UK: Cloak and Dagger Ltd.

UK: Cloak and Dagger Ltd. - Former spies who were set adrift with the end of the Cold War are infiltrating the business world, writes Nicholas Rufford, and top companies are avid buyers of their craft and secrecy.

Last Updated: 31 Aug 2010

Former spies who were set adrift with the end of the Cold War are infiltrating the business world, writes Nicholas Rufford, and top companies are avid buyers of their craft and secrecy.

M fixed his eyes on Bond across the boardroom. 'So, you're finally hanging up your Walther PPK?' he asked, shifting his gaze out over the Thames from the MI6 headquarters on the south bank at 64 Vauxhall Cross. 'Does this mean you're retiring from the intelligence business?'

'Not at all, Sir,' said Bond, with a resourceful grin. 'You see, there are others who want my services. People who will pay me well. Now that the Soviet Union has disintegrated and there is no Enemy Number One, my job here is done. I thought I might try my hand in the City.'

M looked crestfallen. 'Well, I suppose I can't stop you,' he said. Then he added sharply: 'But remember our rule: if you work for someone else, there must be clear blue water between us and them.'

The names have been changed, as they say in films, but the story is true. Some of Britain's most effective spies are no longer working for the government. They have defected to the private sector, where they can earn twice or three times their Crown service salaries. MI6 has grudgingly given its blessing, on condition that the former spies do not use the government's network of contacts and informants.

When the Cold War ended, MI6 was forced to trim the size of its intelligence branch (IB) to about 150 working overseas and fewer still in Britain.

It even gave early retirement pay-offs to some IB officers, unthinkable a few years ago when the policy was to provide spies with a job for life, and a generous pension, precisely to stop them selling their skills.

Simultaneously, there has been a rapid growth in demand for the sort of services trained intelligence officers can offer. Corporate expansion and international mergers and acquisitions, especially in Eastern Europe, Asia and Latin America, have brought sharp reminders of the risks associated with emerging markets and offshore manufacturing. 'Chief executives discover that the contract they signed is not watertight, or their new partner is an embezzler, or the state privatisation they invested in goes belly up,' said a senior City analyst. 'The new wisdom in the City is first consult the bankers and the accountants, then call in the "spooks".'

Normal due diligence may not be enough, even in Britain. Witness the scandals associated with the collapse of Robert Maxwell's empire and Polly Peck, run by Asil Nadir, who remains a fugitive.

So who are the new intelligence firms? Finding out is not easy. They eschew publicity; discretion is their watchword.

Hakluyt, named for Richard Hakluyt, the 16th Century explorer and founder of the East India Company, has its headquarters behind an anonymous door in Queen Anne Street in London's West End. Its principal founders are Christopher James and Mike Reynolds. The company's literature lists them as former members of the 'foreign service', and the company politely declines to elaborate.

However, Foreign Office sources confirmed that both were senior intelligence officers with MI6. James was head of a section that liaised with British firms. Over a 20-year career, he got to know many of the heads of Britain's top companies. In return for a few helpful tips, which might give them an edge over foreign rivals, he persuaded them to pass on intelligence from their overseas operations, industry sources say. After the Cold War, James argued that MI6 should expand this role. Others in the organisation were reluctant to proceed down a path they feared could be mistaken for 'economic espionage'.

When he left MI6 in 1995, James took with him another rising star. Reynolds had founded MI6's counter-terrorism branch and later headed a joint section with MI5 on Middle East terrorism.

To give Hakluyt the kind of reputation they were aiming for, James and Reynolds formed a management board made up of the great and the good.

Its first president, appointed in 1995, was Sir Fitzroy Maclean, the former soldier, spy, diplomat and Tory minister on whom Ian Fleming is said to have based James Bond. Maclean died in 1996 and Sir Peter Holmes, former senior managing director of Shell, took over. Other members of the Hakluyt board include Earl Jellicoe, former chairman of Tate & Lyle, and Sir Brian Cubbon, a former permanent secretary at the Home Office who had close dealings with MI5, Britain's domestic security service.

The company was started in a one-room office. Now it counts among its clients a quarter of the companies in the FTSE 100. Hakluyt will not discuss the kind of work it does for its clients. All it will say is that the clients tend to be one of three types: companies which want to invest in a new market but know little about the hidden wiring of the government or the legal system; companies which have decided to invest, have chosen a partner, but need to be reassured about the integrity of that partner; and companies which have already set up overseas, got into difficulty and need solutions. 'We are not consultants,' Reynolds points out. 'Many companies view a consultant as someone who borrows their client's watch to tell them the time. We are selling a service, and we are only as good as the information that we provide.'

Hakluyt evidently knows its market, because many of its blue-chip clients have retained Hakluyt to provide a regular service.

Some companies prefer to have their own in-house 'spies'. Ex-MI6 people are valued by big British corporations to advise management boards on who's who in, say, China or the Middle East. They can advise on who the real power brokers are, where the pitfalls lie for unwary foreign investors, and can act as go-betweens with the foreign office. The late Tiny Rowland insisted on having a former MI6 officer in charge of security at Lonrho.

