When recession bites the crooks generally come home to roost and this recession is biting like no other in living memory and because of it corporate investigation companies are having a boom time. Forget shoe menders, insolvency practitioners and pawnbrokers, the industry — if that is not too fanciful a word — to be in is corporate sleuthing or, put another way, digging dirt.

Before the credit crunch, lenders were perhaps a little too lackadaisical with their due diligence and, actually, who cared? When the deal went wrong you might bring in an investigations agency, but the deals rarely went wrong.

In a boom market people don't ask too many questions. They take the money and run.
In the 1980s, corporate investigators were used to tremendous effect in takeover battles, digging dirt on the opposition — slinging mud but never seen. Secrecy was their by-word. Criminal records would be unearthed, car number plates traced, mistresses, some present, some past, tracked down. It was a dirty old world, and maybe still is.

It is a business that has its roots with one man, a former assistant district attorney in New York, Jules Kroll who, back in the 1970s started the grand-daddy of all investigations firms, Kroll Associates. It had a glossy patina but however much they dressed it up they dealt in dirt, and dirt that competitors would pay to see, disseminate and make available to a wider audience.

Kroll has been through many manifestations. The most recent being the $1.9 billion sale to MMC, the insurance giant.

The London office is now chaired by Tommy Helsby, a Kroll hand of 28 years' standing. Helsby says (and he has to be careful here because what he is about to tell me could be price-sensitive): “The first nine months of 2008 were very good for us, the last quarter was slower, but since I have come back from the Christmas break the phones haven't stopped ringing. It has picked up with a vengeance.”

In 2007-8, Kroll had worldwide revenues of $1 billion and the UK office is the largest of the stream of outlets it has. There are more employees in London than there are in its birthplace of New York. Helsby says: “Fraud investigation is very lively at the moment and there is lots of business concerning financial misreporting. We have an internal investigation into a large publicly traded entity and there is more asset tracing than we have seen for a very long time.”

Boutique investigations company Alaco is owned and run by two former Kroll employees Ambrose Carey and Amy Lashinsky. They employ 13 people and run the business out of offices in the West End.

There are two US shareholders, James Campbell and Ken Close, both former CIA operatives. Close was the station chief in Africa: “Although there are fewer deals around, the banks are scrutinising them with a fine-tooth comb. Then there's stuff like Madoff, that has been very good for us and we have a lot of asset search work because of it. Also there's not a Russian oligarch that we haven't got a file on,” says Carey.

With reams of unemployed bankers out there and a lot of litigation in the pipeline, tracking down former employees is another boom area.

“Bankers who don't now have jobs, but were involved in selling particular products that may have gone wrong are a rich seam for us. What did they know, when and how? If you can prove collusion then you have the potential for a massive claim,” says Carey.

The last two years have been a boom time for Alaco. In 2007-8 the firm had a turnover of £3.5 million and made profits of £1 million. And this year they are set to do even better. “So far we are doing incredibly well,” says Carey.

Another boutique operation, GPW, is headed by former Kroll boss Patrick Grayson, a suave former Guards officer who is impeccably well connected and given to greeting male colleagues with the line “dear boy”.

Grayson, originally with two partners, (there are now four) Peter Pender-Cudlip and Andrew Wordsworth, started their operation in 2004 — with just the three of them and one secretary.

Now the headcount is 26, with six of those fluent Russian speakers and nearly all Oxbridge graduates. Grayson says: “It was only by a hair's breadth that most of them didn't join the security services.

”And it was GPW's good fortune that they didn't. This year they have a projected turnover of £5 million and margins similar to Alaco at around 30%.

“Coming to us is like employing a medium-sized law firm, we're not in the Clifford Chance league but neither do we charge the fees of a country solicitor.Senior people are charged at £350 to £400 per hour and business, thankfully, is booming,” says Grayson.

“Now we are working on post-event problems that wouldn't have existed six months ago. There are less deals, but those who are doing them are very nervous so they are coming to us, and asking questions like Patrick, where has all the money gone?'. There's also a lot of closing-the-door-after-the-horse-has-bolted work,” says Grayson.

With a clutch of FTSE 100 companies as clients, Grayson, an old and seasonedhand at commercial spookery, is one of a small clutch that is very happy indeed with the way the economy is panning out.