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UK leads the world in private security industry

The recent crises around the world mean demand for armed guards is soaring with the UK leading the way
  • @lucytobin

Somalian pirates, earthquakes, Arab uprisings, fresh rumblings from the eurozone crisis. They all trigger the same effect in the corporate world: a phone call to a private security firm to plot a plan.

It might be hiring ex-marines to guard their top executives 24/7 with AK-47s. It could be teaching oil executives in Bogota how to escape from a potential shooting in a high-speed chase. Or it might be working out a back-up plan in case the whole of southern Europe goes on strike. That's why the recent string of political crises and natural catastrophes has triggered a boom in the private security and risk industry.

It's a particularly British success story. Take London-headquartered Control Risks: its 34 offices around the world, including in Basra, Beijing and Bogotá, hire out men with guns to clients from sectors ranging from energy to retail. Business is growing by more than 50 per cent this year, according to its chief executive Richard Fenning. That's after the company enjoyed a 54 per cent jump in annual operating profit to £19.1m in the year to April 2011, thanks to a higher workload in the Middle East and a gush of contracts in Iraq.

The corporates euphemistically dub the bulk of their work "protective security". What that means is that armed men, and they are always men, are dispatched around the world, ready to press the trigger if any of the VIPs, diplomats and businessmen and women they are paid to guard get into trouble.

Little surprise most of those involved are ex-military: the industry behemoth G4S says its average staff working in "complex environments" are former Marines, Paras, or Army, aged around 35, and who, having already experienced life in Basra and others of the world's most dangerous places, are adroit at staying alive. They wear branded cargo pants and a polo shirt, often with a flak jacket too. At any moment, life could turn into an episode of shooting game Call of Duty: Modern Warfare.

Iraq remains one of the biggest markets, with private security staff clearing mines to develop the southern oilfields around Basra and guarding executives and foreign officials elsewhere in the country. But it hasn't been without scandal, most notably Blackwater, when guards working for that US security firm (which has since twice renamed itself, most recently as Academi) to protect American diplomats opened fire in Baghdad's busy Nisur Square, killing at least 14 civilians.

The industry claims it has moved out of Blackwater's shadow, with insiders pointing to initiatives like the International Code of Conduct for Private Security Service Providers, whose steering committee was led by British firms Saracen International, Aegis and G4S. Critics, however, remain unhappy that the international industry is still reliant on self-regulation.

The workload isn't growing everywhere. Afghanistan, once a hot spot for the sector, is becoming a no-go area after president Hamid Karzai banned private security firms apart from those with guards working in foreign embassy compounds. Only this week Afghan police arrested two British contractors working for private security firm Garda World after claiming to find them carrying 30 unlicensed AK-47 rifles.

But there seems to be more than enough demand for armed guards in the rest of the world to make up for it. When G4S bought ArmorGroup, the private security business chaired by

the former Tory minister Sir Malcolm Rifkind, in 2008, the firm was struggling as Iraqi and Afghan security contracts dried up. Now, the market for protection is booming: G4S works at more than 40 embassies around the world, including Afghanistan's.

"The growth of the private security industry was driven by the US," a G4S spokesman explains. "In 2003, the US government started outsourcing contracts for convoy protection in Iraq, and British companies have been at the forefront of security work for 20 years. The UK government has followed as the public purse grew tighter, so the level of private contracting looks set to grow further."

There's training work to be done too. Corporates call on private security muscle to teach their suits going to South America or Africa how to avoid hostage situations.

The industry also tackles white-collar crime prevention. "It's an interesting time in the world," Mr Fenning adds. "There's major fraud and corruption work going on. The Bribery Act in the UK has made a lot of companies relook at their security standards around the world and come to us to help."

Private security firms might be spreading their gaze but it's still their gun-wielding protection staff that they're best known for. As the defence cuts kick in and thousands more British military are laid off, this is one area where the private sector is lying in wait with jobs.

Name Game: But reputation's still shot

The word "Blackwater" is practically banned these days in the private security industry. It was the name of the US firm whose guards, hired to protect American diplomats, opened fire in Baghdad's Nisur Square, killing at least 14 civilians, including children.

The shooting hit US-Iraqi relations, the Iraqi government banning the firm from the country. Shortly after, the security group, founded by former Navy Seal Erik Prince, was renamed Xe Services. But it couldn't leave controversy behind. Xe was hit by reports the CIA hired its contractors as part of a secret programme to kill top al-Qaeda figures. Mr Prince sold his stake to US private-equity firms Forte Capital Advisors and Manhattan Partners in 2010.

The group changed its name again last month, to Academi after Plato's institution in ancient Greece. The company's president, Ted Wright, said its objective was to be "boring". That looks unlikely: Mr Wright also said he plans to apply for a licence to operate in war-torn Iraq again.

Name change or not, the Iraqis are unlikely to see the group formerly known as Blackwater as anything other than that.