Pakistan’s security business booms

October 11, 2012 6:34 pm

Pakistan’s security business booms

By Farhan Bokhari in Karachi


Pakistan’s decade-long campaign against al-Qaeda and the Taliban may have made the country’s urban areas calmer, as armed assaults and suicide attacks have tapered off.

But, as the shooting of a 14-year-old schoolgirl in the Swat Valley region showed this week, lawlessness remains a big problem – and one that is increasing demand for one type of business: providers of private security guards.

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Armed robberies and extortion in cities such as Karachi, Pakistan’s commercial capital, have prompted the country’s elite to turn to private companies offering security guards for protection of their homes and businesses.

The lawlessness has been fuelled by a steady flow of weapons and drugs from neighbouring Afghanistan to poverty-stricken Pakistanis. Though the government doesn’t publicly reveal the number of people living in poverty in Karachi, which has a population of about 19m, one senior Karachi police officer told the Financial Times, “between 30 to 40 per cent of Karachi’s people live in slum-like conditions”.

As demand for security companies has grown, many have been criticised for the quality of service they provide. Worse still, some private security guards are suspected of taking part in “inside jobs” – providing information to potential criminals in exchange for a share of the spoils.

The FT was taken to witness a police interview of a private security guard who was picked up by Karachi officers in August, after an armed robbery at a home which he was being paid to protect.

“This man was on duty, armed with a weapon and wearing a uniform,” the investigating police officer said. “He says the burglars overpowered him, tied his hands behind his back and locked him in a toilet. There are big gaps in his story. There isn’t even a scratch on his body let alone a wound,” he added, stressing the suspicion the guard may have been an accomplice in the robbery.

The interior ministry has not publicly revealed the number of security companies operating in Pakistan. One senior interior ministry official in Islamabad told the FT there were around 350 companies, employing about 300,000 guards. But none are listed on the Pakistani stock market, which means they are under no obligation to report their earnings.

Critics say the failure of successive governments to enforce tight regulatory controls has meant that many companies offer services that are below globally accepted standards.

“I know of instances where there are guards who work as cooks or gardeners in the homes of people during the day, then put on a uniform and take a gun to turn up on duty for the night as security guards,” says Haroon Rashid, a former president of the Karachi chamber of commerce and industry (KCCI). “There is practically no regulation ensuring a high standard of service by the companies which provide these guards.”

Western diplomats warn that improving the standards of private security companies has become a bigger challenge since Pakistan decided in effect to ban foreign security companies from operating on its soil. The decision followed the arrest of Raymond Davis, a contractor for the US Central Intelligence Agency, who shot dead two armed men in January 2011. He was released in March 2011 following an agreement to pay compensation to the men’s families.

“No foreign security companies will be allowed in Pakistan,” says Rehman Malik, the interior minister. “In Pakistan, there is a lot of negativity and resentment against foreign nationals serving in the security sector.”

This policy means that following the exit from Pakistan in August of G4S – the company criticised for its failure to provide enough guards at the London Olympics – there are no immediate opportunities for other foreign security companies to step into the picture.

Still, businessmen offering security services through local companies say urban lawlessness continues to lift demand from high-income consumers looking for high-quality protection.

“Many customers want quality,” says Ikram Sehgal, chairman of Wackenhut Pakistan. “Even as a Pakistani company, we have to fulfil those expectations.” Wackenhut Pakistan has invested in a centralised control room in Karachi equipped with audio-visual connection to many of the premises that it guards – a contrast to smaller companies which are only in touch with guards through mobile phone connections.

But others, such as Mumtaz ur Rahim, chairman of Phoenix security – another of Pakistan’s large private security companies – says the absence of regulatory controls has meant “there are fly-by-night operations” which can operate with only modest budgets.

“If you are prepared to set up office in one small room and hire a small team of guards to offer to your clients, you will not have much in terms of overheads,” he adds.

More experienced customers will ask for background checks to be carried out on guards. In the 1980s, when private security companies began growing rapidly, many of the first comers typically recruited retired army soldiers. Companies were able to run elaborate background checks on army pensioners by examining their documented work history before recruiting them.

The relaxation of standards since the early pioneers entered the business is summed up by the police officer leading the burglary investigation in central Karachi. He says of his suspect: “This man has no history. He has lived in Karachi for just three months. I simply can’t tell if he is a hardened criminal who put on a uniform and became a private security guard.”

Copyright The Financial Times Limited 2012.


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