Broker, Trader, Lawyer, Spy (27 page)

The group then fired questions at the speakers. What’s the status
of the relationship between China and North Korea? (Bosworth: Not as close as we think.) How does the North Korean leadership interact internally? (Brown: Kim Jong Il is not a madman, but no one on the outside really knows how the government there works.) How big is the gray market in consumer goods? (Brown: The gray market is bigger than the legitimate market.) And what about lifting those sanctions? (Brown: North Korea could have a lot to trade with the rest of the world, including seafood and minerals.)

The businesspeople were energized as they left the room, some still munching their breakfast. They’d gotten what they came for: business information and spy stories. Now they, and their hosts, would try to make money from what they’d learned.

T
HAT KIND OF
business development takes place around the world in corporate intelligence, just like any other business. In Germany, though, the business of corporate intelligence is especially delicate.

On a warm fall afternoon in Berlin, Johann Benöhr sips a latte and smokes cigarette after cigarette at the Shan Rahimkhan Café, which overlooks a scenic cobblestone plaza, the Gendarmenmarkt. He’s there to offer a reporter a glimpse into life as a corporate investigator in Germany, speaking in nearly flawless English honed during a stint as a corporate investigator in London. With his shaved head, two-day stubble, and sleek suit, Benöhr could pass for a slimmer version of the actor Vin Diesel.

In this city, you’re never far from a reminder of its years as the center of cold war espionage. The café is just a short walk from Checkpoint Charlie, where East German and western troops faced off at one of the few passages through the Berlin Wall. That wall is long gone, and although Benöhr is sitting several blocks inside what used to be East Berlin, you’d hardly know it. The nearby boulevard Friedrichstrasse is now a fashionable shopping district, featuring luxury brands and a BMW Mini auto dealership. As the city has
changed, so have its spies. Benöhr is a different kind of intelligence player: he gathers information for companies, not countries.

In recent years, Germany has been racked by corporate spying and bribery scandals: In 2005 and 2006, Deutsche Telecom hired a spy firm to obtain phone records of journalists covering it, and of the members of its own supervisory board. One of the firms Deutsche Telecom worked with was the German office of Control Risks Group, an investigative firm based in London. Control Risks in turn hired out some of the Deutsche Telecom work to Desa, a firm led by onetime informants for the East German secret police force, Stasi. When investigators from Germany’s Federal Office of Criminal Investigation decided to visit the Control Risks office in May 2008, they didn’t have to go far—the private intelligence firm is located in the same Berlin office building as the federal investigators.
¹
The list of German spying cases goes on: in 2008, the retailers Lidl and Schlecker were revealed to have been spying on their own employees, too.
²

The climate of scandal makes it difficult for Benöhr to talk about his industry. Today, he says, he’s taking some time off between gigs. He brushes off requests to discuss specific cases, and proclaims that the investigative business is rather boring: “There’s very little James Bond, and a lot more librarian work,” he says.

Benöhr didn’t get his training in an intelligence school. Instead, he’s a lawyer and an MBA. He started his business intelligence career in Frankfurt, at the headquarters of Kroll, the American investigative firm. There he learned that with regard to conducting business intelligence operations, Germany was a different place from what many of his American and British colleagues at Kroll expected. For one thing, most court records are sealed—even routine civil matters. That makes due diligence investigations much more difficult than they are in other European countries. Gathering information for a routine background check on an executive takes a few seconds in the United States, and can be done by anybody with a computer. In Germany, it takes much longer. To
find out if an executive has ever been sued, gone bankrupt, or been arrested, Benöhr can’t just dip into an online database. He’s got to tap into his long-developed network of German business and legal contacts. Connections are everything in Germany.

Culturally, too, Germany is a trickier place to conduct investigations than other western democracies. The country has recent, searing memories of life under a police state. People have an aversion to anything smacking of intelligence, informants, or secret files. “Because of German history, when it comes to anything to do with intelligence, people are very sensitive,” says Benöhr. Calls to an executive’s former colleagues—a standard part of a background check in other countries—often meet with grim silence or even a disconnection. All this also makes corporate investigations in Germany much more expensive than elsewhere.