Other big British corporations, especially those with strategic interests abroad, have also employed ex-MI6 people. They include British Airways, GEC, British Aerospace and British Petroleum.

In-house appointments, however, can sometimes attract unwelcome attention. Rupert Bowen, a former MI6 man in Africa, was hired by Tony Buckingham, the swashbuckling soldier-turned-oil-prospector, to advise Branch Energy, one of Buckingham's companies with oil and mineral interests in West Africa. Earlier this year, he became linked to efforts by Tim Spicer, chief executive of Sandline, to stage a counter-coup in Sierra Leone. As a result he was named in Parliament and in the foreign office inquiry into the Sandline affair. MI6 denied that Bowen had kept them informed about the coup attempt, in which 30 tonnes of weapons were shipped to Sierra Leone in breach of sanctions, but a suspicion remained that Bowen was a spy who had never really retired.

Another traditional road for former spies after they leave the service is to join multinational investigation firms such as Kroll Associates or Control Risks.

Nigel Churton, managing director of Control Risks, was a military intelligence man who had served with distinction in Northern Ireland. His company was set up in 1975 by an executive of Hogg Robinson insurance, to try to reduce the risks of doing business abroad. He recruited three ex-SAS officers and the company built a solid reputation for tackling commercial sabotage and blackmail, industrial espionage and kidnap and ransom. Today, Control Risks employs over 200 people in a dozen offices worldwide. According to its own publicity it has helped secure release of hostages in more than 840 cases of kidnapping or political detention since it was founded, and had been involved in the efforts to free the four telecom engineers beheaded in Chechnya.

Control Risks was also part of an investigation into Andrew Regan, the City whiz-kid who was secretly videotaped in meetings with executives of Co-operative Wholesale Society, a company he was trying to take over. The evidence helped sink his plans.

Churton says spies have the secretiveness that clients want. 'Confidentiality is the real cornerstone of our business. We occasionally get press attention but it's never instigated by us. We put great emphasis on discretion.'

Kroll Associates, arguably the world's best-known firm of corporate investigators, currently does not employ former spies. Jules Kroll founded the company in New York in 1972, and opened a London office in the former headquarters of MI6 in 1986. Patrick Grayson, an ex-Irish Guards officer who was in military intelligence, was appointed managing director and later deputy chairman. In recent years, key personnel have defected, a number of them after a failed management buy-out. Some believed Kroll had grown too large, or attracted too much attention for its publicity-shy clients. Grayson left and joined Michael Oatley, another former spy and ex-Kroll man, in setting up Ciex in 1994, a 'boutique' intelligence firm. The name is pronounced 'CX', the code name given to secret intelligence reports sent by MI5 and MI6 to Whitehall.

'Companies investing in emerging markets need in-depth due diligence, not just off-the-shelf information,' says Grayson. 'They are using these services more and more, because they know it is more expensive for them not to have information.' Grayson is now with Armor Group, a US security firm, and is chairman of CDR, a company specialising in intellectual property.

Meanwhile, Ciex continues to expand. Oatley prefers not to discuss the company, partly because of client confidentiality and partly because of the sensitivity of his background. A former head of the Middle East department of MI6, he is credited with establishing secret talks between the British government and the IRA which laid the foundation for an eventual ceasefire and peace talks that followed. Code-named Mountain Climber, he made face-to-face contact with Martin McGuinness and in 1975 won an OBE for his work.

The company now has a dozen London-based staff, such as Hamilton McMillan, who ran the MI6 counter-intelligence offensive, and Brian Boyce, who commanded the international organised-crime task force at Scotland Yard, and put Kenneth Noye behind bars for involvement in laundering proceeds from the Brinks-Mat gold robbery. Ciex is run from basement offices in Buckingham Gate, and has an office in Spain run by Simon Butler-Madden, a former spy who worked for 35 years with MI6. Ciex's clients include powerful names in corporate finance and banking. 'Ciex provides high quality information and is very trustworthy,' says one. 'That has got a lot to do with Michael Oatley and his background.'

The services do not come cheap. The company would not take on a contract of less than £15,000, according to one source. For clients investing tens or hundreds of millions of pounds abroad, it is a small amount to pay.

Surprising, then, that more spies do not defect to the private sector. Some may be put off by casualties among colleagues who have ventured unsuccessfully into the corporate intelligence world. In 1994, Duncan Stewart and John Mitchell, two former spooks, were recruited to Cyrus, an intelligence company set up by the entrepreneur David Elias. Despite both individuals being highly able, they found there was no room in the market.

Back in MI6 headquarters, Sir David Spedding, the real-life M, must be pleased that the world outside is not always kind to former spies, otherwise he would have trouble hanging on to staff. Of course, he may be quietly planning his own move from Vauxhall Cross to the City. Dame Stella Rimington, the former director general of MI5, became a non-executive director with Marks & Spencer and British Gas in 1997. Spedding would be welcome on the board of a big corporation, or perhaps in an advisory post to an intelligence company. His term of office expires next year and at 55 he has plenty of energy.

'Perhaps Bond had the right idea, Moneypenny,' one can just imagine him saying. 'Forget the licence to kill. It's time I made a killing.'

Nicholas Rufford is home affairs editor of the Sunday Times.

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