by Eamon Javers
Trident Group, based in Virginia, also has ties to Russia: it was founded by a former Soviet military intelligence officer. It works for some of the largest American companies and law firms.
In each case, the activities of the investigators span continents. And each operation has a “hall of mirrors” quality. Take the Russians, for example: can men who were loyal communists and rose through the ranks of the Soviet establishment truly embrace working for capitalist corporate titans? Or take the former CIA officers: how do patriotic spies who once served their country feel about working for an unelected hereditary billionaire? Such questions do not necessarily involve a conflict of interest, but they may involve a conflict of values. Do spies in the global economy ever feel a disconnect between who they are and who they work for? Does that question even matter?
ONE THING MOST of the people in this industry have in common is that they didn’t start their careers with the goal of becoming private spies. When they began their careers in government, most of them didn’t know there was an international corporate intelligence industry. They wanted to be soldiers, spies, or diplomats. But somewhere along the way, they became operatives for hire.
That’s the story of Steven Fox, who founded Veracity. Fox is thirty-nine, and with his slicked-over hair, aquiline nose and deep voice, he could pass for Hollywood’s version of a 1920s society man. The industry trade publication Intelligence Online reports that Fox is a veteran of the CIA’s Directorate of Operations. And although a bio Fox once used in the private sector described him as having once worked “on counterterrorism in the U.S. intelligence community,” he denies he was ever in the CIA. As he tells it, he’s a veteran of the State Department, and he took some time off to be an Internet entrepreneur during the dot-com boom in the early 2000s. Still, in his private-sector career he has surrounded himself with lots of alumni of the CIA.
Fox’s description of his background—which may or may not be a cover story—goes this way. He is a native of Manhattan, speaks French, and graduated from Princeton University in 1991. He landed a job in the State Department and soon was as far from New York society as it gets—at Bujumbura, the capital city of Burundi in central Africa.
Situated along the Great Rift Valley on the shore of Lake Tanganyika, Bujumbura has, since Burundi’s independence in 1962, been a scene of terrible fighting between the majority Hutu ethnic group and the ruling minority, the Tutsi. This ethnic rivalry escalated into open genocide in 1994 in Rwanda, the country just to the north.
In 1996, the Hutu and Tutsi were slaughtering each other again. More than 150,000 Burundians had already died. And when Tutsi paratroopers took up positions at key government outposts, the capital city’s television station, and its radio station, the Hutu president of the country, Sylvestre Ntibantunganya, knew he couldn’t cling to power much longer. Burundi didn’t have much history of peaceful transitions of government—both of Ntibantunganya’s predecessors had been assassinated. To avoid the same fate, the president headed for the U.S. embassy and into the arms of Steven Fox, who says he was then a young State Department officer.
The United States agreed to give Ntibantunganya sanctuary, and it became Fox’s job to figure out how to get him safely out of the American facility. For eleven months, Fox worked out the logistics of the former president’s new life: Where would he live? How could he be kept safe? The American ambassador secured a commitment from the new military government that Ntibantunganya wouldn’t face prosecution if he left U.S. custody—and even more important, that the new Tutsi leadership would guarantee his safety.
With that assurance in hand, Fox’s work came down to the little things. Fox found a house that had been owned by the local Heineken brewery. He arranged for cars. He worked with Ntibantunganya on security, settling on a thirty-man detail of trusted former officers and men from the Hutu tribe. But the ex-president balked at moving into his new home, announcing that he didn’t approve of the furniture the government had agreed to provide for it. Fox scrambled to find suitable furniture from the embassy’s own surplus, and obtained approval from Washington to have movers install it in the new home.
Fox and Ntibantunganya passed long hours together. The cooped-up, bored ex-president was happy to have someone attentive to talk to. Over the months, he gave Fox a tutorial on central Africa, from the inner workings of the coffee industry to Burundian politics.
