Few people ever penetrate the dark side of money, but Jules Kroll is one of them.
Fortunes plundered, ransoms paid, deals cut - the uncovering of such secrets, and the million smaller confidences that are his history, have made Mr. Kroll a rich man.
It was nearly 40 years ago, when he practically invented the business known as corporate intelligence, that he first came to the attention of crafty boardrooms. At a time when “private eye” still conjured images of cheating spouses and seedy hotels, Mr. Kroll built a sort of private C.I.A. and went corporate. If a Fortune 500 company or an A-list investment house wanted the dirt, it hired Kroll Inc. to dig it up.
Which is why his latest venture seems so unusual and yet so very Kroll. At 69, he is getting into - of all things - the credit ratings business.
You might wonder why anyone pays attention to credit ratings anymore. After all, the financial crisis of 2008 and 2009 laid bare the conflicts at the heart of the ratings game. The world learned that the three dominant services - Moody’s, Standard & Poor’s and Fitch - had stamped sterling ratings on mortgage investments that turned out to be nearly worthless. It was a lesson that nearly brought down the financial system.
Ratings agencies, to many, seem like Wall Street’s enablers. What is Jules Kroll thinking? This is the man the Haitian government hired to track down financial assets linked to Jean-Claude Duvalier. The man Kuwait hired to ferret out the oil wealth of Saddam Hussein. One of Mr. Kroll’s cases, involving kidnapping, inspired the movie “Proof of Life,” and there are plans for Scott Rudin, the producer of “The Social Network,” to make a pilot for a TV series based on his exploits.
Mr. Kroll says that if he can do all of that, he can get to the bottom of an investment security, too. He and his son Jeremy, 39, are staking the family name on a venture called Kroll Bond Ratings. They say the business will marry hard-nosed credit analysis with their trademark corporate sleuthing. Maybe the leading ratings agencies can learn a thing or two from the detectives of Wall Street.
“They never really looked under the covers, which is what I have done all my life,” Mr. Kroll says. “If they were in any other business, they would be out of business.”
The pertinent question for Mr. Kroll is why anyone should listen to him on the subject. For all his talk about shaking up this industry, Mr. Kroll is hewing to the status quo. Kroll Bond Ratings will be paid by the issuers, just as the big three are.
Some wonder if Mr. Kroll is out of his depth this time.
Mr. Kroll, for his part, is thinking big - as always. He wants to grab 10 percent of this $4 billion-a-year industry within five years.
He clearly relishes his nonconformist image. In 2005, for instance, he paid $27,000 at a charity auction for a walk-on part on the TV series “CSI: New York.” He gave away the role so a friend could raise more money for another charity.
Mr. Kroll has never quite fit the corporate mold. He sold Kroll Inc. in 2004 to Marsh & McLennan, the giant insurance brokerage firm, for $1.9 billion in cash and pocketed about $117 million.
Jules Kroll loves a good story. The bookshelf in his office in Midtown Manhattan is stocked with titles that speak to a life spent weighing risks - “The Threat Closer to Home: Hugo Chavez and the War Against America” and “Surviving and Thriving in Uncertainty: Creating the Risk Intelligent Enterprise.”
But Mr. Kroll has his own stories . Like the time in 2003 when Edward S. Lampert, the billionaire hedge fund manager who controls Sears, was kidnapped on the Connecticut Gold Coast. Mr. Kroll was brought in to help the F.B.I. and pointed out that someone - it turned out one of the kidnappers - was using Mr. Lampert’s credit card to buy pizza. (Mr. Lampert was later released unharmed.)
“These guys were real geniuses,” Mr. Kroll says dryly.
By JANET MORRISSEY
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