Finance articles and news

Corporate spies clean up – The financial crisis means boom times for spooks-for-hire

The financial crisis means boom times for spooks-for-hire.

By Barney Gimbel, writer
Last Updated: December 8, 2008: 11:16 AM ET

NEW YORK (Fortune) — If James Bond’s “License to Kill” gets revoked, he’d have no problem finding work as a corporate spy. To the short list of sectors that stand to gain from the financial crisis, add corporate intelligence firms.

They are seeing a dramatic uptick in business from a surge of banks, private equity firms, and hedge funds that need to make sure those pesky multimillion-dollar investments they made when times were good will hold up.

Firms like Control Risks, a London-based risk consultancy staffed by ex-CIA agents, and its rival, New York-based Kroll say they have seen a 20% jump in new business over the past two months. Together the two firms control the majority of the market.

These spook outfits have long carved out a lucrative business investigating corporate fraud, performing due diligence, or simply ferreting out the things not on a balance sheet – be they a company’s shady associates in Brazil or corrupt investors in Texas.

But in the recent heady times, some fast-moving investment outlets cut corners.

Now they are hoping to save face – and money – before precarious deals fall apart altogether. “The tolerance for failure has diminished,” says Jim Brooks, who heads North American operations for Control Risks.

Already, spies-for-hire are finding a couple of embarrassing flubs.

Consider the more than $300 million that one international bank lent to a sketchy Russian magnate (we’d tell you who it was, but then we’d have to kill you). When he stopped paying his bills, the bank brought in Control Risks to find out where the money had gone. (They found the Russian could have funneled money out of the country through various, seemingly unrelated shell companies.)

Another big client, a Washington-based law firm, hired it to investigate a wealthy, if not highly leveraged, Bolivian who had been claiming poverty while secretly moving his assets to places like Poland, Switzerland and Sylvania.

Tactics range from mundane document searches to clandestine interviews with former employees, customers, or government officials. Much of the work is happening overseas, where public records don’t always exist.

For the Bond wannabes, the new business isn’t adding to the bottom line so much as replacing the business they lost when pre-deal due diligence went out the window. Still, they expect the boom times to continue.

“Companies are only beginning to deal with the situation,” says Bob Brenner, who heads Kroll’s business intelligence and investigations practice in the U.S.

It may not match the martini swilling and jet setting the real Bond gets to do, but it pays the bills, which in these times is exotic-sounding enough.
Source

read more related posts:

1. SNAPSHOT – Financial Crisis – 1330 GMT

   - New U.S. housing starts unexpectedly rebounded in February, surging 22.2 percent, according to data that provided a rare dose of good news for the recession-hit economy. - Germany’s economy offered unexpected signs of optimism. A monthly poll by the ZEW economic institute in Europe’s biggest economy showed analyst and investor sentiment rising to -3.5 in [...]...

2. Chinese premier discusses financial crisis with World Bank president

   ·Chinese Premier Wen Jiabao met with World Bank President Robert Zoellick in Beijing Tuesday. ·Wen said China will focus on expanding domestic demand to stimulate economic growth. ·Zoellick said the World Bank will continue to play a role in helping China overcome difficulties. BEIJING, Dec. 16 (Xinhua) — Chinese Premier Wen Jiabao said here Tuesday in response to [...]...

3. Merkel holds anti-crisis summit

   BERLIN – GERMAN Chancellor Angela Merkel, under fire over her reaction to the financial crisis, called together business leaders, ministers and experts on Sunday to discuss ways of escaping the international recession. ‘No concrete measure was decided,’ Economy Minister Michael Glos said after the six-hour meeting finished. The goal of the meeting had been to reflect [...]...

4. New Book – The Finance Crisis and Rescue: What Went Wrong? Why? What Lessons Can Be Learned?

   TORONTO, Nov 25, 2008 /PRNewswire-USNewswire via COMTEX/ — A timely new book examining this year’s financial crisis is the second title to be published by Rotman/UTP Publishing, an Imprint of University of Toronto Press in partnership with the Rotman School of Management. The Finance Crisis and Rescue: What Went Wrong? Why? What Lessons Can Be [...]...

5. Businesses recognise value of interims in hard times

   Businesses in the UK are waking up to the fact that interim managers and other freelance professionals will play an increasingly important role in the nation’s economic recovery.Politicians, however, are taking longer to catch on to the fact that interims will provide a valuable resource for UK plc in the years ahead, and proposed legislation [...]...

6. UPDATE:Germany’s Merkel:Succeeded In Rescuing Banks In Crisis

   BERLIN (Dow Jones)–German Chancellor Angela Merkel said Tuesday efforts to rescue the banking sector, hit hard by the financial crisis, have worked out. “We fundamentally succeeded in rescuing banks,” Merkel said at a conference organized by the Initiative New Social Market Economy, or INSM. However, she added that there still needs to be a “timely sensible” [...]...

7. FEATURE-Broadway finds show fundraising tougher amid crisis

   By Michelle Nichols NEW YORK, Jan 12 (Reuters) – Broadway producers are finding it tough to attract investors for new productions as the global financial crisis begins to take a toll on the Great White Way. And sluggish tickets sales have caused the closure of shows, adding to the sense of gloom on Broadway. While several shows traditionally [...]...

8. Michigan prepares for next financial challenge

   For many Detroiters, sighs of relief Friday on hearing of the federal auto loans quickly gave way to an agonized realization of just how painful the restructuring ahead will be. Having avoided a chaotic bankruptcy, the Detroit Three and, by extension, the broader Michigan community must now carry out deep new cuts in the economic fiber [...]...

Tags: dollar investments, financial crisis, investigating corporate fraud