The episode was a success, as such things go. Ntibantunganya was transferred from the American compound into the former Heineken house. He was not killed, and he began a new life in exile. In 1999, he published a memoir in French, whose title loosely translates as A Democracy for All Burundians.
Fox was moving on as well. After the stint in Burundi, he transferred to the U.S. embassy in Paris. Although Paris has always been a favorite posting for American diplomats, Fox found it stifling. He also found that there wasn’t much for him to do. Soon he applied for and was accepted by the prestigious INSEAD MBA program in Fontainebleau, France. That city, just under an hour’s drive south of Paris, is the site of the celebrated château of Fontainebleau, which was built by French kings and used as a home by Napoleon. In 1999, Fox spent a year there, as a member of a 300-person class that included students from forty countries. Some of the people he met there form the core of his European business contacts today. He didn’t know it yet, but his experiences overseas were laying the groundwork for an excellent résumé in the world of international financial consulting.
Fox briefly left the government to work on an Internet start-up, but after 9/11 he decided he had to get back into government service. He still held his security clearances, which made it relatively simple to reapply to the government. He says he worked as a State Department desk officer on Israeli-Palestinian issues and counterterrorism. Fox went to Algeria in 2003, after its civil war, running the political and economic section of the U.S. embassy. There, he roved the North African country in an armored Chevy Suburban with two bodyguards.
But soon Fox left the government again. This time, he did a stint in the New York office of Diligence, learning the ropes of the private intelligence business. Then in 2007, along with another veteran of Diligence, the dapper Charles Garnett (who was also a veteran of the British army), Fox started Veracity. It would be similar to Diligence, but would take a new approach to this kind of work: eschewing much of the traditional investigative work in place of high-end, emerging-market due diligence. Fox lined up a single investor who provided start-up funding and opened doors—but whom he declines to name.
Fox began lining up distinguished international spies and business executives to serve on Veracity’s board of directors. He soon landed two impressive names. One was Sir Richard Dearlove, who served as the chief—known as “C”—of the British Secret Intelligence Service (SIS) from 1999 until 2004. The SIS is commonly known in Britain as MI6, and its head is the nation’s top spy. Dearlove is a British knight, and a member of the Most Distinguished Order of Saint Michael and Saint George, a class of knighthood generally reserved for foreign-service officers and diplomats. Fox also brought in an American, Stuart Eizenstat. A partner at the law firm Covington and Burling, Eizenstat heads the international trade and finance practice, and could provide an invaluable connection to the top of the international corporate world. Eizenstat was a deputy secretary of the treasury under President Clinton and helped negotiate the Kyoto Protocol, among other international agreements.
And Fox began hiring intelligence veterans. The former CIA intelligence analyst Josh Mikesell became a partner. As senior advisers, Fox brought in Frank Anderson, the former chief of the CIA’s Near East Division; Mel Gamble, former deputy chief of the CIA’s European Division; Flynt Leverett, a veteran of the CIA who served as senior director for Middle East affairs at the National Security Council; and another CIA veteran, Art Brown.
THOSE CONNECTIONS LED Fox to Veracity’s briefing in New York on North Korea. Like any other businesses, corporate intelligence firms have to hustle for new clients. But this c
an be tricky when the work product, and the techniques that produce it, are confidential. Often the secret is to show prospective clients just a glimpse of what a firm can do—and dazzle them with behind-the-scenes tales of spycraft.
As the audience members noshed on bagels and poured themselves cups of coffee, Fox welcomed guests from the prestigious law firm White and Case, the investment banks Morgan Stanley and Credit Suisse, and two private equity firms. The main attraction on this morning was Art Brown, who had retired from the CIA in 2005 and whom Fox had recruited as a senior adviser for Asian issues. With a bullet-shaped bald head and eyeglasses, Brown looked like Hollywood’s idea of a CIA officer. His credentials are impressive. During his twenty-five years in the CIA, Brown lived in Asia for more than twenty years, served as a chief of station in three Asian capitals, and rose to become the chief of the Asia Division for the CIA’s clandestine service. He advised the president of the United States in person on Asian issues, and testified in closed-door sessions of Congress about national security and economic and regional stability in Asia.
