Guns for hire As the number of wealthy individuals in China grows, so does the threat of their being kidnapped - especially when they leave their comfort zone and travel abroad
By Daniel Jeffreys
Jerry Palace had just finished lunch at the Half King, on the lower west side of Manhattan, when he got the call. Palace gets a lot of phone calls because many people value his special brand of service - he has been one of New York's best-known private investigators for more than 20 years.
A former robbery-squad detective and crime-scene investigator, Palace has a television show that airs on TruTV, a New York-based cable network. Called The Wrong Man, it investigates cases of wrongful conviction. Palace may be a hard-nosed private eye but he also has a conscience and there's nothing that upsets him more than a miscarriage of justice. But get him onto the subject of somebody messing with his family - he has a wife and four daughters - or, indeed, somebody else's family, and his soft side disappears. And that's what the call was about. A family man was worried about the safety of his wife and children.
The Wrong Man has made Palace famous - he's been on The Oprah Winfrey Show and CNN's Larry King Live. And with fame come the crazies. That's another reason his phone rings a lot. Call his number and he doesn't answer with his name. The most you will get is a gruff "Good morning", if he's in a pleasant mood and has already had his coffee. The greeting will be laced with suspicion. He wants you to talk, to reveal who you are, so he can place you in his universe of men who cheat on their wives, women who poison their husbands and corporate bandits who rip off their employers for millions.
"The gentleman said he was from China," says Palace, who is gliding along the Palisades Parkway north of Manhattan with his sun-roof open. The car is an anonymous Chevrolet, the opposite of flash. In the world of private investigators there are plenty of flash Harrys. Palace is not one of them; he thinks ostentation is bad for business. As does the gentleman from the mainland.
"He explained that he was worried sick about a visit he was planning to make to New York," says Palace. "He wanted everything to be completely discreet and private."
That was fine, except the multimillionaire businessman with interests in Beijing and Shanghai wanted the kind of privacy that comes with round-the-clock, door-to-door security. And that's hard to do discreetly.
"I explained that we would need one armed man for him and each member of his family plus one spare," says Palace, who carries a Smith & Wesson .50 calibre, the world's largest handgun. "But before I would agree to do anything
I wanted to know why he felt the need for this kind of security." Palace was right to have questions; the prospective client was coming to New York, a place where mayors Rudolph Giuliani and Mike Bloomberg have scoured the city's mean streets clean - its murder rate is now among the lowest in the United States. What on Earth could the guy from Beijing be so afraid of?
"Kidnapping," says Palace. "He was fearful that a member of his family would be abducted and used to extort a ransom."
Palace's first Chinese client is among a growing army of wealthy people who are haunted by the dark shadow of kidnapping. Abductions for ransom are on the rise worldwide. According to Gaston & Associates, a 100-year-old boutique insurance company in New York that offers comprehensive kidnap and ransom insurance, more than 1,000 business professionals and executives are kidnapped globally every year. International law enforcement agencies and insurance companies that offer kidnap insurance, such as Lloyd's of London, estimate that as many as 12,000 people are victimised in this way annually. The actual number of kidnappings is hard to judge because many are not reported. Using kidnapping specialists such as San Diego-based Thomas A. Clayton Consultants, companies cash in on their kidnapping insurance policies and negotiate the release of a hostage without involving law enforcement or the media.
"I'd say 99 per cent of kidnaps you don't hear about," says Tim Horner, a former commanding officer of the New York City Police Department's (NYPD) Public Security Section, Intelligence Division. "In law enforcement we actively try to keep kidnap incidents out of the press."
Horner, who has co-ordinated presidential security details in New York, is now a managing director at Kroll Associates, one of the world's biggest private-security consultancies. The firm has also seen increased demand from China.
"New wealth brings new responsibilities," he says. "There are also new fears. They can be mitigated by taking proper precautions."
