Corporate detectives look to gain in recovery

Corporate investigation and intelligence companies are growing in the region as businesses address issues such as allegations of fraud and look to increase due diligence before making investments. The corporate investigations industry has long existed in the Emirates, which serves as a financial centre for some of the world's fastest-developing economies. But many agencies shied away from the region in 2001 after 19 investigators were arrested across the country for allegedly illegal surveillance activities.

Now, as companies try to root out possible fraud and recover assets after the financial crisis, demand is again growing for their services. "There is increasingly an appetite for investigators," said Nicholas Bortman, an associate partner at the London-based company GPW. "I think what you have is a situation in which people have woken up a bit and realised that you can't just bank on people's reputations any more. You have to get the inside track and really understand how they do business."

Mr Bortman recently set up the company's Dubai office. Half a dozen other agencies, as well as the investigation arms of major accounting firms such as Deloitte and KPMG, have stepped up their presence in the region in the past 18 months. Such companies work alongside regional governments' official investigators of fraud, including those at Dubai's Financial Audit Department, the Abu Dhabi Accountability Authority, the Federal State Audit Institution and financial crime investigation departments within the country's police departments. The UAE has seen some of the highest profile fraud cases in its history in the past two years.

While the private-sector investigation agencies may have an element of "James Bond" intrigue to it, the industry has grown into a professional service much like law firms and accountancies. "It is an exciting business but everything we do must fall within the walls of the jurisdiction," said Bassam Ghellal, the director of Whispering Bell, a collective of about 50 investigators that was set up in Dubai last year. The name comes from the eponymous flower that produces seeds that can survive forest fires and is "adaptable to any situation or environment".

While secret listening devices may be tools of the trade in some parts of the world, stricter laws in the Middle East mean investigators have to find out things the hard way through telephone calls, lawsuits and public document data bases. Their teams are often drawn from the ranks of journalism, government intelligence agencies, law firms and the business world.

"What's happening now in the region is that people are a lot more careful with their money," said Mr Ghellal, who was formerly the general manager of security at Majid al Futtaim Group. "Nowadays, people are being a bit more wary of where they put their cash. They want to know what they are getting into." The type of work investigators are doing has also shifted from mainly due diligence on major investments in the boom times to problem solving, said Tom Everett-Heath, the managing director of the regional office of Kroll. The organisation is one of the world's largest corporate investigations and intelligence companies.

"It's a reflection of the macroeconomic environment," said Mr Everett-Heath, a former journalist. "But there has also been a significant cultural shift. Our regional clients - whether they be financial institutions, corporates or government agencies - are far more willing to address problems in a professional, structured manner than they were 10 years ago." Incidents of fraud have been coming to light in greater numbers as companies scrutinise their finances. Often the main concern is recovery of assets, even if it means not going through the courts.

"Our clients are not always out for justice and we applaud them for that," Mr Everett-Heath said. "That's a matter for the courts and the authorities. What they're after is recovery of assets." bhope@thenational.ae