As a result, Benöhr says, the investigations industry in Germany is dominated by financial firms: “They have huge pockets, and when there’s a big deal pending, there’s so much at stake that they will spend what it takes. And if you do it right, it’s going to be expensive.”

Ironically, two American business trends are driving the German corporate intelligence market: the increasing aggressiveness of the Securities and Exchange Commission (SEC), and the ratcheting up of prosecutions under the Foreign Corrupt Practices Act (FCPA), which prohibits American companies or their foreign subsidiaries from engaging in bribery overseas.

“Until 1999, German companies could deduct bribes they paid abroad from their taxes,” says Benöhr. In Germany, executives have a “different mind-set when it comes to what constitutes criminal activity.” Now that so many multinational companies come under the provisions of the American FCPA, Benöhr says, companies that have had problems with bribery are increasingly investigating themselves. Also, American private equity investors that own pieces of German companies need to make sure the German employees aren’t bribing third-country officials to ease
environmental, customs, or other regulations. Investigators like Benöhr are brought in to make sure executives know what happened in a bribery case, and what the company’s legal exposure is. They ask basic questions:
Who knew? Was upper management involved? Was it a one-off case? Was this the usual method of doing business?
“You have to be particularly thorough,” says Benöhr. “Your job is to make certain that you’ve really looked into this and that everybody who was involved is gone.”

There’s an additional international wrinkle for investigators doing business in Germany: American private equity companies own many German companies, making them subject to the SEC’s disclosure regulations. The burdens of disclosure are much higher in the United States than in many other places, and Benöhr says American investors like to pore over German companies when they’re making a purchase. “As an investor, you want to make sure that the company you have bought is not toxic waste.”

F
OX AND
B
ENÖHR
are willing to explain their industry openly to a reporter, but not everyone in the global intelligence business is equally willing to talk about what he does. Take Sheikh Mohammed Bin Rashid Al Maktoum, who is the ruler of the fast-growing city-state of Dubai and the prime minister of the United Arab Emirates. He’s worth an estimated $18 billion, likes to race thoroughbred horses and camels, and owns the world’s biggest yacht, a glistening white, 530-foot behemoth called
Dubai
.

Sheikh Mo, as he’s known, has a firm staffed by CIA veterans on his payroll in Washington.

That fact is buried in obscure U.S government filings, so it has not been discovered by the media and the public. If it were widely known, it could be controversial. In 2006, the effort by a company called Dubai Ports World to buy a company that managed six American ports caused an uproar throughout the United States, in the mainstream media, in the blogosphere, and among the political
elite. How could a company from the United Arab Emirates—a federation to which several of the 9/11 terrorists had ties—be given access to the American shipping infrastructure? Republican congresswoman Sue Myrick sent an angry letter to President George W. Bush that read in part, “Hell no!” Would politicians like Myrick be pleased to learn that Sheikh Mo had hired—through several cutouts—some of the most sophisticated CIA-trained talent available in the private sector?

It’s not clear what services these former CIA people offer to the ruler of Dubai, but their work on his behalf has left something of a paper trail in federal disclosure records. The documents are difficult to find, but they are the only clues in the mystery: the CIA veterans aren’t talking, and the embassy of the United Arab Emirates does not respond to an inquiry about the matter.

This case is particularly interesting, since it illustrates the way many private intelligence firms are hired. The entire industry is hidden from public view through the clever application of attorney-client privilege, aggressive use of nondisclosure agreements, and creation of elaborate cutout schemes.

Whenever an American company signs on to lobby the government on behalf of a foreign country, it has to file a document with the U.S. Department of Justice Foreign Agents Registration Unit. The law that gives the unit its authority was passed in 1938, and was designed to make life difficult for Nazi sympathizers working in the United States. In all the decades since, the Department of Justice has been accumulating registrations at its small facility in Washington.

