A Primer in Private Security

A Primer in Private Security

Mahesh Nalla and Graeme R. Newman

Harrow and Heston Publishers

New York

2012

© 2012 Harrow and Heston Publishers

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher.

Contents

Acknowledgements

Foreword

1. Introduction: The Scope Of Private Security

2. The Social History Of Private Policing

3. The Concept of Private Security

4. Private Security And The Military Model

5. Security And The Management Model

6. The Scientific Model: Reducing And Preventing Loss

7. The Legal Model: Managing Liability

8. Security and Corporate Culture

9. Fraud Control and Corporate Culture

Recommended Viewing and Reading

References

Acknowledgements

Many people have contributed to this book. We wish to thank those security professionals who visited our class over the years and who graciously endured the difficult questioning of students, at the same time providing a wealth of information and guidance. Among those whom we wish especially to thank for having shared their experience with us are: Dennis Deakin of Motorola, Val Grava formerly of Hartford Insurance, John Horn of United Technologies, Don Parrish of American Express, Dave Proper of the Golub Corporation, and Joe Rossi of Citicorp. These men are outstanding professionals who have done much for the professionalization of private security. We have not made direct reference (by name) to these people throughout the book, although the discerning reader will note that their influence has been considerable. We would also like to thank G. Jona Goldschmidt for his help in reviewing Chapter 7 on the Legal Model. His comments and suggestions were thoughtful and constructive. Nor could we have written the chapter on the military model without the (unwitting) assistance of Tom Lenahan, professor at Herkheimer Community College formerly of the United States Airforce. Of course, we bear complete responsibility for what we have written.

Foreword

Security is an intensely practical business, which sometimes makes its practitioners impatient with anything that smacks of theory. However, the demands upon the industry and the tasks it performs become daily more complex and, as a result, many security managers now recognize that they must become familiar with the latest ideas from a range of disciplines that can inform their work and improve their effectiveness. Law enforcement, itself modeled upon a military style of organization, can no longer serve as the dominant paradigm for private security.

This is a central theme of this useful primer, which traces the history of private policing here and abroad and which analyzes the work now undertaken. It goes on to systematically explore the strengths and limitations of a number of alternative models—scientific, legal and management—for the security industry. It is apparent that each has much to offer in improving the professionalism of private security, but the management perspective may be especially valuable in helping to relate security closely to the context of the organization it serves. This, the book suggests, is the key to success. A management perspective will help security managers achieve this fit by providing an understanding of the organizational structure in which they work and by helping to identify the most effective level at which they can operate. Further, it will help them understand the importance of the corporate culture for their work and the need for effective communication of their mission to senior corporate executives. Without such understanding, the security manager's contribution will be limited however expert he or she may be in loss prevention or crime investigation.

Security managers will still have to pick and choose among the various management techniques and approaches on offer. This book helps them to do this with its clear discussions if the topics surveyed. It also identifies valuable legal and scientific concepts, such as situational prevention, risk management and employee screening. These are explained with depth and clarity which makes the book valuable not just for security professionals, but also for students who require a brief but cogent introduction to the world of security. They will be particularly well served by the frequent summaries and the abstracts of books, articles and movies that are recommended.

The book fills an important gap in the security literature. It will reach a broader audience than existing texts and will contribute to the greater professionalism for which the industry is striving.

Ronald V. Clarke

April, 1990

1. Introduction: The Scope Of Private Security

Private Policing or Private Security?

THROUGHOUT this book, we will use the terms private security and private policing interchangeably. Sometimes, there is the tendency to refer to private policing as only comprising contract services of the rent-a-cop variety. However, we do not want to give the impression that it is only contract personnel who do policing. Rent-a-cops may be uniformed more often than in-house personnel, but there are circumstances and contexts in which in-house personnel, although not uniformed, conduct policing activities very similar to those of both public police and contract personnel.

When we examine the similarities and differences between these types of security in the following chapters, we shall see that the differences usually lie in the particular needs of the particular industry, its management style, and its organizational structure. And as we shall see in the following chapter, in-house policing and contract policing have an inseparable history.

The Demand for Private Security

In 1986 the Federal Bureau of Investigation reported that 10,356 bank fraud and embezzlement investigations were completed; 112,679 commercial houses, gas stations, convenience stores and banks were robbed; 990,708 stores and offices were burglarized; and 1,008,162 instances of shoplifting were reported to the police. The average cost of property damage to structures as a result of arson was even more severe. For example, during the same year 756 industrial/manufacturing units and 5,909 commercial units suffered a loss due to property damage at an average rate of $64,868 and $38,054 per unit respectively (Sourcebook of Criminal Justice Statistics, 1987). Some estimate the annual property damage to be in the range of $6 billion and over while losses due to white collar crime are around $60-80 billion. Losses occur in almost every sphere of business.

Counterfeiting: According to the U.S. Customs Service an estimated $18 billion in counterfeit products are sold in the U.S. annually (Security World, 1985: 11). A California based company, Commercial Counterfeiting Control Inc.(CCC) investigates illegal imitations of brand name products to reduce losses for companies such as Izod, Cartier and Levi. CCC employs about 400 part-time investigators who work as spotters in more than 16,000 retail outlets.

