Fraud probes boom gives Control Risks a cushion

A sharp rise in the number of fraud investigations helped security consultants Control Risks Group offset a huge decline in revenues last year from its operations in Iraq as Western firms fled the violence.

The company, which provides bodyguards for businesses and the Foreign Office in Iraq, suffered last year as the country became too unstable. Pre-tax profits fell to £5.7 million in the year to March from £5.9 million a year earlier on turnover 11% lower at £110 million.

But the Iraq shortfall was cushioned by its increasing focus on the more mundane world of corporate intelligence. Despite the mergers and acquisitions market drying up, chief executive Richard Fenning said the due diligence arm has been booming, investigating suspicious activity in businesses.

Fraud usually increases during economic downturns as employees seek to boost their performance figures and bosses unearth problems during strategic reviews.

Fenning said: "There's always a blame game when times are tough. People who have looked uncritically at their investments in the past now want to look more closely at their portfolios. They're calling on us to investigate concerns over fraud in particular."

Earnings in Iraq, which accounts for around a fifth of business, were down 40% after Control Risk's contracts with the US government to provide security at oil facilities ended and businesses were forced out.

Fenning expects revenues from Iraq to climb this year as oil, energy and telecoms firms scramble to tap into the demand for oil after the US-led troops surge made the region safer.