The FTSE 100 listed company, which is under fire over its failure to provide enough guards at the London Olympics, has agreed to sell the business to its chairman in the region for about $10m. G4S employs 10,000 staff in Pakistan, where it provides security for the UN and multinational corporations. The decision is in line with G4S’s strategy of making smaller disposals of less profitable businesses as it expands in emerging markets. Earlier this year the company, which employs 657,000 staff in five continents, sold a Norwegian consumer alarms business for about £30m.*
Ikram Sehgal, chairman of G4S’s Pakistani operation, already owns a 50 per cent stake in the company – which trades under the name Wackenhut Pakistan Ltd – but is expected to take complete control next month.
Mr Seghal said the buyout was driven by Pakistan’s crackdown on foreign companies. “The Pakistani government has decided it doesn’t want foreign security companies in the region, which makes it tough for outsiders to operate,” he said.
Analysts said Pakistan’s position towards foreign investment in security has hardened since early 2011 following the arrest of Raymond Davis, a US consulate worker, accused of shooting two Pakistani nationals.
Pakistan’s intelligence and police officials concluded that Mr Davis was a private contractor employed by the CIA. Although he was eventually extradited from Pakistan, the experience surrounding Mr Davis appears to have influenced long-term policy towards future foreign investment in security.
“The experience of Raymond Davis has left an imprint which continues to dominate policy. Any involvement of foreigners in security related work is seen with much suspicion,” said Major General Mahmud Durrani, former national security adviser to the prime minister. “I don’t believe, there is any flexibility in this position.”
A former security official said Pakistan’s security establishment, including the army and intelligence services, believe that foreign investors in security duties present a threat to national interests. “Whoever comes in to Pakistan in the name of providing security related duties will be suspect. The Raymond Davis case has led to the conclusion that foreign involvement in security only works against our vital national interests,” he said.
G4S declined to comment. Nick Buckles, chief executive of G4S, is still under pressure over his failure to fulfil a contract to provide 10,400 guards for the London Olympics. The debacle has cost the company up to £50m after the British government called up 3,500 extra troops as cover.
Mr Buckles is due to appear before a parliamentary committee in September, along with Paul Deighton, London 2012 chief executive, and Theresa May, home secretary.
Source: Financial Times
