The terrorist threat to corporate executives

The terrorist threat to corporate executives

THE TERRORIST THREAT TO CORPORATE EXECUTIVES Many multinational corporations are forming crisis management teams which deal with the eventuality of a ...

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THE TERRORIST THREAT TO CORPORATE EXECUTIVES Many multinational corporations are forming crisis management teams which deal with the eventuality of a terrorist threat using the same techniques they apply to other management problems.

ROBERT J. KUHNE AND ROBERT F. SCHMITT 77

Terrorist activities directed towards executives of multinational enterprises have been increasing at an alarming rate in almost every area of the globe since 1970. The U.S. Air Force counterintelligence has reported that an estimated 1,800 terrorist acts took place between January 1970 and November 1977, more than 75 percent of these during the last three years. 1 Terrorism can take many forms, all of which are familiar by now: assassina1. Kenneth J. Miller, "Terrorism and the Multinational," delivered at the University of South Carolina, March 1979.

R O B E R T J . K / J H N E is a n assistant p r o f e s s o r of b u s i n e s s a d m i n i s t r a t i o n at the U n i v e r s i t y o f S o u t h C a r o l i n a a n d the d i r e c t o r of t h e I n t e r n a t i o n a l T r a d e C e n t e r of the Small Business D e v e l o p m e n t C e n t e r of S o u t h Carolina. R O B E R T R. S C H M I T T is a g r a d u a t e research assistant at t h e U n i v e r s i t y o f S o u t h Carolina.

tion, hijacking, bombing, kneecapping, blackmail, and kidnapping. Executive kidnapping is a threat faced daily by many international businessmen, especially those stationed abroad. The corporation, the executive, and his family must realize the seriousness of the problem and both face the unpleasant reality of the limitations imposed on them and develop ways to deal with the threat. Many multinational enterprises are readjusting corporate strategy in an attempt to deal with kidnappings by implementing a new type of management orientation called crisis management. Crisis management includes taking thorough precautionary measures for the safety of multinational executives in the U.S. and abroad and formulating guidelines for the company and the executive who must respond to a kidnapping and its aftermath.

DECEMBER 1979

ROBERTJ. KiJHNE AND ROBERT F. SCHMITT

TERRORIST TACTICS

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Terrorism has become a highly sophisticated means of conducting modern guerrilla warfare. While in the distant past terrorists were motivated primarily by the desire to acquire material goods such as land, money, and other valuables, the motives for modern guerrilla warfare are primarily political and ideological. Terrorist acts are not, as they may appear to be, random and senseless, but rather are means toward the end of undermining the political system which the terrorists oppose. Kidnappings of foreign executives serve this larger goal in one or more of several ways. Because the worst e n e m y of a subversive revolutionary doctrine is a strong, prosperous working class, terrorists may kidnap corporate executives with the intent of discouraging foreign direct investments, thereby undermining the financial stability of the government in power. This, the terrorists hope, will lead to a deterioration of the economic and social well-being of the people and will plant the seeds of revolution in the minds of the large and discontented working classP Another objective of terrorist activity is publicity. Due to sophisticated communications technology, news of every international terrorist incident spreads quickly and commands the public's attention. As a result, small groups of terrorists gain a worldwide forum for airing their grievances and setting forth their ideologies. Short-range objectives may be the release of imprisoned comrades or the financing of future terrorist ventures by means of ransoming kidnapped executives. Sometimes terrorists hope that a kidnapping will elicit a retaliatory response from the authorities which would entail some reduction of personal liberties, such as curfews and security checks. This will tend to foster general discon-

2. Richard Clutterback, Living with Terrorism (London: Faber and Faber, 1975): 28-30.

BUSINESS HORIZONS

tent among the people which may result in friction with the present government, a The number of executive kidnappings is increasing rapidly because they are usually successful in accomplishing the objectives of the terrorists and because the publicity which attends them encourages like attempts. The international publicity offered by the media gives terrorists a global spotlight in which to operate and thereby encourages other dissident groups to become more active in their endeavors. And the great number of successful attacks encourages future attacks. Terrorist successes are due to several factors. With modern communications and powerful weaponry, it has become easier for small groups of terrorists to paralyze the normal activities of everyday life. By improving their communications systems and bringing their arsenals up to the technological standards of those of governments, the terrorists attain equal footing with their adversaries. Also, terrorists groups have certain advantages over their adversaries. Because their numbers are small and they are often the object of constant police search, they use to the fullest these limited advantages: Surprise. This is one of the terrorists' most effective weapons. They know the time, place, and procedures of the attack and the strengths and weaknesses of their victims. The victims, on the other hand, know nothing of the logistics of the operation in advance and often do not even know the size or strength of the organization that they are dealing with. Thus the terrorists start off with a tremendous advantage. 4 Fear. Terrorists try to make potential victims fearful so that they will be constantly on edge and more prone to awkward or 3. For an indepth analysis of the terrorist philosophy, see Anthony Burton, Urban Terrorism (New York: The Free Press, 1975), chapter 12. 4. Carlos Marighela, "Handbook of Urban Guerrilla Warfare" in For the Liberation of Brazil, trans. J o h n Butt and Rosemary Sheed (Baltimore: Pelican Books, 1971): 74.