On the mainland, these fears led, in 2004, to AIG becoming the first foreign insurance company authorised to sell kidnap insurance. The company's AIU Insurance subsidiary was granted a licence to sell policies in Guangzhou and Foshan, Guangdong province. That was shortly after Zhu Yan, a senior executive of China Ping An Insurance (SEHK: 2318)'s Beijing branch, was kidnapped. It is believed he has been murdered.
"China has experienced robust economic growth and accumulated a large number of high-net-worth individuals," explained David Peng, back in 2004, when he was head of AIU's operations in Guangzhou. "This group of individuals may become targets of serious crimes." Peng is now senior vice-president of AIU China and refuses to comment further but a spokesperson for AIG General China confirms that AIG has a full suite of "crisis management products files, which would include unlawful detention".
Other kidnap experts have published research that indicates wealthy individuals are right to be concerned. For example, this year, Control Risks, a global risk-management consultancy based in London, carried out a survey among 1,000 executive business travellers. Fifty-three per cent of British participants said they thought the world would become a more dangerous place for business travel in the next five years - in the US, 43 per cent held that view.
The mainland businessman who approached Palace was aware of the kidnapping policies available but he wanted a different kind of insurance, one with less risk of heartbreak.
"Kidnapping insurance is dangerous because it encourages a false sense of security and makes kidnappers believe they will get paid," says Palace. "The guy who called me from Beijing was not interested in closing the stable door after the horse had bolted. He wanted a big guy with a large gun standing outside the stable door with a sign saying, `Touch this guy's kids and I'll shoot you between the eyes.'"
Palace decided he needed help from Frank Ahearn, with whom he runs security firm Palace Guards. Ahearn is a privacy expert and a finder of missing persons in Los Angeles. When actor Russell Crowe threw a telephone at a hotel clerk in 2005, Ahearn located the victim and hid him from the media. Ahearn's expertise is making people invisible. He is not above distributing disinformation, letting it be known that a client is heading to Paris when he is actually going to New York - and he will back up this ruse with a misleading trail of hotel bookings, flight reservations and credit-card transactions.
"Jerry handles the physical threats," says Ahearn, who has worked with a long roster of celebrity clients, including Britney Spears, and sports a black shirt, dark glasses and a ponytail that makes him look like the movie-studio executives he hangs out with in LA. "I deal with the information threat.
"I overhaul the client's tactics for travelling, spending and family communications. If anything creates a trail for the client I cut it off. While Jerry is out front making the client feel safe, I'm in the shadows looking for that piece of information that may have leaked out about the client and could make them vulnerable."
Vulnerability was a key concept in Palace's first conversation with the Beijing businessman, which was short. A few days later, the prospective client called back for a much longer chat.
"His questions became a lot more personal," says Palace from his favourite stool in the Half King. "He told me he had seen my TV show and now he wanted to know how long I had been married, how many children I had and how long I had been in business. His concern seemed to be my integrity and how much I cared for the people around me."
What Palace now realises, having dealt with dozens of businessmen from China, is that his client was trying to assess his character and, especially, the extent to which he understood the importance of family.
"My other main surprise was the intelligence of the client's questions," says Palace. "He had an amazing understanding of security and global threat analysis. My biggest shock came when I learned he was an actual client and not another security company screening me."
Palace had begun to investigate the background of his mysterious new client; it makes sense for anyone who works in security, in the private or public sectors, to find out what they are getting themselves into.
New York has a large Chinese community and organised-crime gangs affiliated to the triads or the tongs - the Chinese-American version of the triads - have been active in the city for more than a century. Palace reached out to friends and former colleagues in the NYPD and the Federal Bureau of Investigation for a threat assessment.
His sources indicated that Chinese businessmen have become a tempting target to criminal gangs operating in the US. With so many Chinese entrepreneurs entering the ranks of the super rich, they are ripe for picking. While they are on home turf, they are usually protected by local bodyguards but when they travel, they are outside their comfort zone and become vulnerable.
