Firm Is Expert At Preventing Security Risks.

In the recent Hollywood movie "Proof of Life," a daredevil professional hostage negotiator, played by Russell Crowe, rescues a kidnapped American executive in Latin America. It's an action picture that hasn't resonated much with audiences, and many critics found it boring.

What's more, since the characters spend a good bit of time jumping from helicopters and crawling through the jungle toting machine guns, the film didn't ring true to those who in fact help negotiate the release of kidnapped executives.

"That's not at all the way we work," said Andreas Carleton-Smith, vice president of operations in North America with Control Risk Group LLC. "We help clients and families in trouble by providing advice and working as a liaison with the authorities."

Carleton-Smith should know what he's talking about. He's the person upon whom Crowe's character is based, and he worked as an advisor to the producers of the movie.

Not that he hasn't seen his share of action. Carleton-Smith, in charge of Control Risk's crisis management planning, training, and consulting program at the company's recently opened offices in downtown Los Angeles, is a veteran of the British Army's Special Air Service and a decorated hero of the United Nation's task force in Bosnia.

Now, however, his work consists primarily of preventing situations such as those portrayed in the movie.

But they do happen. London-based Control Risk has been involved in more than 1,000 kidnapping cases around the world in the 25 years that the company has been in business. Most of these do not involve Western executives, but rather executives of multinational corporations.

"There are a lot of kidnappings and they are getting more common," said Carleton-Smith. "None of them are easily resolved, and companies that do business in countries where they occur need to be prepared in terms of recognizing the problem, planning for contingencies, and determining a policy whether they are going to pay or negotiate."

Through the company's networks in the countries where it operates, Control Risk's consultants will know who their clients should deal with in the local government and they may even know the modus operandi of the kidnapping gangs involved, said Carleton-Smith.

That knowledge will be important in deciding whether to pay the asked-for ransom or to negotiate with the kidnappers. It is often the case that companies that negotiate a tough deal with kidnappers are less likely to be targeted in the future.

Less-risky work

Although cases of kidnapping and extortion in foreign countries are some of the most dramatic aspects of Control Risk's business, the L.A. office, which opened in November, tends to focus predominantly on more mundane investigations and security needs.

For example, the company sees very strong demand for its investigative services from small and mid-sized companies that are doing business in Asia and Latin America.

"If you're a company that is new to doing business in, for example, Mexico or China, there is a lot of risk mitigation you need to do and a mid-market company can't do that in said Jim Prince, vice president for client services in Los Angeles. "A garment manufacturer with a factory in Mexico will want to make sure that his tracks do not get hijacked, or that that his merchandise does not disappear through the back door. Likewise, a business that enters into a deal or a partnership with someone in China may not know who they are dealing with."

The increasing globalization of manufacturing and services have caused more mid-sized companies than ever before to team up with overseas partners, and many of these companies will outsource their due diligence work to companies like Control Risk.

Asian assignment

San Mateo-based iAsiaWorks, for example, is in the process of building Internet data centers in 11 Asian countries, at a cost of between $18 million and $22 million each. The company has recruited Control Risk to analyze the security needs of its facilities in each of the different countries where it will be operating.

"The type and the level of security we need differs from place to place," said Jonathan Westbrook, manager of operations and integration with iAsiaWorks. "Honk Kong and Taipei, for example, are pretty much low-threat locations, but there are other countries and places in Asia that require much more serious security analysis. We are essentially saving ourselves thousands of dollars per month by outsourcing this work to Control Risk."

Naturally, Control Risk is not the only company that is benefiting from this growing need for international due diligence and security consulting.

Louis Ramirez, who works with companies expanding into Mexico and Latin America as a manager with Deloitte & Touche LLP's corporate real estate services division, said the firm is providing more international due diligence services as its clientele does more overseas business.

"We will always recommend that our clients do background research on the companies they do business with, particularly companies outside the U.S.," said Ramirez. "Of course, it is very different to do this in foreign countries -- you cannot just pull up a Social Security number. You have to be much more creative and rely on local networks in the government and in financial institutions."

Background checks

Not all the vetting is being done overseas. A fast-growing market for Control Risk, according to Prince, is the investigation of start-up companies and their principals by venture capitalists.

Since the financial success of a startup is, among other things, contingent upon the integrity of its founders, investors want to make sure that the individuals involved have squeaky-clean records and are capable of running a company. They also want to be assured that the founders have the rights to the technology upon which the startup is based, and that there aren't five other companies doing the same kind of thing.

"This tends to be a very cost-effective service for investors who may want to invest as much as $10 million in a company," said Prince. "References can be hard to come by for the people starting a company, and we do find out things"

Not surprising in litigation-happy Los Angeles, Control Risk is also seeing a brisk business doing background checks of candidates for reality-based TV shows. Studios are keen to avoid embarrassments like that of Fox TV, which was red-faced last year when it turned out that the eponymous millionaire of its "Who Wants to Marty a Millionaire" had a restraining order filed against him by a former girlfriend.

That means that Control Risk will vet out, for example, candidates who have serious criminal convictions or violent tendencies. It may also mean that for "dating" shows, candidates with children or who are in serious financial trouble will be screened out. It may not be the stuff about which major Hollywood action movies are made, but it's lucrative.

"We have many areas of expertise besides crisis management in emerging market countries," said Carleton-Smith. "A large part of the reason we are in L.A. is because it is the litigation capital of the world and because of the entertainment industry, of course."