The Trademark Counterfeiting Act passed in 1984 has severe penalties. A first time offender convicted of these offenses can face up to 5 years in prison. Repeat offenders may receive up to 15 years. In terms of monetary fines they range from $250,000 for the first offense to $5 million for repeat offenders (Security World, Jan.1985: 22).

Internal theft: A Bureau of Market Research survey revealed that sixty-two percent of the respondents identified employee theft to be the biggest problem, followed by thirty-eight percent who said that unauthorized access was a primary concern (Lydon, 1985a). Some estimate employee theft to be in the range of $40 billion annually (Kirk, 1985a).

Trade Secrets: One of the assets of every manufacturing industry is information. Millions of dollars are lost by corporations due to industrial espionage. In spite of these losses 34 percent of the respondents in a recent survey of high-technology industries indicated that their companies currently did not have any program to protect their trade secrets (Maxwell, 1989). Trade secrets may be stolen by disgruntled employees who sell secrets to competitors, or by ambitious employees who plan to set up their own corporations. Yet others steal and buy trade secrets to stay ahead in business. It is believed that the Soviets save billions of dollars and years of research by using stolen Western technology (Revo and Figelski, 1989).

Computer Viruses: Computer viruses may affect many business and educational institutions. The virus is a bug planted by pranksters with the intention of infecting stored data in computer disks. These viruses are planted in program codes so that they multiply when specific commands are executed. They spread from one computer to another when these infected programs are copied by unsuspecting users. In one case, the virus spread to nearly 6,000 computers that were networked within the U.S. The damage was estimated to be about $100 million (Yovel, 1989). The virus even spread to other countries, attacking a major international bank in Bombay, and various other cities in India (Indian Express, 1989:1-5).

The Computer Virus Education Act of 1988 (H.R.5061) bill was recently introduced. If this bill is enacted, it will provide for prison sentences of up to 10 years for a person convicted of knowingly planting a virus bug into a computer program (Security Management, January 1989:25)

Fire: Businesses suffer major losses from sources that are not clearly criminal, but which are often considered to be preventable. A 1985 survey revealed that financial institutions lost $300 million, retail units $152 million, and Industrial units $104 million (Lydon, 1985b) by fires. The causes of these fires may be accidental or criminal (arson). Those that are not arson are often thought of as disasters which, though not preventable, can be mitigated by disaster plans.

Disasters and Catastrophes: Every year corporations experience crippling blows from disasters and catastrophes. these may be man-made or natural. Examples of natural disasters are Hurricane Hugo and the earthquake that devastated the San Francisco Bay area. Man-made disasters may be caused by defects in product design resulting in severe losses from class action suits or costly product recalls, or human error (or negligence) resulting in such disasters as the Exxon oil leak in Alaska. The top five reasons identified as contributing to these crises are product defects, environmental accidents, plant/equipment defects, computer breakdowns, and rumors (Mitroff et al. 1989). Damages run into millions of dollars. Yet, in a recent survey of Fortune 1,000 companies, close to half of these companies indicated that they do not have a crisis team or a plan to cope with a crisis or catastrophe (Fink, 1986).

Drugs in the work place: Drugs on the job are a multi-billion dollar problem. According to a Justice Department report approximately 10 million workers spend nearly $100 billion annually on illegal drugs, and companies spend another $100 billion annually to deal with problems of employees who use drugs (Matteson, 1985).

Terrorism. There is a fine line between man-made disasters and terrorism. Individuals or groups may imitate the techniques of terrorist strategies by targeting a particular product, striking randomly, creating a climate of fear in the general public. The poisoning of Tylenol capsules emulates this method, even though it is not as violent as the random use of violence. The potential for loss, indeed the actuality of loss, in a wide variety of fields, particularly where the private sector services the public at large, is tremendous.

Violent terrorism also causes direct losses to business. In 1986, international terrorist incidents against U.S. citizens and property numbered 204 which included 135 bombing incidents (Kelly and Barnathan, 1988). These terrorist acts disrupt corporate activities, cause damage to buildings and businesses, and may involve loss of life or limb. Examples include the kidnapping for ransom of top executives, the US Embassy take over in Iran, the TWA hijacking, and many more. Terrorism is expensive to businesses. For instance, in 1985 IBM spent more than $100 million on security around the world (Kelly and Barnathan, 1988).

These are only a few examples of crimes that affect American businesses today. Though various governments at the local, state and federal levels spent more than $45 billion on various criminal justice activities in 1985 (Cunningham and Taylor, 1985), a figure which has increased steadily over the last few years, the amount of crime however, has not been reduced. More and more, business has looked to the private sector for protection.

The Private Sector Response To Crime

In the last few decades, the private security industry has steadily grown in response to increasing losses in business. There has been a growing sense among businesses that public law enforcement agencies are not able to cope with the types of crime that directly affect them.

