NEW BREED OF SECURITY FIRM CATERS TO SPECIAL NEEDS OF CORPORATIONS

Document Type: 
Collection: 
Document Number (FOIA) /ESDN (CREST): 
CIA-RDP90-00965R000706510001-5
Release Decision: 
RIPPUB
Original Classification: 
K
Document Page Count: 
2
Document Creation Date: 
December 22, 2016
Document Release Date: 
February 22, 2012
Sequence Number: 
1
Case Number: 
Publication Date: 
August 4, 1985
Content Type: 
OPEN SOURCE
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Declassified in Part - Sanitized Copy Approved for Release 2012/02/22 : CIA-RDP90-00965R000706510001-5 AV"- ON PAG WASHINGTON POST 4 August 1985 New Breed of Security Firm Cis&r a To Special Needs of Corporations Cases Range From Handling Ransom Demands to Plant Security By Peter H. Stone special to The Wasimpon Post Since the late 1970s, when it launched a $300 million-plus pro- ~ec m e Colombian province Cordoba, the Hanna inii has been concerned about the security of its personnel in the region. Colombia has had its share of violence-guerrilla attacks, gov- ernment crackdowns on dissi- dents, and a crime wave linked to the burgeoning cocaine trade- but Hanna believed the plant was worth the risk and proceeded with construction-but cautious- ly. Hanna hired Ackerman & Palumbo nc., a Miami security consu in firm run by two vet- erans of the CIA's clandestine services who have aye a key role in advising the company on a host of security questions over the last six years. Donald Nelson . director of international opera- tions at Hanna, says c erman Palumbo produced a number o treat assessments" for the company based on its on-site in- spections. "W uused them as a source of reference for finding a full-time security director for the plant," Nelson explains. "They also ad- vised us on the size of the guard force, and we've used them for intelligence gathering.... We use these consultants mainly to make sure that our own people are secure." , Hanna Mining is hardly alone in its concerns about the safety of overseas personnel and plants. Nor is it the only multinational company to turn to Ackerman & Palumbo for help. International Paper Co. solic- ited the consultants' security ad- vice for its headquarters in New York a few years back. "They had a lot of input about designing our security system," said Henry Bertelsen, igterna- tional Paper's corporate security manager. And American Can Co. executives read the consultants' reports regularly to assess risks in countries where they have op- eratiops. By its own account, Ackerman & Palumbo has about 250 clients, most of them Fortune 500 com- panies, and for whom the part- ners provide a panoply of ser- vices including protection, inves- tigation and the handling of kid- napping and ransom negotiations, should the need arise. Ackerman & Palumbo's fees begin at $750 a day and E. C. (Mike) Ackerman boasts that the 8-year-old firm now does about $4 million in business a year-or double that of a few years ago. Increasingly, big companies are turning to Ackerman & Palumbo-or such competitors as Control Risks Ltd., Paul Chamberlain International or In- ternational Risks-for help with an array of security problems. Although the initial objective was to protect U.S, executives and plants overseas, chief executive officers now are seeking advice from security 'consultants on a much wider range of issues, in- cluding financial security threats posed by corporate takeovers, joint ventures and white-collar crime at home. While Ackerman & Palumbo still does about 75 percent of its work abroad and counter-terror- ism remains its stock in trade, Ackerman estimates that about 15 percent of his business now involves white-collar issues. By contrast, Chamberlain says that most of his work-is based in the United States and that the hot- test area today is white-collar crime, which he calls "rampant." These consultants offer clients a Chinese menu of services, in- cluding reports detailing the lat- est social and political conditions in various countries and personal consultations with CEOs. While the consultants would not reveal their clients' names, they said they sometimes serve as liaisons with the FBI here and law en- forcement officials abroad, and in some cases they take the lead in negotiations with kidnappers. Most of the consulting firms are staffed by former CIA and FBI o ~icia s, many of whom say they have e up close contacts wit their former associates. Ackerman boasts: eve got very good relations with the oca police in L0 10m ia, ua ems a and Salvador.' n Chamber- lain, an FBI veteran of some years, sa s his firm is asica "an adjunct to law enforcement. We're middlemen and hand- holders.. .. you've got a unc of old friends in the FBI, it helps a lot. These credentials have im- pressed many insurance compa- nies offering kidnap and ransom insurance. Since 1970, when the Amer- ican Insurance Group offered the first kidnap and ransom policies in the United States, other lead- ing insurers, including Lloyds of London, Chubb and Son Inc. and Professional Indemnity Agency, have followed suit. One insurance executive estimates that the market for kidnap and ransom insurance is now slightly under $100 million a year. Further, many insurers have established retainer relationships with con- sultants, whose services are in- cluded as an option on policies: Lloyds uses Control Risk, Chubb uses Ackerman & Palumbo, Pro- fessional Indemnity Agency uses Chamberlain International and the American Insurance Group has just retained a British con- sultant called Argen. A brief look at several of the QQ Declassified in Part - Sanitized Copy Approved for Release 2012/02/22 : CIA-RDP90-00965R000706510001-5 Declassified in Part - Sanitized Copy Approved for Release 2012/02/22 : CIA-RDP90-00965R000706510001-5 consultants in the