"We had good intelligence that guys in organised crime were preparing to target wealthy people from China once they were outside their element in the US, Canada or the UK," says Ahearn. "Gangsters read the papers and know how much money there is in China these days and they know these guys from Beijing or Shanghai or Hong Kong can't bring a large team of gun-toting guards into the US.
All it takes is a tip-off from, say, somebody in Shenzhen that some guy is coming to New York with his family and he's loaded - and bam! The sharks sense it's time to go hunting."
While Ahearn adopts an academic, fact-based approach to threat assessment, Palace is more emotional.
"The most important thing to me is that the guy feels threatened," he says. "If he thinks his family is at risk, that's my threat assessment, that's enough for me. For the rest all I want to know is what I'm up against. Is it an individual or a gang? Are we talking about guns, bombs or poison? With economic differences becoming more pronounced, the threat of kidnapping for profit is going to increase. If somebody is looking for a payday they will do anything."
Other experts in this field concur with Palace's perception of increasing risk. The Ackerman Group in Miami, which specialises in ransom negotiations, Kroll and Control Risks have begun to offer training courses to executives, designed to make it less likely they will be victimised. The instruction includes guidelines on how to dress (low key and low cost), where to eat (in hotels) and how to travel around (in pre-cleared limousines).
None of that was enough for Palace's Beijing client, who wanted more security than a cheap watch, an inexpensive suit and a driver with a clean licence can offer.
"This guy wanted the works," says Palace. "We equipped all vehicles with armour and GPS tracking devices. We had GPS devices sewn into the client's clothes and into stuff that would be worn by his wife and his two kids. The guards were armed personnel and all were former NYC police officers or federal agents."
Prior to the arrival of the Beijing client and his family, Palace sent a team to scrutinise his hotel and to vet anyone who might be involved in their care. "Almost the first thing we did was to check out anybody who was close to the client," says Palace. "People will say, `Oh, old Joe he's been working for our family for years, he'd never betray me,' but it's always somebody like old Joe, who is completely trusted, who makes the call and sets up the snatch. People will do anything for money."
The client spent two weeks with Palace and Ahearn. As it was their first outing with an Asian customer they even ran counter-surveillance, probing the defences they had put in place with another team to make sure everything was tight - a procedure they have now made a permanent feature of their practice. Neither will reveal the name of the client ("That would be a great way to lose his trust," says Ahearn) or how much the intense security cost - Palace says it was "tens of thousands of [US] dollars" while Ahearn mentions US$100,000 but then says "that's just a guess". What is known is that the Beijing client went back home and told all his friends. Since then, the duo's Asian business has been booming.
"We are getting about 10 inquiries from Hong Kong and the mainland every month," says Ahearn. "One or two develop into clients. It's not always a quick process. It's like courting; they want to learn about us and we take time to learn about them, to assure everyone's safety."
Kroll Associates has seen a similar pattern. "There are real risks and perceived risks," says Horner, who has been counselling increasing numbers of Chinese corporations on the best way to protect their executives. "Often we find the client is not facing a real risk but their perception of risk remains. They want the protection so they can have peace of mind and that's priceless."
So is it plausible private security companies have an interest in exaggerating the risk that Chinese businessmen face in New York, on the simple grounds that, in this case, fear is money?
"That's a good question," says Ahearn. "Risk is risk, be it at the hands of a mugger or a kidnapper. I'd rather be accused of exaggerating a threat than ignoring it and have my client be a victim. If you take away the word `client' these people become someone's father, wife, son or daughter. Seems like a little exaggeration can be healthy."
Almost two dozen Hong Kong and mainland businessmen have benefited from the attentive protection of Palace and Ahearn since that first call from Beijing. So far, every mission has passed off without incident. But what if the unthinkable happened, if a Chinese client had his son kidnapped and ordered Palace and Ahearn not to call the police?
"This gun I have in my hands, it's not just for decoration," says Palace. "If we had to, we'd go after the perpetrators and try to get the kid back. But that's not what we're about. Our goal is to get everyone home safe, including our own guys. This is all about prevention."