The corporate intelligence industry needs to become more ethical and less like James Bond
Recent news stories — such as the London Stock Exchange-listed company, Lekoil, falling victim to an allegedly fraudulent financing deal, the resignation of Credit Suisse’s chief executive after a spying scandal, and the news that Harvey Weinstein gathered information on potential witnesses against him — have all shone an uncomfortable light on the efficacy and ethics of the £2bn corporate intelligence and investigation industry.
Born in the 1970s, the industry has long been in the business mainstream, because information and insight enables influence and better decision-making. Unsurprisingly, this is very appealing to its clients — typically law firms, banks, private equity houses and large corporations.
The vast majority of the work undertaken in the sector is routine commercial information, helping companies avoid, detect and investigate corruption, money laundering and other malfeasance.
Yet, despite its mainstream use, the industry continues to operate under a veil of secrecy. It is ripe for reform.
The sector is yet to face the “platform revolution” experienced by other professional services sectors — such as management consulting, investment research and legal services — where the marketplace model has allowed clients a choice between the traditional big firms or no-frills direct access to an individual practitioner.
GDPR is also a game-changer. Consultancies used to be able to hide their fragmented and leaky information supply chain, but now targets of investigations are increasingly aware of their right to identify who is looking at them and what they are gathering. As litigators who widely make use of intelligence and investigative services are advising, unless you lock down that information, it can be a treasure trove for your opponent.
And then there are the ethical drivers, which are perhaps even more powerful. The industry has always had an aura of spookiness and mystery, but increasingly clients are questioning the purpose and value of that opacity. The majority use the industry’s services to aid and increase transparency, not to subvert it.
On the ethical side, practices adopted by some of the industry’s most prominent players — and their subcontractors — have garnered much attention. High-profile examples include efforts to undermine Harvey Weinstein’s female accusers, as mentioned above. Other firms have pushed the limits of legality even further.
The vast majority of the consultancies in the sector seek to do their work in an ethical and legal way, but even they struggle to vouch for the provenance and legality of the information that they present to clients. This is because the consultancies themselves lack visibility on exactly who is gathering it and their methods for sourcing it. Their analysts are often insufficiently trained, or too thinly spread, to interrogate the methodologies being used on their behalf.
The industry is crying out for regulation and infrastructure to provide intelligence that is legal, compliant, transparent, and optimal to end users. In other words, to bring the industry in from the shadows and normalise it as a regular and necessary professional service.
It may end up being slightly less James Bond, but recent scandals show that things need to change — and if ethics don’t get there first, then surely the pace of technology will.
Main image credit: PA/EON Productions