- The Washington Times - Monday, November 13, 2000

American companies beware.

It's risky business out there, according to Control Risks Group, a London-based corporate security and investigation consultancy that issued its annual analysis last week of dangers around the world.

"Globalization is here. The Internet has no respect for boundaries. Crime has no respect for boundaries, and the legal system and law enforcement are behind, a long way behind, the criminals," said Nigel Churton, CRG managing director. "Business has to look after itself and its people."

Mr. Churton listed AIDS in Africa, unrest in Colombia, the Palestinian-Israeli conflict in the Middle East and the conflict between Pakistan and India as serious impediments to business abroad.

"There is a real nervousness in commerce right now. These are uncertain times," he said.

Since the 1998 terrorist bombings of the U.S. embassies in Kenya and Tanzania, American diplomatic and military installations have been beefed up, he said. That means U.S. businesses have become softer targets, and easier for terrorists to hit.

Cyber-crime, Mr. Churton said, is not just for thieves and spies anymore. According to the CRG, animal-rights groups, anarchists, anti-global-trade groups and others have discovered the Internet and denial-of-service attacks as a way to make a statement.

Survey details dangers

"We see animal-rights activists as a serious security concern in the U.K.," he said.

CRG's "RiskMap 2001," a guide for companies doing business abroad, details the political, social and economic environment for business in countries around the world. It is released each year in conjunction with the State Department's Overseas Security Advisory Council (OSAC) meeting.

The OSAC gathering brings security chiefs from U.S. multinational corporations to Washington to brief them on security risks abroad. It is by invitation only, and while the meeting is well attended, several participants said it offers "an official, sanitized view of the world."

"The State Department talks on South Africa and Colombia painted a much brighter picture than the reality," said one participant, who spoke on the condition of anonymity. "The State Department has to be careful what they say," or it could upset bilateral relations.

CRG, on the other hand, is beholden to no one except its clients and can make more blunt, less diplomatic assessments.

Control Risks Group was founded 25 years ago in London and has since grown to 15 cities around the world. It is in the midst of a major expansion into the United States, where it will compete with such corporate security firms as Kroll Associates and PricewaterhouseCoopers' investigation groups.

Crisis-response teams

CRG advises businesses on how to reduce the impact of political and social instability on their companies. CRG's crisis-response team has been involved in more than 1,000 kidnapping cases, mostly in Colombia, Mexico, the Philippines and Brazil. Thirty-five percent of its $50 million annual revenue comes from American companies, 30 percent from European clients and 12 percent from Japanese firms.

Eighty-five of the top 100 U.S. companies are clients.

It employees specialists in banking, aviation, diplomacy, intelligence, law enforcement, journalism and accounting. It recently bought its own forensic laboratory. It has more than 40 stringers stationed in trouble spots around the world providing daily reports.

CRG's on-line Country Risk Forecast service costs about $10,000 a year. With it, a member company can access updated information on 128 countries and risk ratings for 70 nations. CRG's City Brief profiles of 295 cities give safety recommendations for neighborhoods and specific hotels for business travelers. The on-line reports are updated every working day.

CRG lists 12 countries this year up from five in 1997 as extreme political and security risks: Afghanistan, Burundi, Chad, Congo, Eritrea, Ethiopia, Liberia, Russia (Chechnya), Sierra Leone, Somalia, part of Sri Lanka and Sudan.

Progress seen in Africa

"Sub-Saharan Africa has the highest number of countries rated as extreme, but we see gradual progress in the area," said Richard Fenning, director of CRG political risks services. "We do not see it as bleak as others do."

"Despite containing most of the world's extreme-risk rated areas, the prospects for sub-Saharan Africa as a whole are relatively promising," CRG said in a statement.

In Latin America, Mr. Fenning said, Argentina, Brazil and Mexico are increasingly stable and dominant economies. For that reason, these three nations will continue to attract most of the foreign investment in the region.

