Private Security Industry Bill [Lords]

[back to previous text]

Mr. Ian Stewart (Eccles): It is good to see you in the Chair, Mr. Winterton. This morning, while Mr. Benton was in the Chair, I declared an interest on the basis of my lifelong trade union membership and activity. I went further by declaring the activities of my union—the Transport and General Workers Union—in recruiting and servicing as trade union members employees in the security industry at all levels, from the most sophisticated companies down to what are colloquially known as bouncers. I dislike that name and much prefer the modern description of door stewards.

Having declared those interests, I think that it is only right that, from time to time, Labour Members also consider in a balanced way the interests of employers in the industry. Clause 3 deals with

    ``Conduct prohibited without a licence''.

Subsection (5) states:

    ``Schedule 2 (which defines the activities that are to be treated as the activities of a security operative for the purposes of this Act and those which, so far as they are designated, are subject to additional controls) shall have effect.''

The CBI's concerns about the Bill's impact on the information technology industry have been conveyed to me and other Committee members in the past day or two. It is worried that the Bill's wording makes no distinction between physical and information security. I ask the Minister to clarify the Government's position on that.

Mr. Bruce George: I am a little concerned about aspects of the clause. I speak as a consultant for no one. I have an antipathy towards sections of the private security industry—although not because my principal opponent at the election is having his campaign run from a private security firm; God forbid that I should be so hostile and vengeful towards the industry simply on that basis. We are all in a learning process.

On licensable conduct, one of my concerns—to which I hope that the Minister will be prepared to respond later, if not now—relates to a section of the private security industry that did not want to be seen as part of it and hoped for separate legislation: private investigators. The private investigator is seen as a gumshoe character, the kind of guy who would be seen in a Humphrey Bogart movie. That perception still exists but, in the past few years, the process of investigation has gone upmarket and there are now many large investigation companies, so much so that there was a supplement in the Financial Times on 10 April about corporate security. There are some real giants in the industry, both British and American.

5 pm

I have one concern to which I am not certain that the Home Office has given specific consideration. As I have not declared my hand on this, I am prepared to wait for a response. Investigators such as Control Risks, which is a British firm, Kroll and Pinkerton are in a different market from the gumshoe character. They are engaged in investigating mega company fraud and issues such as due diligence. I know of a British defence company, which was a big household name, that collapsed because it bought an American company that turned out to be crooked. Big security companies, particularly in investigation, deal with white-collar fraud, international asset tracing, due diligence investigation, litigation support, and insurance and reinsurance investigations.

Mr. Bercow: The right hon. Gentleman referred to Control Risks. In addition to the activities that he mentioned, I am sure that he would want to place on record the fact that substantial numbers of people—during the recess, I met someone who works for Control Risks—are engaged in risk assessment on inward investment. That is an increasing sphere for them.

Mr. George: I could add the Control Risks Group, Armor Holdings, Decisions Strategies Fairfax International, Investigative Group International, Bishop International, Pinkerton, Hakluyt, and Smith Brandon International. They are big businesses, both domestically and internationally. The strong pressure on merger and acquisitions in the UK and the country's leading role in banking have encouraged the creation of sophisticated investigations companies that have not really emerged in any other European country. The value of the industry to the UK economy is probably between £100 million and £200 million per annum and depends largely on the confidence placed in it by corporate clients in the discreet management of investigations.

I do not speak from any direct experience, although I recall visiting several legal firms that brought together investigators of all types to pursue, successfully, those who had evaded police detection after the Brinks Mat robbery. There was a celebration party of 250 people, which shows how the private sector is engaged in the investigation of corporate affairs almost as much as is the Serious Fraud Office. Frankly, the private sector can often do it better than the police, because it has access to highly qualified people, more numerate lawyers and better business specialists—I mean no disrespect to the police force.

The problem is that clause 3 requires the licensing of anyone employed for purposes of assisting with an investigation. That does not take into account two important factors. Naturally, most investigations of corporate crime attempt to uncover information that is hidden either because it would imply or prove a crime or cause for civil action, or because the discovery of that information could injure the party that is attempting to keep it secret. That is obvious. An example of the first case is suspected fraud; an example of the second would be misinformation supplied by a company to secure competitive advantage. In now come Kroll or Control Risks to do a major investigation of what could amount to millions of pounds. To obtain relevant information in the course of that investigation, it is often essential that the individual seeking it is not identified as an investigator. Indeed, the information might probably be obtained only because he can claim to be a consultant of some kind, an academic, an industry expert or a financial analyst.

Much of the work undertaken by corporate investigation teams depends upon the ability of those companies to employ on a temporary basis people who do not normally work as investigators. If they were required to have their names on a register as having been licensed because they were undertaking licensable activities, quite a number would not wish to be involved in any investigation.Furthermore, it would be possible for the subject of an investigation to identify those making inquiries as investigators, thereby nullifying the activity.

If everyone engaged in investigation—I can use this argument in another part of the Bill—had their name disclosed because they had gone through a licensing process, someone committing a major fraud in the City of London could gain access to all that information on all the corporate investigators and private security companies and therefore could identify someone who suddenly came into the company to undertake a survey of some kind. That would give the serious fraudster an enormous advantage.

Can the Minister look at who those people applying for licences are and whether they are carrying out their business in a professional manner? Perhaps it might be possible to assist the process of corporate investigation by some form of amendment to the Bill. This also comes up in another clause. We are talking not about a seedy guy in a mackintosh who is snooping around to see whether someone is engaged in extramarital activities, but about the phenomenal growth in corporate crime, both domestic and international. Expertise of the highest order is required to match the expertise of those who are defrauding companies and the nation as a whole of vast amounts of cash and resources.

We are all involved in a learning process on the whole question of private investigators. We are trying to understand that it is not just the guy outside the nightclub or a security guard. It is pretty easy to work out how they operate. It is vital that we do not disadvantage those legitimate companies, which I believe should be licensed as companies and not simply as an amalgam of individuals. I hope that it might be possible at a later stage for the Minister to invite his officials to have some discussions with that top level of the market to see whether the Bill might not advance the cause of investigating and successfully bringing to prosecution major criminals, not a drunk who tries to get into a nightclub.

I hope that the Minister will be satisfied and will eventually be able to convince us that corporate investigation will not be disadvantaged in any way as a result of the Bill, particularly under this clause, as some of the big companies suspect that it may impair the ability of their qualified people to go under cover. It is not possible for someone to tell an office that he works for Control Risks and to ask whether any employees have their hands in the till. It has to be done surreptitiously. I hope that the Minister can convince the Committee that the Bill will enhance rather than retard the requisite process. Despite the negative image of investigators, the security industry is important: it brings a great deal of money into the country and it solves many crimes.

Mr. Hawkins: Important points have been made by the right hon. Member for Walsall, South and the hon. Member for Eccles. In both cases, we are talking about the interests of industry and it will not surprise any member of the Committee to hear that Conservative Members have been contacted by organisations and companies, and that meetings have been arranged with a group of leading corporate investigation consultancies—including the companies, such as Control Risks, Armor Holdings and Kroll Associates, mentioned by the right hon. Gentleman. Conservative Members have also talked to CBI experts on these matters.

Both Labour Members who have spoken would concede that we shall return to this matter when we debate schedule 2. The hon. Member for Eccles will note our amendment No. 32, and I hope that he will be minded to support it.

5.11 pm

Sitting suspended for a Division in the House.

5.26 pm

On resuming—

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2001
Prepared 24 April 2001