Insecurity: it’s turning out to be a cash cow

It’s a cake everyone wants a slice of and the armed forces as well as the police are not to be left behind.


Salman Siddiqui July 04, 2010

It’s a cake everyone wants a slice of and the armed forces as well as the police are not to be left behind. The trend in the multi-billion rupee security business is the running of private companies by public sector entities.

Ironically these are entities that are tasked with providing security, law and order as part of their functions. Instead, as the situation deteriorates, they are now out sourcing their expertise.

“There has been a steady boom since 2000. In the last six years particularly, there was a 400 per cent increase in the number of private security companies and their revenues,” says Maj (retd) Munir Ahmed, chairman of the All Pakistan Security Agencies Association (Apsaa). Apsaa was formed in 1992 and today has close to 170 private security companies as its registered members.

There are around 400 private security agencies in Pakistan. “But since each company requires a separate licence to operate in each of the four provinces, the number of companies based on licences issued throughout Pakistan comes to about 600,” he says.

Clearly, many are benefitting from the shaky security situation in the country and some of the beneficiaries are those institutions whose primary duty is to protect the citizens and which are funded by public funds. Analysts worry that this trend may further reduce the writ of the state. They also stress that there is a clear clash of interests between the state institutions and this side business.

Almost all private security companies are run by retired armed forces and police personnel

The development of an industry

According to Ahmed, the private security industry is one of the biggest job providers in the private sector. He estimates that the total number of private security guards in the country has crossed the 300,000 figure. To put things into perspective, the total number of active duty personnel in the paramilitary forces, which includes the National Guard, Pakistan Rangers, the Frontier Corps and Maritime Security Agency, is also just over 300,000.

There are 65,000 private guards in Sindh alone, Ahmed elaborates, out of which around 40,000 are in Karachi. In Punjab, there are an estimated 80,000 private guards and 25,000 are in Islamabad. Close to 40,000 guards operate in Khyber-Pakhtunkhwa, says Ahmed, adding that the rest are in Balochistan and Azad Kashmir.

Special Secretary Home Department Sindh, Collin Kamran Dost, confirms that the number of private guards has exceeded the police force in the province. Karachi has 26,873 police personnel in active duty, more than 13,000 less than private security guards. And the number of private guards is set to rise. “Since March this year, 219 licences to private security companies were issued in Sindh,” says Dost.

However, since the demand for guards has outstripped the supply of ex-servicemen, all private security companies, including the state-backed ones, are now forced to hire fresh blood. “Some are given just three days of training before being posted by the company,” says Ahmed.

Big money

In terms of money, it is a roughly Rs5.5-billion-rupee or close to $60-million-per-annum industry. “There are several big names in the sector which file tax returns close to the tune of Rs10 million per annum,” says Ahmed.

Askari Guards Pvt Ltd (AGL), Fauji Security Services Pvt Ltd (FSS), Bahria Security System & Services (BSSS), National Police Foundation (NPF) and Frontier Corps Security Services Pvt Ltd (FCSS) are some of the private security companies that come under the ambit of the state.

These companies say that their aim is to provide jobs to retired personnel and contribute to the welfare of their organisations. However, a senior interior ministry official says that “it’s a commercial venture, pure and simple. They know there’s a lot of money in it and now everybody wants to be a part of it.”

The spokespersons for these companies say they operate legally and are registered with the Securities and Exchange Commission of Pakistan (SECP) as per requirement. Interior Ministry sources confirm this claim.

Spokesperson for the AGL says that the company has over 5,000 guards across the country. Sources in the industry, however, claim that the AGL employs close to 8,000 guards. The company has bagged dozens of lucrative clients in the corporate world including private banks and USAID offices. “Our guards are also posted at the US embassy,” says the spokesperson. He also says that the AGL maintains a ‘link’ with the General Headquarters as it is a subsidiary of the Army Welfare Trust (AWT) whose chairman is the chief of the army staff. Nevertheless, no serving officer of the Pakistan Army has anything to do with the AGL’s operations, which is a private concern, he clarifies.

