Home Affairs CommitteeWritten evidence submitted by GPW [PI 19]

Proposed Regulation of the “Investigations Industry”

At the recent invitation of the Clerk to the Committee I respectfully submit the following comments for consideration in your review of a possible regulatory framework for what is loosely dubbed the “Investigations Industry”.

By way of background, I am the Chief Executive of GPW + Co Ltd (www.gpwltd.com), a UK incorporated Business Intelligence and Investigations Consultancy headquartered in London with a small office in Dubai.

Before joining GPW in 2004 I had been Regional Managing Director of Kroll in Asia, based in Hong Kong, prior to which I had been that company’s Regional Managing Director for all of Europe, based in London. My three co-shareholders and the original founders of this company had all been senior Kroll executives until 2004, and our senior partner, Patrick Grayson, founded the original Kroll office in London in 1986.

We enjoy a profitable turnover of approaching £11 million per annum and currently employ 47 full time staff in London on salaries of between £25,000 and £150,000. We employ no former police officers and our staff is comprised almost of exclusively multilingual, top level graduates for whose recruitment we compete against Government, financial institutions, management consultancies, accountancy and law firms and other top-tier professional service providers.

Although I was closely involved in discussions with the Home Office and the SIA leading up to 2007 I have not been so during the most recent round of discussions between your Committee and those of our peer-group firms whom you have met. I hope therefore you will forgive me if some of what follows is based more on the general thinking that prevailed up to 2007—and with which I was familiar—rather than reflecting the nuances of any more recent thinking by the Government or by your Committee.

We are not averse to fair regulation.

In common with other leading firms in the sector we are not averse to a regulatory framework within which we should operate, so long as it is proportionate, appropriate and equally applicable to all those against who we compete commercially or who carry out the same activities.

Under the former proposed licencing regime it was suggested that accounting firms be exempt from the licencing requirements that would apply to us. We compete daily against such firms and each of the “Big 4” has a department that provides precisely the same services that we offer. For evidence of this fact one need look no further than the published contractual awards of the European Bank for Reconstruction and Development (EBRD)—one of our own largest clients—where we sit alongside accounting firms on the Bank’s panel of approved consultants conducting “Integrity Investigations”.

The departments of the accounting firms providing services that compete with us are not exclusively staffed by accountants nor solely by members of any recognised professional body. For us to operate under a regulatory obligation that was not imposed upon those against whom we compete on identical matters would be unfair.

Further, the recent and highly publicised arrest of Howard Hill, a corporate investigative partner who was not an accountant at the accountancy firm PKF, demonstrates that an “umbrella” professional licence, such as a firm’s membership of the ACEAW, will not necessarily provide the regulatory oversight or constraints sought.

Very little of what we do can or should be described as “investigation” in the context that we understand the Committee to mean.

Our use of the term “investigation” primarily relates to the due diligence investigations required by our clients into their partners, counterparties, agents and acquisitions in order for these clients to discharge their own regulatory obligations under FCPA, UK Bribery Act, Anti-Money Laundering and other compliance driven requirements. The work requires detailed collation and analysis of legal, commercial, media and other material both directly accessible from the public domain and also expressed as opinions of informed individuals whose independent views we seek on behalf of our clients. This work is conducted on a global basis, in full and proper compliance with the laws that prevail in the country of interest and, arguably, beyond the competent oversight of a UK licencing framework even if these actions were deemed to be required to be licenced.

It would be disproportionate to require every employee of our firm to be individually licenced to undertake investigative activities.

Of the 42 fee earning staff that we have, perhaps one of them spends up to 20% of his time directing—not doing—activities that fall within the range of actions that might be described as the activities of a private investigator. The remainder conduct work that on a daily basis is being carried out by organisations as diverse as head-hunters, property search agents, market researchers, academic and political research groups, bond rating agencies, corporate financiers and pollsters.

We would propose either that individuals within a firm who undertook licensable activities (however defined) be individually and specifically licenced, irrespective of the primary commercial activity of that firm, or that firms wishing any of their employees to conduct any of the licensable activities be licensed as a firm, again, irrespective of the primary sector within which that firm operated.

To require every individual employee of some (but not all) firms that conduct work of the type that that we carry out would be both unfair on us and disproportionate in its reach.

Any licensing regime should recognise the spectrum of activities caught under its proposed remit.

The activities of firms such as GPW, Kroll, Control Risks, TRAG and their peers are quite different from the work conducted by enquiry agents, private detectives, pre-cognition agents, and skip tracers. We provide measured due diligence in support of regulatory requirements and we provide litigation support for top legal firms. This is not to say that we are superior to the first group I describe, but just that our work is of a different type and it is not likely that our clients or the public at large will be best served or protected by a “one-size-fits-all” licensing regime.

At the request of your Clerk and in recognition of the substantial workload faced by the Committee I have kept this submission as short as seemed reasonable, but my fellow directors and I remain available at any time to meet the Committee or to answer any additional questions that you or your members may have.

May 2012

Prepared 5th July 2012