In Afghanistan unseen forces can change your life in an instant. They bubbled just beneath the surface as Daniel Ménard headed to what he assumed was a routine meeting in Kabul. Ménard is a managing director for Afghanistan at GardaWorld, part of a global security company based in Montreal. Its business is renting out bands of armed men to protect clients working in some of the Earth’s most dangerous outposts. But like other foreign-owned private security companies (PSCs), during the past few years it has been forced to hand off much of its work to local Afghan subcontractors. This process requires a lot of face time with Afghan Ministry of Interior officials—such as the men Ménard went to visit in the dusty capital on Jan. 10.
Events took an unexpected turn just as the meeting wrapped up. According to Ménard’s own account (from a memo obtained by Canadian Business), a police officer appeared and asked Ménard to accompany him. “I agreed without hesitation,” wrote Ménard. He soon found himself answering questions and handing over documentation. “Despite my full compliance, however, CID [the Afghan National Police’s Criminal Investigation Department] thought it best that I remain within the facility.” He was under arrest. According to reports, the Ministry of Interior claimed Ménard was found in possession of 129 rifles and 148 radios, none of which were properly licensed. Ménard’s employer, GardaWorld, said it didn’t know why Ménard was detained. “We believe it probably has something to do with licence requirements,” GardaWorld spokesman Joe Gavaghan offered. He claimed Ménard wasn’t charged. Reports surfaced in mid-February that Ménard had been released and departed the country for Dubai; Gavaghan confirmed the release but added “we are not disclosing any additional details.”
Whatever the reasons behind it, Ménard’s arrest is just the latest in a series of misfortunes to beset GardaWorld. For years, the company rode the post-9/11 surge in demand for security services in dangerous countries such as Iraq and Afghanistan. The profit margins were huge and the potential for growth enormous. But then strange things started happening. Last year, Iraq’s government began withholding crucial vehicle permits, leaving the company’s teams unable to meet the needs of key clients. Andy Edwards, the company’s managing director for Iraq, was detained in Baghdad last fall. Combined, a picture emerges of a company encountering rising hostility in its two most important markets. The most compelling explanation boils down to this: GardaWorld fell out with the wrong people.
These setbacks come as a blow to Stephan Cretier, founder and CEO of GardaWorld’s parent. Although headquartered in Dubai, GardaWorld is a division of a 45,000-employees security conglomerate based in Montreal that you probably know as Garda. The 3,500-employee “international protective services” division is the least visible to Canadians, who are more likely to see Garda’s people moving truckloads of cash for banks, screening passengers at airports, or guarding malls. Should you find yourself being groped before boarding a flight, chances are you’ve been touched by Garda.
Three years ago, Garda unveiled a plan to expand well beyond its North American stronghold and compete head-to-head with global security giants like G4S and Brinks. Cretier expected GardaWorld to deliver much of that growth. “This is our next blockbuster,” he told the Globe and Mail. Indeed, such was the international division’s new-found importance that the whole company adopted the GardaWorld brand last year. (For clarity’s sake this article refers to the parent company by its previous title.) But with powerful figures in distant lands now working against him, Cretier’s dreams of world domination are starting to slip away.
Over the past two decades private security companies have become a familiar presence in modern war and its aftermath. GardaWorld’s men go wherever there’s trouble: they’ve witnessed the aftermath of Haiti’s devastating earthquake, the Arab Spring in Egypt and Libya, and the lawlessness of southern Afghanistan. Their activities vary greatly, ranging from manning entry gates of military bases and embassies (classified as “static” work) to shuttling clients about in armoured vehicles (known as “mobile”). But looking past their wraparound sunglasses and stern faces, their end product is security—that scarcest of commodities in post-conflict states.
GardaWorld’s team leaders are all former soldiers who have completed at least two tours of duty. They’re mostly British, although the grunts they supervise are usually locals. In Basra the company deploys six-man teams in three Toyota Land Cruisers. An expatriate’s job is not dissimilar to his stint in the armed forces: personal security detail teams can expect to wake up at 4 a.m., and within hours they’ll be running clients to and from airports. Then they might head off to the oilfields, escorting engineers along a pipeline or to wellheads for inspections. The biggest difference is that an expatriate can earn US$400 or more a day, tax-free.
