Not many people can claim to have invented an industry, but 44 years ago, Jules Kroll did just that with the launch of Kroll Associates, the firm that established corporate investigation as a modern, even a respectable, profession.
Now, at 75, he is on his second version of the Kroll template, as chairman of K2 Intelligence, and has also branched out into a new-style ratings firm, Kroll Bond Ratings Agency.
Much has changed in the world of corporate intelligence, partly because of the revolution he himself wrought, partly because of new technology and the information revolution.
“The internet has changed everything. In the old days, you got up from your seat and you went to the courthouse for information, or even sometimes to the morgue. Now it’s all electronic, open sources,” he says in his functional offices high above New York’s Third Avenue.
“But the challenge remains the same: a lot of the available information is wrong. Not everything that appears in print, or TV, or the internet, is 100 per cent correct,” he says.
Getting to the hard, nitty-gritty truth has been the hallmark of the Kroll style since the beginning. Back in 1972, the investigations business was a cross between private eye-type sleuthing and practical on-the-ground security advice in kidnap or ransom situations. “I saw a chance of something different, covering a broader patch with people from a greater diversity of backgrounds,” says Mr Kroll.
He had already developed considerable investigative expertise. After training as a lawyer, he helped to run the printing business his father had started. Kroll Jr came across a spider’s web of clandestine payments and backhanders to advertisers that had cost his father’s firm a lot of money over the years. Busting that network earned him a reputation as a forensic expert with a nose for the dirty dollar.
The company expanded outside the printing business, taking on lawyers, accountants, former police officers and – it was hinted darkly – former members of the US intelligence services.
The boom in financial markets of the early Reagan years gave the company real momentum, and by 1985 Kroll Associates was the go-to outfit for sophisticated corporate intelligence work. In 1985, he was profiled in The New York Times under the headline "Wall Street's Private Eye". Bankers in the US financial capital began to talk of having been "Krolled".
The firm expanded outside America, opening in London and Hong Kong, and developed a global reputation.
By the time Saddam Hussein invaded Kuwait in 1990, Kroll was sufficiently well regarded to be called in to track down the Iraqi dictator’s hidden foreign assets. He found them, bizarrely, in the form of shares in the prestigious French publisher Hachette, in what Mr Kroll still regards as one of his most successful cases.
Corporate intelligence is – like the banking and legal practices it serves – a “peoples’ business” par excellence. You are only as good as your operatives, who over the years develop close relationships with clients. Talented executives can walk out of the door at any time and often take the clients with them.
A phenomenon that has become know as the “Kroll diaspora” took place, with top practitioners leaving the company to set up on their own, spreading Kroll techniques around the world in the booming investigations industry. “A number of good competitors emerged in the investigations business, some of them from Kroll. Many of our alumni went on to build their own businesses,” says Mr Kroll.
The Kroll business, meanwhile, was involved in some of the world’s biggest investigations: dictators, corrupt politicians, fraudster businessmen all fell under the company’s glare. Mr Kroll remembers, fondly, the investigation that established that the gruesome death of Italian banker Roberto Calvi, found hanging from a London bridge, could not have been suicide.
Such was the firm’s renown that by 2004, he was able to sell the business for close on US$2 billion to the American insurance giant Marsh & McLennan, with him joining the Marsh board as vice-chairman and staying on as head of Kroll.
But some of the magic had clearly been lost under new management, and the company began to suffer financially. “I tried to buy it back from Marsh, but they had a better idea. They sold it to a private equity company who put it together with another firm that was big in security and doing work for the US government,” he says.
He does not volunteer an opinion on the wisdom of that deal but you get the impression he did not exactly approve.
Meanwhile, although he clearly wanted back in the investigations business, until 2010 he was hampered by non-compete contracts. Then, he and his son Jeremy were able to launch another investigations outfit, called K2 Intelligence.
“Jeremy and I carry our name with us but we view Kroll and former colleagues with respect and affection,” he says diplomatically.
Simultaneously, he launched Kroll Bond Ratings. “I saw credit rating as a close offshoot of due diligence, especially after the failure of the ratings agencies in the financial crisis,” he says. After just five years, last year, the business was valued at $300 million when a private equity firm bought out much of Mr Kroll’s stake.
K2 has been growing steadily too, with a number of overseas offices. The Middle East, where Mr Kroll has proven expertise and a historic interest, is serviced via the growing London office.
“We’re not going to open everywhere in the world. We’ve taken a view that we can service clients with interests in the Middle East from London. We do some work for sovereign wealth funds in the Gulf” – he reels off a list of names of well-known regional institutions – “who often want an independent view of a deal, or a partner,” he says.
One place he is unlikely to be involved in Iran.
“I don’t see much opportunity there. In China in 1988 we were eventually able to establish a modus operandi with the government, but I don’t think that would ever be likely in Iran,” he says.
Mr Kroll has had a lifelong interest in politics, and was once – long before the investigations business – talked of as being potentially the first Jewish US president. As a committed Democrat, he is worried about the prospect of a Donald Trump presidency. “He’s is benefiting from the decline in material income of middle America. That gives him an advantage. I still think Hillary [Clinton] will win because she has a broader appeal, but it’s been an unpredictable year,” he says.
If there was ever any regret at a frustrated political career, it does not show now. He is happy working with son Jeremy, K2’s chief executive, and with being “coach” to that he calls the Kroll “team”.
“I’ll carry on as long as I can make a contribution. I enjoy it, and it’s been my life’s work,” he says.
fkane@thenational.ae
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