Private Investigators in Demand
By Lynn Cowan

WASHINGTON (AP) - It would be enough to make Sam Spade grin and light a cigarette for the next pouting CEO who sashays into his office.

Private investigators who run their own agencies are making a mint this year - but it's not dames in distress who are keeping them busy.

Private eyes who specialize in employee and client background checks, security and other corporate detective work are finding themselves in high demand as U.S. boardrooms react to a year filled with business fraud and terrorism-related issues.

Jim Bearden, chairman of Private Investigators and Consultants in Dallas, said client companies have been spending 25 percent to 50 percent more on private investigations, and his firm has seen a 10 percent increase in the number of cases it has handled in the past two years.

Companies want more extensive background checks of executives and directors than before, and are willing to spend more to do it, he said.

``If someone is proposed as a director, it might have cost them $2,000 in the past, and they would have wanted to know about any criminal convictions and basics like where the spouse worked. Now, it's up to the $5,000 to $10,000 range, and they want to see every piece of paper about you, how you voted on past boards, any rumors of extramarital affairs, shaving of expense accounts,'' said Bearden.

Whether companies are looking to hire new executives or acquiring other firms, they are being more diligent in their background checks after a year filled with corporate scandals, from Enron Corp. to Tyco International Ltd.

``They really want to make sure that the vice presidents, presidents and other top honchos in the companies are people who don't have hidden warts that will show up later,'' Bearden said.

Rory J. McMahon, a private investigator in Fort Lauderdale, Fla., said he's noticed a change in his assignments during the past year.

McMahon said it isn't so much the volume increasing, but different clientele and assignment requests. More companies are interested in checking out employees and executives whom they have already hired, not just prospective hires.

McMahon has also seen an increase in the number of internal sting operations that corporate clients request.

In one case involving a pharmaceutical retailer, he was hired to pose as a customer and attempt to purchase prescription drugs without a doctor's order.

The company had attracted the scrutiny of federal regulators and wanted to determine itself if salespeople were complying with federal laws.

``I've had two or three of those (internal sting requests) in the last six months. Before that, I'd be surprised if I did more than one in the last three or four years,'' said McMahon.

Reggie Montgomery, a private investigator in Mahwah, N.J., said his business has increased by 40 percent since Sept. 11.

One of his clients' primary concerns is of terrorism, particularly as security has been stepped up at more obvious targets.

``There's an awareness by companies that they could become a secondary target of terrorism. As security has tightened at airports, hospitals and government offices, they're aware that multinational corporations will be next,'' he said.