Looking back, Cretier’s entry into this business seems almost an afterthought. He launched his security company in 1995 with a $25,000 second mortgage on his house. At the time, his company was little more than another bit provider of lobby watchmen. But through dozens of acquisitions Garda branched out into armoured-car services, airport passenger screening, access control systems and internal corporate fraud investigations. Not content to remain in Quebec, Cretier expanded into Ontario and then the U.S., the world’s largest market for security services. At the height of this frenzy Garda announced new purchases on an almost monthly basis. By the time he finally ran out of steam, Cretier sat atop what had become by some measures the world’s sixth-largest security conglomerate—and undisputedly the most successful one from Canada.
Behind this rapid expansion lay two key ingredients: Cretier’s relentless ambition, and mountains of debt. The drawbacks of this approach surfaced during the 2008–09 financial crisis as Garda’s performance flagged. Its shares dropped more than 90% amid growing expectations of its demise. But Cretier managed to ride it out, and in 2012 he took the company private with the help of Apax Partners, a private equity firm. Undeterred by this near-death experience, Cretier again set his eyes on acquisitions, “which we can more efficiently accomplish as a private company.”
The international division originated amid this frenetic acquisition binge. In 2006 Garda bought a London-based PSC called Kroll Security International. Cretier combined Kroll with related bits from an earlier acquisition to form GardaWorld. It was a rounding error compared to Garda’s physical-security and cash-logistics operations back in North America. But unlike mall cops and airport screeners, the work was hugely profitable. It was also more glamorous and exciting, bringing Garda to exotic places like Afghanistan, Pakistan and Iraq.
At first GardaWorld’s customers were primarily aid organizations, but soon it attracted defence departments and diplomatic corps. In 2009 it won a lucrative contract to protect employees of the U.K.’s Foreign and Commonwealth Office at its embassy in Baghdad and offices in Basra and Erbil. The company also further established itself in Afghanistan, winning contracts to secure several NATO forward operating bases. And it began courting the industry’s most highly coveted clients—multinational oil companies and their subcontractors—particularly in southern Iraq.
Recognizing the region’s potential, in 2010 GardaWorld moved its headquarters, previously split between Washington and London, to Dubai (the head office for the parent company, Garda, remained in Montreal). Much of the current senior management team also joined around this time. President and chief operating officer Oliver Westmacott is among the few lacking a military background: previously a venture capitalist, he supervised Garda’s operations in Kurdistan before assuming the top job. His second-in-command, senior vice-president Pete Dordal, is a former U.S. marine. Before joining Garda and ending up under arrest in Afghanistan, Daniel Ménard was a brigadier-general in the Canadian forces. (He resigned following revelations of a sexual relationship with a female subordinate while commanding Canada’s forces in Kandahar.) Last year Garda also recruited Andrew Zdunich, formerly a lieutenant-colonel who commanded Canada’s Queen’s York Rangers, to head operations in Libya.
At first the push into the Middle East paid off handsomely. New oil-related contracts in southern Iraq helped the international division expand rapidly during Garda’s last year as a publicly traded company. For that year, 2012, it reported more than $106 million in revenues from the Middle East and North Africa. Watching the Arab Spring unfold, Cretier believed revenues from the region could double yet again. Andrew Stephen served as an operations manager for Garda between 2010 and 2013, first in Afghanistan and then in Iraq. He recalls being briefed on a three-year plan to grow aggressively. “By the end of 2014, we, GardaWorld, were meant to be a half a billion dollar company,” he recalls.
There was one angle Cretier evidently hadn’t considered. GardaWorld’s continued success required the acquiescence of powerful figures within its key Middle East markets. Some of those same people also aspired to get rich in the security business. His aspirations and theirs were on a collision course.
Winfried Scheel’s head smashed against the bulletproof glass. Through a blossoming cloud of dust and debris he glimpsed the rear of the Toyota Land Cruiser ahead of him. Then he blacked out. When he came to moments later, he realized the convoy’s trailing Cruiser was nowhere to be seen. “Where’s our third vehicle?” Scheel demanded.
“They’re gone,” the team leader said.
