Entrepreneur: George Nicholls - Safe and sound

Risk Manager Helps Companies Break New Frontiers

George Nicholls founded Pasco Risk Management in 1996, having been a subcontractor for what is today one of the company's biggest international rivals. After more than a decade of sustained growth and - thanks to steady interna¬tional expansion from its headquarters in Johannesburg Pasco is now able to lake global players such as Kroll and Control Risks head on. Says Nicholls: "We're mak¬ing a dent in the international market even though it's a mature market compared with South Africa. 1-ocally, not everybody seeks advice beforehand. They only call us when things have gone wrong."

Risk management can relate lo a variety of areas and industries. Pasco is involved in political risk and industry analysis, business intelligence and investigations, employee or business partner background checks (integrity screening, in industry-parlance) fraud investigation and asset recovery, incident response (for example, following a kidnapping), investment and customer due diligence and management and advocacy and negotiation support, among others.

Pasco's TravelSafe - protective and management services designed for com¬panies sending personnel into high-risk environments will no doubt be a touch¬stone for visitors to SA during the Soccer World Cup.

It was a similar event overseas that saw Nicholls - born in Britain - end up in SA in the first place. "I've been living in SA for 20 years and I'm a South African citizen - but I really ended up in here by chance. After working in Australia I flew to Hong Kong to join the police force there. Then the Tianan¬men Square protests erupted and I just took a right hint, changed my ticket, flew to SA and ended up staying. It was a great place to start a business," says Nicholls.

For the first few years Nicholls was a one-man consulting firm, but after garner¬ing a contract from the National Prosecut¬ing Authority in 2000 he started adding services. "We were involved in redesign¬ing SA's witness protection programme by making it more intelligence-driven and allocating resources accordingly. The International Criminal Tribunal of the UN and a number of other governments have adopted some of the processes."

By 2003, 15 people were working for Pasco. However, Nicholls decided it was time to move away from dependence on Government contracts. Pasco currently works exclusively in the corporate envi¬ronment for a handful of major clients (and, not surprisingly, in the run-up to the World Cup, local stadium owners and the English Football Association), particu¬larly multinationals expanding into Africa, "The South African market is fragmented and there's little regulation. We still have 'embedded resources' in Government, but the range of experiences working with different companies and industries in the corporate environment is good for the company and employees.

"We concentrate on frontier markets where typically information isn't good or at best outdated. We have two to three emerging markets covered and have local networks of experts in corporate law, security, forensic accounting, etc, in all regions," says Nicholls. Pasco opened a London office in 2006, with Los Angeles following in 2007. An Indian branch in New Delhi opened its doors last year. Next on the list of expansion possibilities is South America, says Nicholls.

All Nicholls would reveal about turn¬over is to say it's "multimillion dollars"
and has been growing at a steady pace of around 15%year-on-year. "Pasco is fund¬ed from free cash flow and growth has been measured. Pasco employs around 40 permanent staff, who come from n variety of backgrounds, including law enforce¬ment, economics, political analysis and psychology.

Royal Bafokeng Holdings acquired a 27% stake in the SA company in 2006. Nicholls remains the largest shareholder, with the balance going to management and staff. "The Bafokeng has a history that stretches farther back than the Grimaldis of Monaco. They were looking to diversify from mining and Pasco was one of their first outside investments. It's been a very good partnership.

"Most often companies come to us after getting involved with the wrong business partners. We then have to disentangle the relationship and recoup assets," says Nicholls. He gives an example of an opera¬tion carried out by Pasco on behalf of a US logistics firm involved in the oil and gas industry in the Middle East. The US firm invested between USS15m and S20m in a joint venture with a Jordanian firm. Not long after the money was transferred, the Jordanian company simply shut up shop and the investment evaporated. Nicholls says at first the US company didn't want to throw good money after bad, but Pasco was able to trace the individuals and the money to other countries in thy region. Eventually a settlement was negotiated. Says Nicholls: "The US firm made a classic mistake. They didn't take time to under¬stand the market or the people they were doing business with."

Although fraud follows the same pat¬terns worldwide, Nicholls says there are some cultural differences. "In SA we see a lot of financial fraud in the procurement chain and CV fraud where credentials aren't valid. The Middle East is targeted by organised crime syndicates for money-laundering, and nepotism is also a prob¬lem. In Africa there's very little informa¬tion and usually no recourse to systems or institutions. It's our most complex work."

FRIK ELS