WORLD: Private Military Companies Seek a Image Change

The business of war is being progressively privatised around the world and Iraq has helped lift the veil of mystery that surrounds the private military industry. By one estimate the industry is now worth up to $100 billion a year.
Publisher Name: 
Financial Times

From Iraq to Afghanistan, to Colombia and the Balkans private
companies are involved on the battlefield more than ever.

During the first Gulf war one private contractor served on the
ground for every 50 US soldiers. By last year's war in Iraq, there
was one contractor for every 10 military personnel.

Since hostilities formally ended, the number of private contractors
has risen. An estimated 10,000 privately-employed armed men, mostly
former soldiers, are providing security in Iraq. By this estimate,
private soldiers make up the second-largest armed contingent in the
country, ahead of the British.

The business of war is being progressively privatised around the
world. By one estimate the private military industry is now worth up
to $100bn a year.

Companies providing those services are reaping big windfalls. "It
has been a good year for us, as it has for most of our competitors,"
says Christopher Beese, chief administrative officer of
ArmorGroup. "All of us have seen phenomenal growth in 2003 and 2004 -
 nearly all of it driven by Iraq."

ArmorGroup, which provides security services in 26 high-risk
countries, including Afghanistan and Iraq, is on course to earn
twice as much revenue this year as it did in 2002.

It is taking that growth to the bank. After splitting from its US
parent company, Armor Holdings, ArmorGroup intends to float its
shares on the London Stock Exchange.

Other companies, such as Britain's Control Risks Group and the Risk
Advisory Group, are also heavily emphasising Iraq.

Kroll, the international investigations company, set up a high-risk
security group in March, in part to handle extra business from Iraq.

Kroll was sold by its founder this year to Marsh & McLennan, the
largest US insurance brokerage company, for $1.9bn.

An array of other, smaller companies, such as Global Risk
Strategies, Erinys International, Olive Security and Diligence Iraq,
have sprung up to meet the surging demand for security services in

But with new profits comes risk - US death insurance claims by
contractors working in Iraq have risen more than sixfold since 2003.
One of the main challenges for companies such as ArmorGroup as they
market themselves has been to separate themselves from the
more "colourful" parts of the security industry.

They have mounted a public relations campaign to rid themselves of
the mercenary tag, pointing out that they provide only defensive
services. Other companies are harder to categorise.

Blackwater USA and Triple Canopy pride themselves on being founded
by former US special forces soldiers. They also carry out operations
that blur the lines between offensive and defensive operations.
Certainly, Iraqi insurgents draw no distinction between US troops
and their private counterparts. Blackwater came to international
prominence when four of its personnel were killed by insurgents in
Falluja, their corpses hung from a bridge.

Other private military companies working in Iraq have made headlines
for the wrong reasons. Custer Battles, of the US, has been accused
of defrauding the US government of tens of millions of dollars. It
denies the allegations, made in a lawsuit by former employees.

The appointment of a well-known British mercenary to a security post
in Iraq also caused a flurry of negative publicity. Aegis, the
company run by Tim Spicer, was awarded a $293m contract by the US to
co-ordinate security companies working in Iraq.

Col Spicer's previous company, Sandline, was involved in
controversial military campaigns in Sierra Leone and Papua New
Guinea during the 1990s.

Efforts by the industry to distance itself from lurid tales of
African coups received a further setback this year when it emerged
that a friend of Col Spicer's, Simon Mann, had been planning another
such an operation in Equatorial Guinea. Mr Mann was sentenced to
seven years in jail in Zimbabwe on weapons charges.

Ahead of its listing, ArmorGroup has been addressing such image
concerns by calling for greater regulation of the private military

Such a move would ensure basic industry standards, the company

Widespread use of private military companies during the Iraq war has
done much to alter perceptions.

The US has long supported farming out many non-combat tasks once
conducted by soldiers. Until recently, the British army was far more
reticent. Industry executives say that has changed.

Iraq has also helped lift the veil of mystery that surrounded the
private military industry.

For better or worse the industry is more visible than ever. In one
sign it has entered the mainstream, a company has released a
computer game about the private military industry.

The game's title of Mercenary suggests the industry's public
relations drive has some way to go.

AMP Section Name:War & Disaster Profiteering