“Let’s go back,” said Scheel.
“They’re gone,” repeated the leader.
The day, Oct. 4, 2012, had started promisingly. Scheel woke up and put on his best suit. Formerly a U.S. army logistician, he had worked several years in Iraq for Sallyport, an American PSC that competes with GardaWorld, primarily providing protection for government aid workers. He’d reached the end of a gruelling assignment. He felt burned out and worried he might start making mistakes that would get colleagues killed. So he had resigned, and prepared to leave Iraq for good. That morning, with business slow, his bosses agreed to let him take a trio of new Land Cruisers, each with less than 1,000 miles on the odometer, to Baghdad’s airport.
Scheel rode in the middle vehicle with his best friend, an Iraqi, seated beside him, that unmistakable new-vehicle scent permeating the air. Just moments after leaving Sallyport’s compound, they saw a small four-door sedan parked on the side of the road ahead, its hood raised. Scheel and his men became instinctively nervous as they approached. The lead car’s driver looked inside the parked vehicle as he passed. It was unoccupied. He radioed the convoy: “Clear.”
Just to be safe, Scheel’s driver swerved to afford the widest berth possible, passing within five metres. That nothing happened was also encouraging. Insurgents were familiar with PSC protocols; they knew VIPs typically rode in a convoy’s middle vehicle. Reassured, the trailing Land Cruiser drove straight through.
The parked car exploded just as it passed. The blast blew its run-flat tires, shattered its passenger-side windows, peppered holes in its skin and peeled back the bonnet like a bedsheet. It also smashed the rear window of Scheel’s vehicle and perforated its rear passenger-side pillar. Outside, shrapnel tore through the bodies of bystanders.
After Scheel regained consciousness, the occupants of the convoy’s two remaining operational vehicles decided to return to Sallyport’s compound. To get there, they had to retrace their path back past the destroyed Land Cruiser. They drove by bits of concrete and human flesh. The damaged vehicle stood in the middle of the street, its doors ajar and airbags deployed. But through the fog of concussion, Scheel noted the absence of blood and bodies inside the Land Cruiser. He would later learn that while the blast killed five bystanders and injured 17 others, his colleagues were protected by the Land Cruiser’s armour plating and legged it back to Sallyport’s compound safely.
From a distance, the Land Cruisers favoured by many PSCs may look identical to those at your local Toyota dealership. They’re not. Private security companies need B6 armouring, a European standard. Installation involves partly disassembling the vehicle, welding hardened steel panels to the body and adding multi-layered ballistic glass several inches thick. This adds considerable weight: best go with the V-8 engine, a heavy-duty suspension, reinforced door hinges and run-flat tires. The final price tag usually exceeds US$100,000. That accomplished, the vehicle can withstand multiple 7.62 x 51 mm rounds—standard chambering for many assault rifles. And as Scheel’s colleagues discovered, it may also protect occupants in roadside bombings.
Stripped to its bare essentials, a growing security company needs three things: men, guns and vehicles. One would suppose that finding a steady stream of ex-soldiers would be the biggest challenge, but it’s supplying them with guns and vehicles that’s the tricky part. In 2011 Sallyport decided to import the three armoured Land Cruisers that ultimately comprised Scheel’s ill-fated convoy. It used to bring in new vehicles from Dubai by ship. But in September that year the Ministry of Interior official responsible for regulating PSCs was assassinated, and half a year elapsed before he was replaced. This ushered in an era of regulatory uncertainty. “After 2011 nobody could figure out how to bring in B6 armoured vehicles,” Scheel says. Sallyport ultimately decided to fly them in to Baghdad, at an added cost of US$10,000 per vehicle. But the Land Cruisers got stuck in customs and remained parked at the airport. For 15 months. “We could go by and see them through the fence,” Scheel says. “But we couldn’t get them.”
GardaWorld has also found supplying its force with Land Cruisers to be a surprisingly difficult task. It used to rent its own fleet from an Iraqi supplier, but that was expensive and cut into margins. To save the exorbitant rental fees, Stephen recalls receiving word that Cretier had allotted US$10 million to buy 40-odd Land Cruisers. Thus another catastrophe was set in motion.