Meanwhile, the FSS comes under the Fauji Foundation, while the patron in chief of BSSS is the chief of naval staff, says the agency’s spokesperson, Commander (retd) Iqbal Bilgrami. “The naval headquarters decides members of the selection committee,” adds Bilgrami.

And NPF comes under the Ministry of Interior, says NPF’s Regional Director Sindh C K Chachar. Until recently, the NPF was providing security at the Port Qasim Authority installation.

The AGL, which enjoys a good reputation in the market, claims on its website that it is “certified to operate with security companies of foreign countries.” Dost, however, says that as per the law, local private security companies cannot collaborate with any foreign security company, even for training purposes.

Dost adds that like all other private security companies, AGL, FSS, BSSS, NPF and FCSS are regulated by each province’s Private Security Agencies’ Ordinance, 2000.

Without state backing

Private security companies which are not affiliated with state institutions, say they are at a disadvantage. They complain that companies under the army, navy and police are able to utilise state-owned training facilities and easily able to get clearances from the ministries or intelligence agencies as well as recruit a large number of ex-servicemen. Two of the big names in the industry, not linked with the armed forces or the police, are Security 2000 and Phoenix Security.

A private security company owner and a former Pakistan Army officer, speaking on the condition of anonymity, says that “private companies which come under the armed forces and police welfare trusts should be banned.” Another retired army officer claims that companies that are not associated with state institutions can’t match their rates. “With the minimum wage now Rs7,000, I have to spend close to Rs12,000 when I hire a new guard, which includes his salary, uniform, shoes, weapon and training. But these guards [belonging to companies affiliated with the armed forces and the police] are available for less than 10,000 rupees at times. How they manage to do this is a mystery to me.”

Where is the state?

Private security business is an indicator of the state’s incapacity to provide security to its people, says defence analyst Ayesha Siddiqa. “The problem is that countries like Pakistan spend billions for military security, which is a public good, but then invest very little in law-enforcement agencies, which in turn neutralises any positive impact you may have with investment in defence institutions,” she says.

“Also, the military’s private security companies are meant to take advantage of the existing negative security conditions. The issue was never addressed at a policy level,” she adds.

The case of Sindh police

On June 12, the Sindh police issued a notice in newspapers saying that it “would provide [Sindh Police Guards] on payment basis to organisations and individuals for their security.” CCPO Waseem Ahmed says that this is in accordance with police rules and regulations. “A policeman in his official uniform and gun would be available,” he says, for a negotiated price. Assistant IG Police, (Sindh Welfare Department), Irshad Ali Raza, claims that a No Objection Certificate (NOC) for the Sindh Police Guard is not needed. Meanwhile, the National Police Foundation also provides private security guards.

However, Sindh police are in the process of forming another private security company which will report directly to IG Sindh. “The Sindh Police Welfare Security Guards Ltd will be launched in 15 to 20 days,” says Raza. Dost says that the home department has granted permission to the Sindh police, but they still need to register with the SECP in order to get a licence. “We are renting a separate office, vehicles and guns for the new company,” says Raza, adding that all due processes will be followed.

Analyst Zahid Hussain calls the situation very alarming. “Instead of doing something about the security situation, the state has chosen to abdicate its responsibility,” he says.

“Nowhere in the world do we see the acquiring of private security for every house and business concern. People must be able to trust the state for their security.” Hussain adds that if the state becomes complicit in cashing in on the situation, it will lose its writ completely.

Published in The Express Tribune, July 5th, 2010.

COMMENTS (3)

maz | 13 years ago | Reply private security is a global phenomenon......u can see heaps and heaps of private security even in countries like the US and UK....therefore, considering the wave of violence in the country, the above numbers are justified........ however, it is not acceptable for public sector entities and govt secuity agencies to be indulging in commercial private security and it is highly unethical on the part of these private security firms to not impart proper trainig to their employees......moreover these security guards are paid a pittance for their toil......nevertheless this "industry" is now providing employment to many a unskilled laborers who wud otherwise be jobless
PARVEZ TAUQIR | 13 years ago | Reply I read some where that arm forces and police belongs to the country but our country belongs to arm forces and police. Figures are shocking, hats off to the investigation reporter.
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