Brown sat at the head of the table at the Princeton Club and gave the same insights he’d given to presidents and senators, but this time to the paying clients—and prospective clients—of Veracity. He was joined at the head of the table by the former U.S. ambassador to South Korea, Stephen Bosworth. Today, Bosworth is dean of the Fletcher School of Law and Diplomacy at Tufts University and sits on the advisory board of Veracity Worldwide.
Together, the two men gave a short presentation on North Korea. In deference to protocol, Bosworth spoke first. He alerted the bankers and lawyers that the North Koreans thought a deal was at hand in the protracted talks with the West about their rogue nuclear weapons program. He also laid out North Korea’s two goals for diplomacy with the outside world: removal of North Korea from the State Department’s list of countries that sponsor terror, and removal of economic sanctions imposed by the Trading with the Enemy Act, a law which limits American companies’ ability to conduct business with designated enemies.*
Next, Brown laid out his somewhat controversial vision for future relations between the United States and North Korea. Although the United States had up to that point focused on preventing North Korea from building a nuclear weapon, Brown said that either the North Koreans already have one, or it’s only a matter of time until they do. Continuing U.S. policies designed to stop that from happening would be pointless, he said. Instead, Brown argued, the United States should tolerate a nuclear-armed North Korea. “My vision is we should just belly up to this,” he said. Then, tailoring his pitch to the audience in the room, Brown told the bankers and lawyers that even such a radical departure from U.S. policy wouldn’t have a shock effect on the stock market in Seoul. The market there has probably already priced in an expectation that North Korea would develop a nuclear bomb.†
The group then fired questions at the speakers. What’s the status of the relationship between China and North Korea? (Bosworth: Not as close as we think.) How does the North Korean leadership interact internally? (Brown: Kim Jong Il is not a madman, but no one on the outside really knows how the government there works.) How big is the gray market in consumer goods? (Brown: The gray market is bigger than the legitimate market.) And what about lifting those sanctions? (Brown: North Korea could have a lot to trade with the rest of the world, including seafood and minerals.)
The businesspeople were energized as they left the room, some still munching their breakfast. They’d gotten what they came for: business information and spy stories. Now they, and their hosts, would try to make money from what they’d learned.
THAT KIND OF business development takes place around the world in corporate intelligence, just like any other business. In Germany, though, the business of corporate intelligence is especially delicate.
On a warm fall afternoon in Berlin, Johann Benöhr sips a latte and smokes cigarette after cigarette at the Shan Rahimkhan Café, which overlooks a scenic cobblestone plaza, the Gendarmenmarkt. He’s there to offer a reporter a glimpse into life as a corporate investigator in Germany, speaking in nearly flawless English honed during a stint as a corporate investigator in London. With his shaved head, two-day stubble, and sleek suit, Benöhr could pass for a slimmer version of the actor Vin Diesel.
In this city, you’re never far from a reminder of its years as the center of cold war espionage. The café is just a short walk from Checkpoint Charlie, where East German and western troops faced off at one of the few passages through the Berlin Wall. That wall is long gone, and although Benöhr is sitting several blocks inside what used to be East Berlin, you’d hardly know it. The nearby boulevard Friedrichstrasse is now a fashionable shopping district, featuring luxury brands and a BMW Mini auto dealership. As the city has changed, so have its spies. Benöhr is a different kind of intelligence player: he gathers information for companies, not countries.