In late July, Nigel Lea, GardaWorld’s regional director for southern Iraq, had the unenviable task of contacting one of his most valuable clients with distressing news. Due to delays in obtaining crucial vehicle permits, his Land Cruisers couldn’t leave the compound. And that meant his teams couldn’t escort the client’s oilfield service workers in southern Iraq. Lea needed to get those permits back, and fast. “I am still confident that we will be on the road for Monday,” Lea wrote.
It would have been embarrassing enough had he been right. But GardaWorld’s troubles ran deeper than Lea realized. It requires special permits to drive armoured cars, and they must be renewed every few days. They’re called MVENs, and they’re issued by one Gen. Jalal, the Ministry of Interior’s man in charge of regulating PSCs. But he suddenly stopped granting MVENs to GardaWorld in late July of last year. After that, any GardaWorld convoy stopped at a checkpoint could find its vehicles and weapons confiscated, its team arrested and its clients left at the roadside. In industry lingo it’s called being “off the road”—and for PSCs it can spell ruin.
GardaWorld became increasingly desperate as the impasse dragged on. It hired new lawyers to smooth things over with the ministry, and rented vehicles from competitors when it could. Yet progress was elusive. According to one e-mail authored by Lea early in the stoppage, it had already erased two months’ profits “and also damaged our reputation.”
One of GardaWorld’s most important clients, a Turkish company with about 15,000 employees called Tekfen Construction, wanted to avoid idling its workers at all costs. So it hired other PSCs to send personnel from Baghdad as a stop-gap measure. After reassurances from Lea, Tekfen called them off, only to learn GardaWorld wouldn’t be able to provide escort after all. Unable to work, Tekfen lost face with its own client: global energy giant BP, which is working to boost production in the Rumaila oilfields in southern Iraq. One Tekfen representative tore a strip off Lea: “This is not a professional approach,” he fumed. Another of GardaWorld’s most important clients, Schlumberger—the world’s largest oilfield service company—was also affected. (Tekfen declined to discuss its security provisions, other than to say it continued to employ GardaWorld; Schlumberger did not respond to inquiries. GardaWorld declined comment.)
Last October, amid this licensing nightmare, managing director Andy Edwards was suddenly detained in Baghdad. According to the company, the problem was simply that he wasn’t carrying his passport; the matter was cleared up in a day. Former employees, however, told Canadian Business it was far more serious. According to one account, Edwards was arrested and detained four days, then brought before a judge who told him he would serve a six-year jail sentence if he ever set foot in Iraq again. “You could ask anyone in the local community here, and they’d tell you Edwards is not allowed back into Iraq, full stop,” one former employee said. (The company insists Edwards continues to travel unimpeded throughout the country. Iraqi government representatives did not respond to inquiries.)
Things haven’t been any easier in Afghanistan. In early 2012 Afghan police stopped two British nationals working for GardaWorld, along with their Afghan driver and translator, at a checkpoint. Inside the vehicle were dozens of AK-47 assault rifles, concealed in a box and wrapped in a blanket. They weren’t registered. Authorities arrested the men and paraded them on Afghan television, claiming serial numbers on most of the Kalashnikovs had been removed.
GardaWorld claims the employees were merely test-firing the weapons prior to purchase and proper registration. However, a former employee says GardaWorld’s senior leadership understood the risks but needed to procure guns quickly to accommodate rapid growth. The men were held three months before being released, and were flown immediately from the country. The government vowed to revoke GardaWorld’s licence and send it packing—a fate that was only narrowly averted. Daniel Ménard’s arrest might put it in jeopardy again. “Given Karzai’s mood, he may see this as an opportunity to make an example of GardaWorld and withdraw their licence,” says one former employee. Intelligence Online, an industry journal, said it “could be the death knell for the company’s operations in the country.”
Why is GardaWorld on the outs in both Afghanistan and Iraq? Although a comprehensive understanding remains elusive, this much seems clear: friends aren’t exactly pouring out of the woodwork to assist the company.
