Smash hit

Lawyers are also a steady stream of revenue for the industry. Gary Miller, head of fraud and investigations at Mishcon de Reya, the law firm, frequently hires GPW, Kroll and their competitors to investigate how a fraud was perpetrated, and trace stolen assets.

Miller has spent the past 15 years building up a database of investigators and has about 400 companies on his list. He takes a pragmatic view of the industry and its techniques: “There is lawful bugging and there is unlawful bugging. You can stay within the constraints of the law if you tap or monitor telephone calls in the office. Equally, dustbins can be quite good. They are very useful.”

A leading lawyer who has used Kroll on several occasions cautioned that the best way of recovering stolen assets was a court injunction.

He says: “If the guy has bought a $20 million Matisse, Kroll would be useful at finding out if the painting is in the house. They’ll have locals who can sit and have a cup of coffee with someone to find out who was fired. It’s Dick Tracy stuff.”

The willingness to hire private investigators can be partly attributed to the success of the industry in shedding its threatening image.

The credit for this lies with Jules Kroll, the enigmatic grandfather of the industry, who spent much of the 1980s absorbed in high-profile takeover investigations for Wall Street. Mr Kroll’s success was cemented in 1992 when he was featured in The New York Times as Wall Street’s “gumshoe”.

The $1.9 billion acquisition of Kroll in 2004 by Marsh & McLennan, the American insurance and financial services company, signalled that the transition to respectability was complete. However, the industry leader has had a few slip-ups: several of its staff were arrested in Brazil that year and five have since been charged with breaching data protection laws. Kroll declined to comment. The firm has previously denied any wrongdoing by its employees.

Having ventured across the Atlantic to Britain in the 1980s, Kroll has maintained pole position in the industry, which is littered with companies formed by former Kroll staff.

Senior staff left Kroll to set up rival companies during the mid-1990s, including John Conyngham, who was lured away by Control Risks to head the company’s business intelligence unit. Conyngham remains at Control Risks, Kroll’s biggest competitor. In 1997, all but a handful of Kroll’s London office walked out to form Risk Advisory Group.

More competition also appeared in 1995 in the form of Hakluyt, a shadowy company run by former MI6 officers. Named after the mapmaker of lore, the company is the self-styled Cazenove of the industry, with a client base mainly of FTSE 100 companies.

The industry is characterised by a handful of larger companies, with some smaller boutiques. These include GPW, headed by Patrick Grayson, a former Irish Guards officer who previously ran Kroll’s London office. Another recent breakaway is the good governance group, known as G3.

The marketplace has even attracted interest from the Big Four accounting companies, which have set up specialist units within their forensic sections. Yet they are all dependent on the web of contacts accumulated through networking.

The companies all say that they have strict ethics policies, which require them to observe the laws of the country they are working in. But it is not uncommon for investigators to distance themselves from surveillance work or bugging by hiring smaller agencies.