Intelligent art of illumination

Corporate investigation and "competitive intelligence" has long had a presence in the Gulf where investigators can help cast light on murky corporate issues.

Tom Everett-Heath, left, and Stephen Millington are corporate investigators with Kroll in Dubai.

A company is in disarray: millions of dirhams are missing; a top executive has fled the country; and meeting the payroll this month is going to be tight. That was an all too common scenario at Gulf companies during the past 18 months, according to top corporate investigators who help companies track down and recover missing funds, or research potential business partners before they enter into deals.

"A major part of this is about problem solving," says Tom Everett-Heath, the regional managing director for Kroll, one of the world's largest corporate investigation companies. "It's partly a growing willingness to address issues and partly because of the current and recent economic woes." In a case where money is missing, a team of investigators could complete a forensic audit of a company's finances, track down employees who have fled and even file lawsuits in conjunction with lawyers to recover the funds. A fraud survey by the auditing firm KPMG in 2008 said such losses run into billions of dollars.

The staff at companies such as Kroll come from a range of professions, from journalism to forensic accounting to intelligence agencies. Mr Everett-Heath was formerly the editor of the Middle East Economic Digest, where he was able to make key contacts across the region. While neither Mr Everett-Heath nor his colleagues would discuss ongoing work, it is on public record that Kroll is involved with some of the region's largest cases of alleged fraud. The company is working with Bahraini authorities on the recent debt defaults at the Saad Group and Ahmad Hamad Al Gosaibi and Brothers, two Saudi family-run conglomerates that are embroiled in litigation across the world.

A lawsuit in the US revealed Kroll has also signed on with Bahrain's authorities to investigate allegations of corruption at industrial heavyweights including an ongoing case filed by Aluminium Bahrain (Alba) against the giant aluminium producer Alcoa that involves claims of overcharging, kickbacks and fraud. "A lot of problems didn't get picked up on when the money was flowing quite easily," says Stephen Millington, the associate managing director of financial investigations at the regional Kroll office who, in his pinstriped suits and braces, could be mistaken for a City banker. "However, when things turned for the worse, the situations where people have been taking kickbacks and bribes are highlighted much more because the companies start to notice. Their margins are being reduced."

A major investigation can take months while a team puts together lists of names and addresses, combs through internal documents and interviews people. "You start seeing patterns, invariably," Mr Millington says. Corporate investigation and "competitive intelligence" - a phrase that describes the process of gathering information to provide a company with a commercial edge - has long had a presence in the Gulf. Originally made up of former members of the military and businessmen in the region, it took a major hit in 2001 when 19 investigators were arrested by the authorities for illegal surveillance. Among those was Michael Sixsmith, a former officer in the UK army's intelligence corps, and Peter Lockhart-Smith, a veteran of the Grenadier Guards. Since then, companies have been steadily returning, albeit with a new sense of caution.

There are laws against surveillance that prevent these investigation companies from using the tactics they have honed in other countries. The use of sophisticated equipment to eavesdrop or spy on people is prohibited. And while fraud is a major line of business for them, they have historically focused on simply helping local businesses understand the risks of business partners around the world - and likewise, keeping foreign companies appraised of who they are dealing with on the ground. This could involve determining how much debt a company in an emerging market has, how they are viewed among other companies and even their ties to governments.

A major boon for investigators and corporate intelligence gatherers for the past few decades has been in the emerging markets of Asia, Africa and eastern Europe, where there are fast-growing economies that do not have a culture of public disclosure. "It's a matter of due diligence," says Patrick Grayson, a senior partner with the London company GPW. "Companies shouldn't see us as a threat. We are helping their business partners make informed decisions. The business is becoming not unlike law and accountancy - necessary tools for doing deals."

Many corporate investigation companies also are involved in other sensitive lines of work. Control Risks Group, a major UK-based strategic consultancy, is involved with everything from forensic accounting to security to hostage negotiation. Mr Grayson's company, which this year opened a Dubai office, focuses on investigations. He gained international attention as part of the Kroll team that tracked down the foreign assets of Saddam Hussein after the First Gulf War.

To be successful, an investigations company needs to be able to think through a problem in ways that might not be apparent, he says. In one case in South America, GPW hired a psycholinguistic analyst to determine the profile of someone sending threatening letters to a company. "The challenge is to unravel mysteries with many parts," he says. There is a strong sense of teamwork in the industry as well. Major companies in New York or Geneva often hire on-the-ground companies to help them with their work. One such company is Whispering Bell, based in Dubai, which was founded by several local investigators last year to take advantage of the growing need for corporate intelligence.

"I always felt some of the larger players in the industry were a bit slow and less than focused," says Bassam Ghellal, the director of the company and former general manager of security at Majid al Futtaim Group. "Several of us joined forces to be Middle East specialists who could respond quickly." The group, which takes its name from a flower that produces seeds that can survive forest fires and "adapt to any situation", is made up of about 50 people with a range of skills. It operates as a collective; if one project needs a computer specialist and an investigator, they pair up. One major line of business in the past year has been helping foreign companies make investments in Libya, a notoriously challenging place to set up a business.

The UAE is an important base for corporate investigators because of its position at the centre of Asia, the Middle East and eastern Europe. "Any fraud investigation involves half a dozen jurisdictions in the world today," says Mr Millington. "It's rare that a case doesn't involve tracking funds and people down across multiple countries." [e-mail]