GardaWorld’s official position is that there’s nothing to tell. To the extent that it discussed these incidents at all, it downplayed their significance. But internal memos obtained by Canadian Business shed more light. Nigel Lea placed blame for GardaWorld’s licensing woes in Iraq squarely on Gen. Jalal’s shoulders. Lea told clients the Turkish company that imported GardaWorld’s Land Cruisers neglected to obtain a crucial piece of paperwork from Iraq’s Ministry of Interior. Jalal took personal offence, and decided to make life difficult for GardaWorld. “The obstinacy of this one individual is causing us all a significant amount of pain,” Lea wrote.
Could one official wreak so much havoc? It’s possible. But former GardaWorld operations manager Andrew Stephen says that’s not the whole story. Following its relocation to Dubai, the company’s senior management team began ignoring advice from people on the ground, he says. This resulted in missteps that damaged its relations with powerful people in Afghanistan and Iraq. “GardaWorld is very poorly and inadequately run, and I don’t believe Montreal gets the true picture of what’s going on,” Stephen says. Another former employee (who requested anonymity) echoes those sentiments: he praises GardaWorld’s in-country staff, but criticizes management for pressuring staff to get things accomplished by any means necessary. The company “expanded too quickly and without adequate thought and planning, resulting in over-stretch,” he says.
It’s also possible GardaWorld’s problems merely reflect broader challenges facing all PSCs. Big customers, notably the U.S. government, are withdrawing from Afghanistan and Iraq. (A year ago, the U.S. government employed 19,000 security contractors in Afghanistan and Iraq. Now it employs only 11,000.) Meanwhile—and not coincidentally—host governments are becoming more assertive. Beginning in 2010, Afghan President Hamid Karzai has regularly threatened to expel all foreign private security companies. “Karzai hates PSCs,” says a former employee who worked in Afghanistan. “He sees them as a fifth-column armed threat.” His government established its own security force (the Afghan Public Protection Force) to absorb thousands of guards from PSCs and pick up most of the work protecting convoys, development projects and other activity. The pressure mounted last summer: GardaWorld has transitioned dozens of contracts to the APPF. PSCs are being similarly squeezed in Iraq. “That has been the trend for some years,” says David Isenberg, a U.S. defence and security expert who’s watched the industry for several decades. “To the extent there’s going to be jobs, they’d much rather have them go to indigenous Iraqi companies.”
GardaWorld’s licensing problems are hardly atypical. Indeed, Scheel spent his last 15 months at Sallyport trying to restore its own licences in Iraq. He says their frequency became something of a black joke among PSCs. “People would go, ‘Hey, I heard a rumour that you were losing your licence.’ And I’d say, ‘Yeah? I heard you were losing yours too.’”
In western countries, licensing issues typically arise when a company gets accused of breaking rules. In Afghanistan and Iraq, however, the explanation more often lies in the company’s relationships with powerful government officials. “You need the right contacts,” Scheel explains. One company he knows greatly improved its fortunes in Iraq after partnering with the Minister of Interior’s brother, for instance. But “you never know, your contact may go bad or fall out of favour, and now you’re on the wrong side of a struggling government.” And when that happens, no amount of guns, weapons and men can save you.
Further complicating matters, officials acting against a PSC often do so clandestinely. Scheel’s efforts to retrieve Sallyport’s licences eventually brought him into the bowels of the bunker-like headquarters of the Ministry of Interior in Baghdad, face to face with none other than Gen. Jalal. “We were in his office,” Scheel recalls. “The power was out, so most of the time we were sitting there in the dark.” Scheel remembers him as a kind, polite older man wearing a suit. He quickly concluded Jalal was neither the cause of Sallyport’s problems, nor the solution. “Jalal is just a pawn, really,” he says. “He was careful to not say you were going to get issued [a licence]. He would say things like, ‘I don’t see a problem with this going forward. We’re working on it.’” Even today, Scheel says he doesn’t know who was pulling Jalal’s strings.
Managing these relationships can be extraordinarily delicate. Afghanistan and Iraq rank 175th and 171st, respectively, out of 177 countries on Transparency International’s Corruption Perceptions Index. In other words, they’re regarded as being among the most corrupt places on Earth. Although in recent decades western governments introduced strict anti-bribery laws, PSC employees say illicit payments are endemic in both countries. Following a particularly naive question from this reporter, one of them betrayed exasperation. “There’s not one thing in Iraq that isn’t corrupt,” he said. “Obtaining a visa should cost $50, but you actually have to pay $2,500 to be able to come into work. Everybody has to operate, to a certain level, outside the normal parameters of the law in order to do business.”