The Terrorist T h r e a t to Corporate E x e c u t i v e s

irrational behavior. Fear also serves to distort the actual strength of the terrorist group, s Knowledge of the terrain. Since the terrorists initiate the time and place of the incident, they have the opportunity to become familiar with the site far in advance of the time of operation. The victim and the forces involved in trying to save him may be relatively ignorant of the terrain and therefore overlook many of the details capitalized upon by the terrorists. Mobility and speed. Given the time advantage usually conferred by surprise, mobility and speed become major factors in maximizing this advantage. If the terrorists can strike quickly and accomplish their objective before the victim can overcome the initial shock, their chances of success will be much greater. Information network. The successful planning and implementation of operations depends on a sophisticated system of reconnaissance by which terrorists can obtain valuable information and monitor their victim's position, attitudes, strengths, and weaknesses. The more the terrorists learn about their adversaries, the greater their chance of circumventing retaliatory actions. 6

means of neutralizing these advantages and taking precautionary measures in an attempt to forestall terrorist attacks.

THE THREAT TO EXECUTIVES

Recent terrorist incidents have demonstrated that terrorist organizations have become highly adept at utilizing these advantages to the maximum extent. There is also evidence of collusion between sophisticated international terrorist organizations, which increases the likelihood that operations will be successful. The implementation of the above five advantages to their fullest, coupled with the relative inability of the authorities or corporations to effectively combat these advantages, has contributed to a large extent to the recent successes of terrorist activities. Governments and businesses have not been prepared to combat terrorists on a sophisticated level and are only now developing

According to a report from the Insurance Company of North America, CIA statistics show that "40 percent of the 232 terroristconnected kidnappings reported since 1970 have involved businessmen. Almost all of them have taken place in Europe and Latin America, with one out of five of the businessmen being Americans. ''7 Two of the more prominent U.S. executives kidnapped in South America are William F. Niehous, general manager of Owens-Illinois who was kidnapped in Caracas, Venezuela in 1976, and Victor Samuelson, the manager of the Esso Argentina oil refinery, kidnapped in Campana, Argentina in 1973. In both cases, ransom demands were extremely large and involved not only payments of money but also the distribution of food to the poor and the publishing of the terrorist's ideology in major international newspapers. The demands of Samuelson's kidnappers were met and he was released unharmed. In the case of Niehous, the Venezuelan government forbad the publication of the terrorist doctrine in Venezuelan newspapers, so Owens-Illinois published it instead in several major international newspapers. The Venezuelan government retaliated against OwensIllinois by announcing the expropriation of the company's local holdings; ownership is still in question. Niehous was held by the terrorists for three years and finally discovered by the Venezuelan police. He was unharmed and in good spirits. Recent highly publicized kidnappings of non-U.S, executives include those of HannsMartin Schleyer, a German industrialist in

5. Brian M. Jenkins, Terrorism Works--Sometimes (Santa Monica, Cal.: The Rand Corporation, 1974): 3. 6. Marighela: 74-78.

7. Insurance Company of North America (INA), an advertisement appearing in The Wall Street Journal, October 3, 1978: 9.

DECEMBER 1979

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ROBERTJ. KUHNE AND ROBERT F. SCHMITT

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1977, and Baron Edouard Jean Empain, a French executive, in 1978. Again, exorbitant ransom demands were made and, in the case of Schleyer, the release of imprisoned members of Germany's notorious Baader-Meinhof gang was demanded. French compliance resulted in the safe release of Empain, b u t the German reluctance to free the imprisoned guerrillas led to the brutal execution of Schleyer.

BUSINESS HORIZONS

It is believed that many more terrorist incidents have taken place b u t have not been revealed to the general public for corporate security reasons. Such incidents would have been privately negotiated by the corporation and the kidnappers, and gone unreported to the local authorities. The INA estimates that "for one year alone in Argentina, U.S. corporations may have paid as much as $90 million in ransom for their kidnapped executives"

The Terrorist Threat to Corporate Executives

(INA, p. 9). This figure is for one country only; the worldwide aggregate is difficult to estimate. U.S. corporations abroad are realizing the need to take precautionary measures to protect their employees from kidnappers and the economic stability of their businesses from extortion. "It is estimated that 80 percent of large U.S. firms have either started executive protection programs or are considering doing so, at an estimated cost of $7.1 billion annually, more than double the amount spent five years ago" (INA, p. 9). The prevailing corporate philosophy is that expenditures such as these are becoming one of the necessities of doing business abroad.

