Michael Howard and spooks on brink of Rothschild funding deal

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The Independent Online

Diligence, the corporate intelligence firm founded by former spies and chaired by the one-time Conservative leader Michael Howard, is close to striking a major investment deal with a member of the Rothschild banking dynasty.

The company, thought to be valued at around £30m, is understood to be in talks with an investment business called JNR, run by Nathaniel Rothschild, son of Lord Jacob Rothschild.

Under the proposed deal, Diligence's majority shareholder - a South American private equity firm - will sell part of its 60 per cent stake. It is also thought that group chairman Richard Burt, the former US Assistant Secretary of State and chief arms control negotiator in the first Bush administration, will sell his 12 per cent holding and then leave the company. Mr Howard is European chairman.

Diligence declined to comment. However, sources close to the situation believe a deal could be struck within weeks.

Diligence was founded in 2000 by Nick Day, a former MI5 spy who also served in the Special Boat Service, and ex-CIA agent Mike Baker, who no longer works for the company.

Mr Howard joined on a part-time basis last year. He also sits on Diligence's advisory board beside Judge William Webster, a former director of the CIA and FBI, and Edward Mathias, a managing director of private equity group Carlyle, among others.

Diligence describes itself as an "intelligence gathering and risk management" firm. Like its larger rival Kroll, it has built a reputation advising clients on a range of sensitive issues, such as investigating fraud and money laundering, vetting potential overseas partners and providing security.

The business has grown rapidly since its inception, and now boasts offices around the world, including London, Washington, Moscow and Hong Kong. The new investment, should the Rothschild deal go ahead, will allow it to continue expanding its operations. It is particularly focused on growing its presence in Asia.

However, the group is not without its controversial side. Clients are understood to have included Halliburton, US Vice-President Dick Cheney's former firm, while heavyweight Republican lobbying outfit Barbour Griffith & Rogers has invested in the business in the past.

Diligence settled a dispute with accountancy giant KPMG out of court last year. The legal row centred on claims that Diligence staff had impersonated MI6 officers in order to steal information.

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