BEIRUT: As outbreaks of violence across the country become increasingly routine, one would expect Lebanon’s private security companies to thrive. But the global trends that have reshaped the international private security industry over the past few years and heightened risk aversion on the part of governments and corporations have complicated what would otherwise be a straightforward economic success story.
Michael Olver, the director of Kroll’s Middle East business intelligence unit, said Lebanese firms were likely to see sustained or increasing demand for services from their existing stalwart clients like embassies, which typically boost their spending on security when the situation deteriorates in order to maintain operations.
At the same time, they will probably see a reduction in the number of multinational corporate clients, he said.
“Large international private sector firms are already evaluating the risk-return balance for having large offices in Lebanon and are going to be re-evaluating the need for a continued large-scale presence,” he told the Daily Star.
Kroll, which provides personal protection to high-level executive clients visiting Lebanon in addition to its business advisory and fraud investigation services, has already seen GCC nationals scale back travel to the country due the bans many Gulf countries have imposed.
The bulk of Kroll’s current regional work consists of advising international and Gulf clients looking to expand in the MENA market, including Lebanon, and local corporations, banks and individuals.
“If you’re a U.S. manufacturing firm doing a ... [joint venture] with a Saudi partner, we will do a full analysis of their position in the market,” Olver said. “We work with Lebanese clients with Gulf interests because that’s where we are strong and often that’s where the money is.”
Though the volume of foreign direct investment aimed at Arab Spring-affected states has seen a steep decline since 2011, there is still demand for Kroll’s services from clients looking to ensure their business activities are not in violation of new EU or U.S. sanctions or that their existing partnerships don’t leave them exposed to individuals who are tainted by association with the old regimes, Olver said.
“If you look at business trends regionally, Syria was just opening up until two years ago. While previously there was a lot of call for a more standard pre-transaction due diligence advisory processes, since 2011 there has been a flurry of interest from corporations asking, ‘Can you look at a JV partner or vendor we looked at a few years ago in Lebanon and make sure we’re not in violation of the new Syria sanctions?’” Olver said. “A lot of people want to keep doing business in the Levant, but they want to make sure that they are not dealing with a front for someone on the sanctions list.”
ITF Detectives, a private detective agency that has operated in Lebanon since 1990, has seen demand drop across the board in the country this year, particularly for personal protection services due to the lack of intentional visitors. The agency is currently working on just three cases in Lebanon, down from 37 in 2012.
Like Kroll, ITF does due diligence for corporate clients from Lebanon or those looking to invest here.
“We use company records, personal research into individuals, their holdings, and other companies they may be a director of,” Buckle explained. “This hasn’t changed too much. What we have noticed a big change in is the private side. We’ve noticed a lot more personal mistrust. There’s an awful lot of fraud.”
ITF’s biggest case of the year so far has been an investigation into blackmail, which Buckle says is on the rise in the country.
“You have individuals based in Lebanon saying that if you don’t do x we will hack your website,” Buckle explained. “If you’re an Internet based website and you are being threatened with a massive attack on your website, you’re going to lose a lot of time and money if your website goes down, so you will probably pay.”
Payments range from $200 to $200,000 in the Lebanese Internet denial of service cases ITF has investigated, Buckle said, and are generally motivated by one of three reasons: to get credit card numbers and other personal information from visitors and use it fraudulently; “pure, straight-up blackmail, ‘if you don’t pay us, we’ll take you offline;’” and politically motivated denial of service attacks like those perpetrated by the Anonymous collective.
Buckle said he has identified four groups behind the attacks in Lebanon. The case ITF investigated this year was done by a “a group of individuals from the Middle East” that “may be politically motivated.”
Internet denial of service attacks are often accompanied by a host of jurisdictional complications, Buckle said:
“If you have a U.S. company on the Internet and they have offices in Russia and the Caribbean, and then the money is transferred via Western Union to Lebanon, who has jurisdiction Where is the crime? We deliver the information to law enforcement, but what can they do with it, where’s the crime. Is it in the Caribbean, Russia or Lebanon?”
Lebanese physical security companies – those that provide guards and security to residential and corporate compounds, individual body guards, and the like – have fared comparatively well so far this year, but competition is rising from international players and local upstarts alike.
The A to Z Group, a security company offering guard services and cash transfer protection to corporate clients and Lebanese public institutions, hired an additional 100 people about six months ago to meet demand, bringing its total staff to 250 people, General Manager George Ghorayeb told The Daily Star.
“We cover all of Lebanon and I’ve noticed that clients everywhere are afraid of the situation. The biggest demand is for residential and corporate guards,” he said. “There has been a big increase in buildings requesting services because they are scared.”
Elie Georgiou, the executive manager of PRO.SEC, a Lebanese firm that employs 800 people and offers physical security and close protection services, said business remained stable between 2012 and 2013, but there had been an increase in job seekers.
“I’ve noticed that there are a lot more people coming to work in the sector,” Georgiou told the Daily Star. “We’ve had a lot of people with BAs and other degrees who are coming to work in security because they have been laid off and there are no jobs anywhere else. Even if they have a BA in science, if he doesn’t know the principles of basic security he can’t be hired.”
There has been a slight increase in inquiries from potential clients, Georgiou noted, but “there is a lot of competition in the security field, so business has been stable. We lose some contracts and get new ones to replace them.”
This might be poised to change since many of the international firms that thrived off Western military contracts in Iraq and Afghanistan are diversifying operations and looking to new markets, Olver of Kroll said.
“The security industry in general is in crisis, so a lot of international companies are looking for the next big thing or to diversify into the next little five or six things,” Olver said. “A lot of the international oil and gas companies have set up one-man offices in Lebanon since the oil and gas tender round is about to start and a lot of security guys are looking to that sector. They see that the oil companies they already service in Libya are looking at Lebanon, so a lot of them have positioned themselves to be able to provide services in Lebanon.”
Whether Lebanese firms are able to continue to thrive in an increasingly competitive market, will depend on the type of contracts they have and the clients they serve, Olver said.
“Some will do well and some will go under. In spite of the image it presents, at the end of the day the security business is just that, its a business. The ones who deliver good products and who are run by better businessmen are the ones who do well.”