Home Affairs CommitteeSupplementary written evidence submitted by Kroll [PI15]

Thank you for the opportunity to clarify to the Committee our position on the use of independent contractors. I will write to you separately on our broader perspective on regulation of the private investigation business.

Due to the broad and international nature of the services Kroll provides, it has established a network of independent contractors in order to provide a complete range of services to clients. It would not be feasible or practical for Kroll to employ staff in all locations in which it performs services. In addition, many of our individual independent contractors have specific professions and expertise upon which Kroll relies in order to provide services to clients and are used on an occasional basis as and when needed for a case.

For each aspect of a project, we would consider whether the expertise we have within our company is the most appropriate to deliver the best service to our client and will not hesitate to draw on external support where necessary. All projects will, of course, be managed by Kroll employees. We take full legal and professional responsibility for the actions of our contractors, just as if the work was being performed by an employee. We are, after all, responsible for the end result to our clients. As we have grown, more of our work is brought in-house; but equally, the professional and geographic range of our services constantly grows, creating the need for additional expertise which initially will be externally sourced. Currently, less than one third of professional time is represented by contracted services.

Kroll’s work in the London office is predominantly international. Of our billings in 2011, 80% by revenue were for clients outside the UK; and of the 20% for UK clients, many were international law firms in London whose clients were outside the UK. Only about 10% of our work is actually focussed on UK subjects; although the actual work is, of course, largely desk based analysis done in London. Consequently, we have a constant need for expertise on languages. culture, politics, industry and business practice across our region (Europe, Central Asia, the Middle East and Africa); but those needs are not so predictable that we can always have them in-house.

Our contractor base is continuously evolving as the business and market needs develop. New contractors are added and others removed. We currently have 478 contractors on our EMEA database. Less than half (217 out of 478) of our current EMEA independent contractor base are UK companies or individuals and of those most provide services both in and outside of the UK. Of the 217 in the UK, fewer than 90 active independent contractors are individuals. Over half of these are business researchers (including industry analysts, freelance journalists and business consultants) but this also includes academics, lawyers and a number of former full time employees who do occasional project work. This number also includes licensed security consultants, translation agencies and expert providers such as fingerprint and other forensic specialists.

We have in place strict procedures governing our use of independent contractors to ensure that independent contractors are used and managed appropriately and given guidance and direction on the services and the information they provide to us. A copy of Kroll’s Independent Contractor Use policy is attached.1

As with employees, Kroll’s internal procedures require that independent contractors are background checked. Independent contractors complete a questionnaire in which they are asked, amongst other things, whether they have been convicted of a crime or offence and whether they have had, for any reason, any licences or permits suspended or revoked. They are also asked to confirm what measures they have in place in order to adhere to applicable data protection and privacy laws. Background checks typically include professional licensing verification and global compliance database checks. As you will be aware, criminal records checks can only be carried out in limited circumstances. The results of the checks are reviewed by legal and must be satisfactory in order for the independent contractor to be added to Kroll’s approved database. Background checks are repeated every two to three years.

In addition, independent contractors are required to sign Kroll’s independent contractor engagement agreement (copy attached)2 in which they warrant that they will comply with all applicable laws, rules and regulations when providing services to Kroll, including anticorruption legislation, and that they will not carry out any work that could constitute a conflict of interests with the services they provide to Kroll. They also represent that they hold any licences necessary to provide the services and agree to comply with Altegrity’s Code of Conduct and Business Ethics (Altegrity is Kroll’s US-based holding company) (a summary of the Code is included at Exhibit B of the independent contractor engagement agreement). The case manager is responsible for communicating and confirming that the independent contractor adheres to this policy. Our standard independent contractor engagement agreement also contains a restriction on sub-contracting without our prior written consent.

We provide legal and compliance training to our employees including on the use and management of independent contractors. We encourage active management of independent contractors and require that employees clearly specify the scope of their instructions each time an independent contractor is tasked. Statement of works can be completed on the form appended to the Independent Contractor engagement agreement or by email. Our procedures ensure that only approved independent contractors are tasked and the system set-up prevents any unapproved independent contractor from being paid without a waiver from Legal or Compliance.

Kroll has a global compliance function based in New York and overseen by Altegrity’s Compliance department that monitors Kroll activity worldwide, including use of independent contractors, with the aim of ensuring compliance with local laws and regulation. Compliance regularly audits use of independent contractors to check adherence to our internal procedures. From a legal perspective, Kroll accepts liability for the actions of its duly authorised independent contractors in the same way as it would the actions of its employees. Our independent contractors are also covered under our professional liability insurance.

Kroll operates regional Risk Committees whose approval is required before certain types of engagements can proceed. Each Committee is made up of representatives of senior management, legal and Compliance and assesses prospective engagements in terms of financial, political, operational and legal risk. When a case is submitted for review, any use of independent contractors is discussed and reviewed as appropriate and any appropriate limitations or conditions imposed on their use.

30 April 2012