Since 1950 the number of private police has outgrown those of public law enforcement. The Hallcrest Report (Cunningham and Taylor, 1985) suggests that private security personnel will continue to grow at a rate far exceeding that of public law enforcement in the next couple of decades.

There are a several reasons for this:

1. The number of crimes reported to police is very high and public police primarily attempt to solve personal and violent crimes. The media image of crime as violent and predatory fosters a climate of the individual fear of crime. Under these circumstances it is important to provide a sense of security to the public. Hence, the primary function of police is seen to be one of solving murders, rapes, and robberies.

2. Public police agencies spend only one-third of their time in crime control functions. The rest of the time is occupied by routine traffic and other service functions. That leaves very little time and manpower to attend to losses incurred due to crime in businesses.

3. In the last few decades there has been a meteoric expansion in the variety of businesses, particularly in the adoption of high-tech innovations. Sometimes it is not clear what types of losses one could anticipate due to the deployment of high-tech gadgetry in business. For example, we have become information dependent and we live in an information society. The speed with which one can access, retrieve and transmit information in this new age is facilitated by computers and radio waves. This also results in new areas for criminal enterprise such as computer crime.

Telephone credit card crime is another example. The Bank of China has closed credit card outlets at many hotels and restaurants to prevent fraudulent cash withdrawals for the card members of major U.S. credit card companies. (Security World, March 1985: 14). In sum, public law enforcement is more concerned about personal safety and well being of all citizens rather than the unique problems of these specialized businesses. This has led to the proliferation of private security businesses that can provide adequate protection to such specific interests.

4. Another reason for growth in the private security industry is an increase in what is called mass private property (Shearing and Stenning, 1983). Shearing and Stenning suggest that the number of private security personnel are increasing due to the fact that more public life takes place in private areas such as shopping malls, private housing complexes and amusement parks such as Disney World and the Epcot Center. The jurisdiction of public law enforcement does not ordinarily extend into these private properties. Because of this increased public life on private lands, the demand for protection to the visiting public as well as the propertied owners lead to an increase in private security.

The Hallcrest Report (Cunningham and Taylor, 1985) also suggests that these increases in private security will bring about some changes in the relation between businesses and public law enforcement. The report indicated that public law enforcement would be rarely called to investigate internal fraud and theft and that businesses would divert crimes from the criminal justice system by resolving them privately.

A bank attempted to solve the case of a $14,500 theft from one of its automatic teller machines. The bank suggested to the thief that he had the option of avoiding prosecution by signing a contract to the effect that the money stolen would be considered as a loan with an appropriate rate of interest. The public police were called in only when the bank could not reach an agreement with the offender (Shearing et al. 1985).

Varieties of Private Security

Today it is estimated that there are more than a million people employed in various private security-related occupations in the United States (Shearing and Stenning, 1983, Cunningham and Taylor, 1985). The growth in this area has been quite significant in the last couple of decades. In terms of expenditure, private security spending in 1980 was $13.8 billion and the expenditure is projected by the Hallcrest report to be $53.4 billion in 1995. The full significance of this growth must, of course, be examined in the context of the growth of public policing as well. We will examine this question in detail in Chapter 3. For the moment, we may observe that part of the explanation for the vast expenditure in private security is the enormous variety of occupations and roles filled by private security. There are hundreds of personnel employed in various occupations such as security guards, private investigation firms, armored car/courier firms, equipment manufacturers and suppliers. All these personnel provide protection from manmade or natural disasters, theft, fraud, pilferage, espionage, and arson, to various consumers such as manufacturers, corporations, and small scale businesses. The major kinds of services offered are as follows:

1. Security Guard Services. Of the various forms of private security services available in the market, the security guard is probably the most visible of all. One sees security men guarding banks, retail stores, shopping malls, office complexes, housing complexes, educational institutions etc. This group of private security constitutes the largest percentage of all security personnel. In 1960 there were an estimated 225,000 employed in guard services and by 1990 the Hallcrest Report estimated this figure will be around 900,000 employees (Cunningham and Taylor, 1985). These security guards can be identified as either contract or proprietary guard services. Let us examine these types of guard services.

Contract Guard Services: This type of security service is hired from firms which provide guard services to establishments such as shopping malls, amusement parks, small businesses, etc. The security firm that contracts out guards to these businesses usually charges hourly rates which normally include the guard's salary, insurance, worker compensation, liability insurance and other expenses. Before a business hires security guards from a particular contract security firm, the hiring agency consults with the managerial or supervisory staff of the security firm to design the best program. The responsibilities of these guards are generally defined by the contracting firm. The size of these contract firms can range from very large organizations such as Pinkertons to small regional agencies.

Proprietary Guard Services: These guard services are often referred to as in-house security. In other words, these security guards are regular employees of the organization and are not contracted from an outside security agency. The duties and responsibilities are defined by the firm that hires these personnel.

2. Security Professionals. The majority of these skilled and more highly trained security officers are "in-house-, often trained by their employers, or certified by an independent agency, such as the American Association of Industrial Security. These personnel may become the managers and supervisors of the security division in a company,