EXECUTIVE PROTECTION Several means are available to the multinational corporation to ensure the safety of its executives, b o t h at home and abroad. One m e t h o d is the development of the crisis management team consisting o f executives from different parts of the company. The team would study all aspects-legal, financial, security, personnel, and public r e l a t i o n s - o f kidnapping and terrorist attacks and would formulate detailed plans for handling them. The objective is to prepare the company to employ management skills in such situations, rather than to rely on intuition or emotional responses. Companies are also initiating classes to teach executives precautionary security methods to protect b o t h themselves and their families. These classes also deal with response tactics for the executive in the event of an actual kidnapping. Terrorist methods can be simple or intricate so preventive measures range from simple, commonsense precautions to intricate and highly technical means of prevention. The following are some of the more c o m m o n precautions suggested to executives. • Maintain a low profile. Try to keep y o u r picture o u t of the newspapers and off the

television, and never publicize any information regarding y o u and y o u r family. • Don't go anywhere alone or permit members of y o u r family to do so. • Always have a list of daily appointments on file for yourself, your spouse, and y o u r children. This will provide a means for quickly determining the authenticity of an alleged kidnapping. • If at all possible, leave y o u r spouse and children in the U.S. if y o u are stationed abroad. • Never discuss financial matters in public. • Vary y o u r routines. This includes modes of transport, eating habits, recreational habits, varying routes to and from work, and even maintaining several apartments. • Have yourself and your family fingerprinted. • Have an armed chauffeur skilled in evasive driving tactics. Armed bodyguards and bulletp r o o f cars are also recommended. • Have a phone in y o u r car for use in case of emergencies. • Install security devices in y o u r home and office, and try to live in patrolled neighborhoods. • Check references of all domestics carefully. • Instruct secretaries never to divulge y o u r whereabouts to strangers. • Maintain a file of vital information, including the plans to your home, telephone numbers of neighbors, existing alarm systems, and location of telephone, gas, water, and electric lines, and keep this on file in y o u r office. This will be vital information in the event that terrorists are are holding y o u or y o u r family hostage in your own home. 8 • Look into insurance coverage for corporate kidnappings. This is costly b u t it does provide compensation to the corporation in the event of an exorbitant ransom demand. There are two major conditions for this policy: secret acquisition so as not to encourage the kidnap-

8. The majority of this section is summarized from F. X. O'Connor, "What to Do if you Are Kidnapped," Saturday Evening Post, May 1976: 6-9.

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ping of insured executives, and the company's promise to cooperate with the local police authorities in the event of a kidnapping. 9 These are the most significant, b u t by no means only, precautionary measures which can be implemented. The emphasis lies in maintaining a low profile and in always being aware of the possibility of being a potential target. The more seriously this threat is viewed and the more preventive measures which are taken to preclude an incident, the less likely it is that an attempt will be made. Multinational corporations are instructing their executives on measures to be taken in the event that they should b e c o m e a victim of a kidnapping in spite of their precautions. Some of these tactics are:

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• Don't make yourself a nuisance to the kidnappers. • Don't try to escape unless the chances are excellent. • If y o u get a chance to call or write, a pre-arranged signal or code proves helpful in secretly relaying additional information. 1°

• Try to maintain as good a physical and mental state as possible; the kidnapping will be a trying experience. • Don't struggle with your kidnappers; they have come equipped to handle you. • Keep alert to any lack of vigilance on their part. • Leave fingerprints or other clues as often as possible.

~[[[[l[[[~l[[ There are no hard and fast rules governing corporate behavior which will ensure the safe return of the executive. Each kidnapping is unique, and depends greatly on the arms, methods, and desperation of the terrorist group holding the victim. Much depends on chance, b u t as long as the corporation is prepared to handle the problem by means of rational crisis management, the executive's chances of survival will be greatly enhanced. Corporations should deal with terrorism in a professional manner, treating it as one of the many contingencies faced b y corporate management today. The terrorist threat is changing the way executives live and do business abroad; without preventive measures and the necessary flexibility, executives are taking additional and unnecessary risks. E2]

9. See Insurance Decisions: Executive Security (Philadelphia: Insurance Company of North America, 1977),

I0. O'Connor: 6-9.

BUSINESS HORIZONS