Sleuths In Suits: Mission: Intelligence

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To be sure, the government commands resources that no business can match, from the eavesdropping technology employed by the National Security Administration to information-sharing arrangements with foreign governments. But business intelligence has several important advantages over the government's. Because a business focuses on a specific industry and specific regions, it often develops a greater depth of intelligence in its specialties than is possible for the CIA, with its worldwide responsibilities and tendency to throw resources at the biggest brush fire. Chubb, Skold says, started seeing the first signs of trouble in Argentina two years ago, thanks to the insight of an underwriter who had spent considerable time in the country developing contacts within government and business. Early last year, Chubb forecast that an economic meltdown would make currency transfers impossible. As a result, it stopped offering insurance for short-term loan agreements nearly a year before Argentina's problems hit the news.

While a CIA station officer posted overseas may require years of delicate handling to develop a source, a business can simply hire a local former law-enforcement or intelligence official and gain the benefit of his experience and sources. "If the former head of Saudi intelligence takes a consulting job with an oil company, that's not a big deal," says ex-military intelligence officer Edward Badolato, president of CONTINGENCY MANAGEMENT SERVICES, based in Washington. "But if he's discovered working for the CIA, he's liable to get hanged."

Businesses working in troubled regions often develop relationships with more elements of a country's society, including those that may be hostile to the government, than does the CIA. To stay neutral in a conflict, some businesses even risk irritating their host governments by hiring members of rebel groups. The CIA, as Badolato puts it, "doesn't stay in with the outs." A formal agreement between the U.S. and Britain prevents the two from spying in each other's country, Baer says. That means the U.S. could not have useful operatives in London mosques, and the British just did not. And some businesses make the same mistake, according to George Friedman, founder of STRATFOR, an intelligence firm in Austin, Texas. "The expat community in Iran missed the fall of the Shah. In Russia they missed the fall of communism," he says. "They tend to rely too much on their personal contacts. They think, 'If I know the Shah's brother-in-law, I'm well connected, and I know what's going on in the country.'" The story of oil development in the Caucasus, Friedman adds, "is littered with companies that thought they had relationships that would carry them over the top."