such a shower.....

Notes

1 With all the inherent conflicts of interest, such as security consultants acting for the private and public sector at the same time, that this can imply.

2 The European Commission brought out its Green Paper on Corporate Social Responsibility in 2001. At the time of writing, its White Paper is expected. This is unlikely to lead to an effective EU Directive. However, it may mean that in future, some corporates will, for example, no longer adopt one set of values for the industrialised countries and another for the developing world. This could result in some changes in some relationships with private security companies; as well as, of course, with the national intelligence agencies.

3 For example, when personnel of an 'advertising' company found themselves in a little bit of 'local difficulty' overseas - imprisoned by their host country - when, a few months earlier, other company personnel, operating out of one of the 'usual' addresses in Buckingham Gate, London, had produced a no-expenses spared glossy advertising FT 'Supplement' lauding the country concerned. I have withheld the date of the Supplement, and the name of the country, because I do not know the men's present circumstances.

4 I have not looked at the private security sector's regulatory environment for some years. When I last did so, the UK, for cynical reasons, including corruption, offered the most user-friendly, non-regulatory climate. Meantime, since most other EU members had some regulation in place, progress was being made towards a standardised internal market. This, of course, does not control non-EU activities. Nor is it ever likely to. Even the WTO (via, for example, the General Agreement on Trade in Services) did not get involved.

I assume, incidentally, that mandatory EU tendering procedures for government contracts over a certain amount of money, awarded to the private security industry, are not adhered to by any member state.

5 Any inquiry into the military, rather than private security consultancies, would necessitate a similar journey, this time through the SAS and other elite units ('hired' or 'loaned' to friendly governments,), as well as the SIS. This, in consequence, would place the conduct of British foreign policy under a microscope. This similarly militates against government regulation. As a result, there are no safeguards on, say, the 'beneficial owners', who may not be British.

6 Using insurance expressions such as 'due diligence' is not quite the same thing.

7 The Guardian, 17 April 2002

8 The previous lot will manage, of course, to cling to networks in parts of the world where host nations are too polite, dependent on US patronage, unsophisticated, dangerous, or corrupt to get rid of them. However, as I say above, at the moment these networks are of no interest to many corporate clients of the private security industry, since their insurers demand a low-risk operating environment. To make money, ex-spooks require a high-risk one. As this market dribbles away, they are doing all they can to develop new income streams.

9 Israel is already a quasi member of the EU, participating, for example, in scientific research projects

10 This is where ex-spook public affairs consultancies, including those which organise conferences, can come into their own. British ones are headed up by former senior civil servants, now the global agents of rectitude, advised by a plumage of former senior diplomats and EU bureaucrats,as well as former soldiers and an exotica of prestigious 'foreign' consultants who sit on their boards.

11 If Turkey really does want to join the EU (Cyprus and Kurdistan not withstanding) it will have to let the locked-up journalists all out again.

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