Its offices are tucked into the first floor of a nondescript building just a block or so from the White House on New York Avenue. After pressing a buzzer to be let in, visitors enter a filing room overflowing with years of old papers, books, and directories. Three worn-looking computers sit on a table, available to any member of the public for a search through electronic copies of the files. Invariably, young paralegals from some of Washington’s high-powered
law firms occupy these computers, searching the records for details to support ongoing litigation.

The documents they’re searching through typically include copies of any contracts signed by American companies working to advocate for foreign governments. They detail names of American officials the firms met with, and the dates and times of those contacts.

The disclosure forms show that the government-owned Dubai Holding (which, because Dubai is a monarchy, thus belongs to Sheikh Mohammed Bin Rashid Al Maktoum) hired the American law firm DLA Piper to work on its behalf. The law firm in turn hired the public relations firm Levick Strategic Communications. And the PR firm hired TD International (TDI), a private intelligence firm that is based in Washington, D.C., and employs a number of CIA veterans.

The founder of TDI is William Green, who is described at the firm’s Web site as “a former U.S. diplomat specializing in multilateral affairs.” Several sources say he is a former CIA officer. A partner at the firm is Ron Slimp, who is described as a “former U.S. diplomat and trade negotiator,” and who once described himself in an e-mail to a colleague as a “former spy.”
*

The contract with Levick called for TDI and its stable of former spies and diplomats to receive $25,000 per month, after an initial start-up payment of $40,000. According to the filings of one of the firms involved, team members in Dubai were working on something they code-named “Project Voss.” The work involved building a document sharing system and a Web site that would serve as a public relations vehicle for the firm’s client in Dubai.

The entire effort—lawyers, Web masters, and spies—was
designed to fend off a class-action lawsuit against Sheikh Mo in south Florida. The suit was filed on September 7, 2006. In it, a group of parents alleged that their sons had been kidnapped and forced to work in the United Arab Emirates, as jockeys in camel races.

Camel racing has been popular in the bedouin desert regions of Arabia for hundreds of years. The oil produced in the region in the twentieth century provided wealth for this sport, which grew ever more competitive and deployed ever more resources, as sheikhs battled for prize money and glory. The sheikhs realized that small boys—who weigh very little—made the best jockeys for these races. That fact, plus the oil money, quickly created a market for children to work in the growing camel-racing industry. Boys from as young as three up through adolescence worked in the racing circuit.

But there may have been a dark underside: the lawsuit alleged that the boys riding the camels were not paid athletes but slaves:

This had the potential to embarrass Sheikh Mo. It also looked as though it might get expensive, even for a billionaire: the lawsuit didn’t specify an amount of money sought by the plaintiffs, but it asked for compensatory damages, punitive damages, and the cost of the lawsuit itself. And it listed as plaintiffs “Minors John Does 1–10,000, Mother Does 1–10,000, Father Does 1–10,000, along
with Mother Roes 1–1,000 and Father Roes, Individually and as Survivors of Deceased Children.”

That meant potentially tens of thousands of impoverished third-world parents suing one of the richest men on the planet and invoking the images of their enslaved, and in some cases dead, sons. Whatever the merits, it would be a tough case to defend. Sheikh Mo’s phalanx of Americans went to work to mitigate the damage.

It’s possible that TDI became involved because executives there saw Sheikh Mo’s troubles as an opportunity for profit—that’s how the competitive intelligence industry works. There is also a possible hint of something more: for the United States, the lawsuit was extraordinarily sensitive. The United Arab Emirates is a crucial ally of the United States against Al Qaeda, and it borders the Strait of Hormuz, a strategic point separating the Persian Gulf from the Gulf of Oman. The twenty-one-mile-wide strait is the sole transit point for as much as 40 percent of the world’s oil, which is transported by tanker to the Indian Ocean and the rest of the world beyond. Across the strait is a hostile nation, Iran. The United States military has used the United Arab Emirates as a launching point for operations in Iraq and the Horn of Africa, where two volatile nations—Ethiopia and Somalia—are situated.