Colombia is seen as a major trouble spot. Kidnapping, which puts foreign businessmen at risk, is skyrocketing, from nearly 3,000 kidnaps in 1999. The report says that the U.S. aid package of $1.3 billion to help Colombia in the war on drugs could have a residual effect on foreign interests.

"The military anti-drug offensive in 2001 will reduce the guerrillas' drug-related revenues and could encourage them to increase extortion and kidnap activities," said the report.

There is also fear in the business community that the anti-drug war could escalate and drag the United States into a quagmire, making Colombia an even more dangerous place for U.S. businesses. But CRG analysts say that is unlikely.

Sophisticated criminals

"The one difficult area we see is Colombia, but the idea that Colombia will become America's next Vietnam is not well grounded," he said.

In Western Europe, CRG listed Spain, Greece, France and Ireland as countries dealing with active terrorist groups.

Turning to Eastern Europe, Mr. Fenning said there has been a "decline in overt gangsterism."

"We do see that a sophisticated criminality has taken hold," he said, noting that cyber-crime originating in Russia will become a major problem in the future.

"RiskMap" identifies several global issues that businesses need to address.

The report looks at the proliferation of dam-construction projects around the world. It says eight major dams are being constructed in Latin America, and 20 more are planned, including 16 in the Amazon.

Eight dams are under construction in Asia and another 10 are planned. There are four dams going ahead in Europe, Russia and the Middle East and three under construction in Africa.

"Even the most complex technical and engineering challenges are now almost certain to be dwarfed by myriad political, social, environmental, financial and legal issues," the report concludes.

AIDS as investment risk

The report also takes a detailed look at HIV/AIDS in Africa, with much of its information gleaned from recent U.N. reports. It cautions that businesses operating in countries where there is a high incidence of this deadly disease will face higher recruitment and training costs and skyrocketing insurance, health-management and funeral costs. But it encourages companies to work with local business partners, nongovernmental organizations, local governments and host nations on prevention and education projects.

Kent Anderson, CRG's computer-crime and hacker expert who helped the FBI and Scotland Yard catch several hackers, said computer crime is the wave of the future.

"The president of North Korea asked [Secretary of State] Madeleine Albright for her e-mail," he said. "If North Korea has the Internet, it is everywhere."

He said that at one time, the stereotypical hacker was a 17-year-old working in his basement. But today, organized crime and political pressure groups are turning to the Internet and hiring experts.

"It is easy for someone to sit in Argentina and attack a U.S. system," he said. "Organized crime in Russia has picked this up because of their high level of education."

Anarchists on the Internet

Mr. Anderson said that anarchist groups and animal-rights groups have taken to the Internet in a big way, and that the Irish Republican Army and supporters of the Zapatistas in Mexico have used computers to identify targets.

He said that in the current Middle East unrest, Palestinian and Israeli hackers are targeting each other's Web sites to undermine their ability to put out propaganda. He said that as government sites have set up fire walls and more sophisticated encryption for protection, hackers have turned to targeting more businesses.

"There has been a move in the last six to nine months away from government targets to industrial and biotech targets. I think you will see a whole lot more of this from animal-rights activists in the future," he said.

One of the more surprising predictions of the CRG study concerns the price of oil and the development of alternative technologies.

In just 10 years, according to Roger Rainbow CRG's oil specialist, who spent 25 years with Shell Oil alternatives to the internal-combustion engine will be commercially viable. This could lead to a decline in the price of oil and political instability in the Middle East.

"Widespread introduction of 80 mpg vehicles, say from 2010, would have a major impact on world demand," he wrote in CRG's "RiskMap 2001."

This would lead to a decline in social services in certain countries and put enormous pressure on those governments.

"In a worst-case scenario, undermined regimes in countries in the Gulf experience periods of political and social tensions that could provoke unrest and increased crime," he wrote. He adds that oil-boom cities like Abu Dhabi in the United Arab Emirates and Dhahran, Saudi Arabia, "could shrivel in size and importance."

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