In recent years, Germany has been racked by corporate spying and bribery scandals: In 2005 and 2006, Deutsche Telecom hired a spy firm to obtain phone records of journalists covering it, and of the members of its own supervisory board. One of the firms Deutsche Telecom worked with was the German office of Control Risks Group, an investigative firm based in London. Control Risks in turn hired out some of the Deutsche Telecom work to Desa, a firm led by onetime informants for the East German secret police force, Stasi. When investigators from Germany’s Federal Office of Criminal Investigation decided to visit the Control Risks office in May 2008, they didn’t have to go far—the private intelligence firm is located in the same Berlin office building as the federal investigators.1 The list of German spying cases goes on: in 2008, the retailers Lidl and Schlecker were revealed to have been spying on their own employees, too.2
The climate of scandal makes it difficult for Benöhr to talk about his industry. Today, he says, he’s taking some time off between gigs. He brushes off requests to discuss specific cases, and proclaims that the investigative business is rather boring: “There’s very little James Bond, and a lot more librarian work,” he says.
Benöhr didn’t get his training in an intelligence school. Instead, he’s a lawyer and an MBA. He started his business intelligence career in Frankfurt, at the headquarters of Kroll, the American investigative firm. There he learned that with regard to conducting business intelligence operations, Germany was a different place from what many of his American and British colleagues at Kroll expected. For one thing, most court records are sealed—even routine civil matters. That makes due diligence investigations much more difficult than they are in other European countries. Gathering information for a routine background check on an executive takes a few seconds in the United States, and can be done by anybody with a computer. In Germany, it takes much longer. To find out if an executive has ever been sued, gone bankrupt, or been arrested, Benöhr can’t just dip into an online database. He’s got to tap into his long-developed network of German business and legal contacts. Connections are everything in Germany.
Culturally, too, Germany is a trickier place to conduct investigations than other western democracies. The country has recent, searing memories of life under a police state. People have an aversion to anything smacking of intelligence, informants, or secret files. “Because of German history, when it comes to anything to do with intelligence, people are very sensitive,” says Benöhr. Calls to an executive’s former colleagues—a standard part of a background check in other countries—often meet with grim silence or even a disconnection. All this also makes corporate investigations in Germany much more expensive than elsewhere.
As a result, Benöhr says, the investigations industry in Germany is dominated by financial firms: “They have huge pockets, and when there’s a big deal pending, there’s so much at stake that they will spend what it takes. And if you do it right, it’s going to be expensive.”
Ironically, two American business trends are driving the German corporate intelligence market: the increasing aggressiveness of the Securities an
d Exchange Commission (SEC), and the ratcheting up of prosecutions under the Foreign Corrupt Practices Act (FCPA), which prohibits American companies or their foreign subsidiaries from engaging in bribery overseas.
“Until 1999, German companies could deduct bribes they paid abroad from their taxes,” says Benöhr. In Germany, executives have a “different mind-set when it comes to what constitutes criminal activity.” Now that so many multinational companies come under the provisions of the American FCPA, Benöhr says, companies that have had problems with bribery are increasingly investigating themselves. Also, American private equity investors that own pieces of German companies need to make sure the German employees aren’t bribing third-country officials to ease environmental, customs, or other regulations. Investigators like Benöhr are brought in to make sure executives know what happened in a bribery case, and what the company’s legal exposure is. They ask basic questions: Who knew? Was upper management involved? Was it a one-off case? Was this the usual method of doing business? “You have to be particularly thorough,” says Benöhr. “Your job is to make certain that you’ve really looked into this and that everybody who was involved is gone.”
There’s an additional international wrinkle for investigators doing business in Germany: American private equity companies own many German companies, making them subject to the SEC’s disclosure regulations. The burdens of disclosure are much higher in the United States than in many other places, and Benöhr says American investors like to pore over German companies when they’re making a purchase. “As an investor, you want to make sure that the company you have bought is not toxic waste.”
FOX AND BENÖHR are willing to explain their industry openly to a reporter, but not everyone in the global intelligence business is equally willing to talk about what he does. Take Sheikh Mohammed Bin Rashid Al Maktoum, who is the ruler of the fast-growing city-state of Dubai and the prime minister of the United Arab Emirates. He’s worth an estimated $18 billion, likes to race thoroughbred horses and camels, and owns the world’s biggest yacht, a glistening white, 530-foot behemoth called Dubai.