A final plausible explanation for GardaWorld’s troubles lies amid this corruption. A former employee says its Iraq licensing woes stemmed from its decision to import vehicles last year. Two senior officials within the Iraqi government happen to be in the business of renting vehicles to PSCs, he says. GardaWorld hoped to do an end-run around them by bringing in Land Cruisers via Turkey. Employees in Iraq warned their superiors in Dubai that crossing those men was a bad idea. “They decided to cut certain people out of this, and those certain people are very well connected and senior people within the government. That’s why GardaWorld can’t do anything now.”
An internal e-mail authored by Nigel Lea seemingly confirms that possibility. Discarding briefly his contention that Jalal acted alone, he attributed GardaWorld’s licensing difficulties to “various elements within the Baghdad authorities” who didn’t want GardaWorld owing its own fleet.
Nobody dared tell Canadian Business who those officials were.
Whatever transpires in the shadows, warnings abound that the business model used by foreign private security companies is becoming strained. There are dozens of familiar names operating in the Middle East, among them Triple Canopy, Edinburgh International, Desert Road and Olive Group. During Scheel’s early years in Iraq they typically deployed as many as nine ex-special-forces types per team. But as PSCs began undercutting one another, Scheel watched them shrink teams and substitute in lower-wage Gurkhas or Peruvians. In recent years, that substitution gave way to outright layoffs, with many veteran security contractors leaving the business. Indeed, GardaWorld’s current head count of 3,500 is strikingly lower than the 5,000 it employed as recently as 2012.
The model is morphing as foreigners try to placate host governments. One strategy is to incorporate locally or partner with a local business. After leaving GardaWorld in early 2013, Stephen says he and some associates bought a struggling Iraqi PSC, injected it with fresh capital and are now bidding on contracts. “We’re all disgruntled, pissed off ex-GardaWorld people,” he says. Several sources claimed domestic companies have a much easier time maintaining good relations with powerful officials.
The impact of all this on GardaWorld’s bottom line is difficult to measure. But Stephen believes its revenues last year were a small fraction of Cretier’s ambitious targets. “It’s losing business now more than it’s winning,” Stephen says.
What PSCs really need is another major U.S.-led invasion. But since that doesn’t seem imminent, GardaWorld must instead make the best of the narrower opportunities generated by an insecure world. Following the Arab Spring, GardaWorld opened Libyan offices in Tripoli and Benghazi; Intelligence Online reported it won contracts with Alstom (a power generation and transmission giant) and a European Union mission that monitored Libya’s 2012 election. In October GardaWorld nabbed another contract to secure the World Bank’s new offices in Tripoli. “They do have the expertise to achieve in other countries,” says one former employee.
After a protracted transitional phase, Somalia’s parliament elected a new president, Hassan Sheikh Mahamud, in 2011 and introduced a provisional constitution. In October the country’s finance minister invited attendees of an oil and gas summit in London to invest in his country. Somalia remains so dangerous that Médecines Sans Frontières, an NGO famous for operating in Earth’s worst hellholes, recently pulled out after 22 years. They might well have run into incoming PSC personnel at the airport. GardaWorld rented a villa last year in Mogadishu’s sun-bleached Medina district. It’s now offering to put up oil and gas contractors and international development workers, and transport them around the country.
GardaWorld will need guns, vehicles and men. The good news is that the Somali government appears to welcome foreign PSCs with open arms, for the moment at least. It recently permitted Australian private security company Tacforce International to import a B6-armoured vehicle via Mogadishu’s seaport. It even issued glowing letters of recommendation on Tacforce’s behalf.
But GardaWorld might want to carefully read the most recent report by the United Nations Monitoring Group on Somalia and Eritrea. Although Somalia’s Ministry of Interior is responsible for regulating PSCs, that report claims, “there are strong indications of conflicts of interest among senior Somali security officials involved in the security business.” GardaWorld had better figure out who those officials are and what they want. It already knows what can happen if it doesn’t.