Security giant GS4 quits
Pakistan By Syed Fazl-e-Haider
KARACHI - The world's top security firm,
UK-based G4S, has decided to leave Pakistan, where
it operates under the name Wackenhut Pakistan Ltd,
following a government crackdown in Islamabad on
foreign security companies.
Last week, the
chairman of G4S's Pakistani operation, Ikram
Sehgal, said it had been forced to leave the
country as it had become difficult for foreign
security firms to operate there under constant
government hostility. The parent company came to
global prominence last month
when it failed to supply an agreed number of
security personnel for the London Olympic Games,
forcing the UK government to draft in thousands of
soldiers for the job, many of whom had served in
Afghanistan.
Though terror-hit Pakistan
offers lucrative investment opportunities to both
domestic and foreign security firms to flourish in
an environment where terrorist attacks, kidnapping
for ransom and robberies have become a routine,
the government is suspicious about foreign stakes
in security-related work.
Sehgal, who owns
a 50% stake in the company, is expected to buy the
company's Pakistan interest, although he rejected
reports that it would cost as much as US$10
million.
"The deal is expected to take
place within the next 14 days," The Express
Tribune reported Sehgal as saying. "I'm not going
to reveal the actual figure, but it's nowhere near
$10 million for sure. The reported figure is
simply wrong. A consortium of banks is helping us
carry out the deal."
G4S, founded as a
result of the merger of the United Kingdom-based
Securicor plc with the Denmark-based Group 4 Falck
in 2004, is a multinational security services
company. Headquartered in Crawley, England, it is
the world's largest security company measured by
revenues and has operations in around 125
countries. It is the world's third-largest private
sector employer with over 657,000 employees.
Listed on the London Stock Exchange and Copenhagen
Stock Exchange, the company is also a constituent
of the FTSE 100 Index.
G4S received its
license to operate in Pakistan about 20 years ago.
It employs more than 10,000 personnel, including
150 women guards, in the country. It provides
security for the various agencies of the United
Nations, multinational companies and banks and has
major operations in Islamabad, Karachi, and
Lahore.
The decision of G4S to exit the
Pakistani market is in line with its strategy of
making smaller disposals of less profitable
businesses while expanding its footprint in
emerging markets, according to a report in the
Financial Times, a British newspaper. The report,
while citing Sehgal, said the Pakistani government
"doesn't want foreign security companies in the
region, which makes it tough for outsiders to
operate".
The government reviewed its
policy following the last year's arrest of Raymond
Davis, a US consulate worker, accused of killing
two Pakistani nationals in Lahore. Davis was
believed to be a private contractor employed by
the American CIA (Central Intelligence Agency).
The country's security establishment and
intelligence agencies see the involvement of
foreigners in security related work as a threat to
national interests.
"The experience of
Raymond Davis has left an imprint which continues
to dominate policy. Any involvement of foreigners
in security related work is seen with much
suspicion," Nicosia Business Review, an investors'
website, reported Major General Mahmud Durrani,
former national security adviser to the prime
minister, as saying. "I don't believe there is any
flexibility in this position."
G4S is the
second foreign firm to pull out of Pakistan by
selling its interests to its local partner.
US-based Brink's Company, which started its
operations in 1983 as Brink's Pakistan Pvt. Ltd,
has already left the country and it was re-named
in 2001 as Phoenix Armour Pvt Ltd, a local
security provider. Phoenix provides guarding
service to a large clientele across the country,
comprising foreign missions, oil companies,
airlines, banks, commercial organizations and
residences.
"The government doesn't allow
foreign companies to take part in private security
business," The Express Tribune reported Brigadier
(retired) Rashid Ali Malik, chairman of the All
Pakistan Security Agencies Association, as saying.
"Brink's, which had a license to provide Pakistani
financial institutions with cash in transit
service, became Phoenix some years ago. The other
foreign security company, G4S, is now being made
to pull out of Pakistan while leaving its business
to its Pakistani partner, Wackenhut Pakistan Ltd"
The private security business is booming
in Karachi, the country's financial hub, where a
worsening security situation continues to fuel
investors' concerns. Lawlessness has turned the
country's trade hub into a crime hub where land,
extortionist and arms mafia groups, backed by
political parties, call the shots. It has become
impossible for the local business community to run
their businesses without paying extortion money to
such gangsters and many businessmen have lost
their lives for refusing to pay them extortion
money
The government has so far been least
concerned about the problems of the businessmen
and industrialists in Karachi, where industries
contribute 67% to national coffers and 35% to
gross domestic product. A country's business
community in trouble reflects an economy in
troubled waters. This is exactly the case with
Pakistan, where cost of doing business sometimes
may be the lives of the businessmen involved in
creating wealth.
Foreign direct investment
(FDI) fell 50% to $812 million in the financial
year that ended on June 30, as against $1.63
billion in the previous 12 months. The decline in
foreign investment is attributed to political
uncertainty, a deep and worsening energy crisis
and the prevailing law and order situation.
Syed Fazl-e-Haider
(http://www.syedfazlehaider.com) is a
development analyst in Pakistan. He is the author
of many books, including The Economic
Development of Balochistan (2004). He can be
contacted at sfazlehaider05@yahoo.com.
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