field today of- fers some insight into the wide- ranging functions they now per- form. ^ Ackerman & Palumbo was founded in 1977 shortly after e Ackerman resinvied from 5i CIA to protest sensation-seeking congressional investigations of the agency and preserva- tion of ad American intelligence capability." is partner, ou Palumbo, spent 22 years wit the agency. his resume says tha he on mate muc t of the defensive methodology currently employed throughout government and m- ustr Ac ckerman and Palumbo com- bine common sense with their years of experience in clandes- tine operations. Under the rubric of "protective services," for ex- ample, the consultants offer a course in defensive driving that includes "an in-depth briefing on the conceptual basis for defen- sive-driving methodology and instruction in technique." One seminar for traveling executives explains "gray or anonymous travel and other executive coun- termeasures" designed to foil terrorist or criminal plots. If an executive is kidnaped, Ackerman and Palumbo move into high gear. They promise to he available 24 hours a day and will participate in delicate nego- tiations or pay ransom monies, if needed. (Ackerman says he fa- vors the policy of paying ransom first and seeking out kidnapers later.) Although most of their work is overseas, the consultants say their caseload in the United States is growing, particularly among companies worried about corporate takeovers, friendly or not. "We've been involved in ward- ing off a few unfriendly foreign corporate takeovers of U.S. com- panies," Ackerman says. "We've been able to arm the general counsel of the defending compa- ny with information that's some- what derogatory." Ackerman & Palumbo also has helped companies with joint ven- tures abroad, especially in Col- ombia. "You have to be very care- ful there because of the heavy amount of drug money," Acker- man says. "It permeates every- thing, including finance." ^ Peter Goss, the director of Control Risks' U.S. headquarters in Bethesda, echoes Ackerman's assertion that kidnappings of ex- ecutives has declined in the last few years. "They're now taking oil technicians, construction su- pervisors, missionaries and jour- nalists rather than local corpor- ate representatives," Goss says. The London-based firm's re- cent cases have taken it to the Sudan, where it sought the re- lease of some kidnapped techni- cians, and to Angola, where Unita rebels fighting the leftist Angolan government had engaged in kid- napings. Overall, the company says it has 700 clients worldwide, about 350 of these in the United States. In Europe, Goes ? says, defense industry companies have been tar- gets of attack, and at the Paris Air Show this spring, several defense contractors based in the United States, Canada and Europe sought the firm's help. Goss and a three- man team coordinated security, hir- ing more than 30 local guards to watch hotels and nightspots where ,defense executives were entertain- ing. In this case, however, Goss says the fear of terrorist attacks probably was overblown. "I think the threats tended to get exagger- ated," he says. Like Ackerman & Palumbo, Con- trol Risks relies heavily on former i s lea er- intelligence officials for ship. Goss, a 30-year veteran of the British army, served in the special forces and intelligence divisions and saw action in such hot spots as an, Northern Ireland and Ma'ia sia. Karl Ackerman another director, was chief securit at the State Department or many years. tough it has concentrated on kidnaping cases since it was founded in 1976, Goss said Control Risks Wbroad its focus to in- clude white-collar erinie. "I'd .say that there's increasing ooticbili over computer fraud and fraud in general," Goss says. Con- t1rol Risks has a computer center at its London headquarters and is planning to expand the operation to its U.S. offices. He said, "We're focusing on high- technology security, general con- tingency planning and across-the- board crisis management. In. the aftermath of things like Tylenol and Union Carbide, corporations `are now reviewing their operators broadly." ^ Paul Chamberlain International has handled nearly 86 kidnaping and extortion cases since 1981, 76 of those in the United States, Cham- berlain says. But he adds that white-collar crime now constitutes about 50 percent of his firm's over- all caseload. "In-house white collar crime is becoming rampant. It's becoming epidemic," he says. "Anybody who can take some money is taking it, including high-level guys at major financial institutions. We have ma- jor financial institutions placing bad loans. We have S&Ls who are being taken by employes putting out bad loans." Chamberlain estimates that his firm has worked for about a doz- en savings and loan institutions over the last few? years, investiga- ting improprieties and criminal acts by employes, including kickbacks on some loans. Chamberlain and his associates all boast of lengthy careers with the FBI and a number worked on the cele- brated Patty Hearst kidnaping case. Chamberlain estimates his firm has about 25 clients on retainer; another 1,200 clients purchased optional in- surance policies from professional indemnity agents. He estimates that revenue will total between $2 m ion end $3 million thia?year. Chamberlain is bullish on thepro- sects for his business. Reeenttl~ he was hired by a couple of defense companies to investigate mid-level employes suspected of taking kick- backs. And he just finished a case in which a corporate lawyer earning $500,000 a year received a three- year jail sentence for "taking kick- backs from outside law firms." Says Chamberlain: White-collar crime "is where it's really at." a1i Declassified in Part - Sanitized Copy Approved for Release 2012/02/22 : CIA-RDP90-00965R000706510001-5