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When bonus rage turns violent
Emma Jacobs | March 30, 2009
For top bankers and other high-profile company executives, it pays to be a little paranoid about personal safety these days. As public distaste at taxpayer-funded bail-outs has turned to "bonus rage" directed at specific individuals, the fear of physical harm has grown appreciably. For a vilified few, they really are out to get you.
On Wednesday, it emerged that the Edinburgh home of Sir Fred Goodwin, the former head of Royal Bank of Scotland widely denounced for his lavish pension arrangements, had been vandalised. Although Sir Fred is not thought to be living at the address, windows were smashed and a Mercedes damaged. E-mails from a group claiming responsibility for the attack branded all bank bosses "criminals" and warned: "This is just the beginning."
Last week, testifying to Congress, Edward Liddy, chief executive of AIG, the stricken insurer at the centre of a scandal about bonuses paid to top executives in spite of a $170bn bail-out, told of lurid death threats, including a vow to garotte staff with piano wire. Jimmy Cayne, the dethroned chief executive of Bear Stearns, is said to employ armed guards.
It is hard to know how real these dangers are. Corporate security is by nature a secretive industry. Threats may be more about making headlines than actual intent. Reports that Dick Fuld, the disgraced boss of Lehman, was punched in the company gym by an enraged employee have been denied by the bank, for example.
What is beyond dispute is that corporate figureheads have become visible targets in the downturn. Wall Street, according to one banking executive, is on red alert. "We are worried about a mob mentality. People are angry about the economy. And Wall Street is an obvious target."
Eden Mendel, director of security consulting at Kroll, agrees. "There has never been this kind of populist anger before," she says. "When executives are revealed on television with bonuses they become a target."
In London, the forthcoming summit of world leaders from the Group of 20 nations is expected to bring a wave of anticapitalist demonstrations. Police fear that City workers may be targeted: posters for the "G20 Meltdown" campaign carry pictures of a suited man hanging in a noose; some anarchist websites are running "burn a banker" campaigns.
Financiers have been advised to dress down and to leave the Porsche at home, if they come to work at all.
RBS is understood to be providing personal security for Sir Fred, following his departure. When a busload of activists from Connecticut Working Families, a coalition of union and community groups lobbying for fair wages and public healthcare, visited AIG executives' homes last week, they were met by security guards.
Steele Foundation, a California company that specialises in protecting executives, reports a 30 per cent increase in demand over the past year. "Our business used to be about companies moving overseas and doing due diligence on the safety of new locations," says Kirian Fitzgibbons, director of operations. "It is now about protecting key staff as threats come from former employees and angry protesters as companies downsize."
Christopher Falkenberg, president of Insite Security, another US consultancy, likens corporate security to choosing private over public healthcare. "We respond very quickly to complaints. Policing can be somewhat general: they tend to look at a crime rather than head off a threat."
According to Ms Mendel, the danger is more acute than in previous downturns, not just because of the depth of anger but because the internet has created a fertile environment for exchanging information. "People are frustrated and angry - and it is easy to get company directors' details and find out where they live."
Mr Fitzgibbons identifies a rump of militant troublemakers whom he believes are seeking to exploit peaceful public protests. "Some protesters are full-time activists - they will show up at an animal rights meeting, antiwar and also an Acorn (US community group) meeting."
Or as Lord Malloch Brown, a British foreign office minister, told the BBC last week: "Frankly, there's enough anger out there amongst all of us who are watching what's happening on bankers' salaries and bonuses. I think...the hardliners are going to have a sympathy they haven't had for quite a while."
But the concern is not focused solely on militant activists. Private security companies also report increased demand for both personal executive protection and workplace security to head off possible attacks from workers. Mr Fitzgibbons says: "We are having to deal with threats from disgruntled former employees turning up at executives' houses, sending disturbing letters and making phone calls."
According to Ms Mendel: "It's not just senior bankers earning vast salaries (who are demanding our services) - they can just be ordinary people laying staff off."
Smaller companies as well as multi-nationals can be at risk. Mark McCann, of Trinity Protection in London, says: "I had one incident the other week where the managing director was worried that a couple of former employees might return with a gun."
Such threats may be more a matter of perception than reality. Simon Rowland, director of Veritas International Consultants, believes claims that economic activists are targeting business figures are overblown. He has seen a 30 per cent rise in business over the past year but mainly from wealthy individuals who are anxious about low-level crime. Yet as Pat Timlin, president of Michael Stapleton Associates, says: "At the end of the day, it doesn't matter. Perception is real if it's you who feels threatened."
There comes a point when companies have to be seen to be taking the issue seriously. One banker recalls a recent death threat made to a colleague by a Russian client who had lost his life savings.
"You don't know how serious the threat is but the bank can't take chances," the banker says. "Leaving to one side the personal safety of the person threatened, it would do the company great reputational damage, and at a time when the economy is so precarious you can't afford to lose confidence."
Copyright The Financial Times Limited 2009