Advertisement

Detective agency set up by ex-spies sues its chief executive

MI5 'stretched' by growing threats, warns Mr Wallace: PA
MI5 'stretched' by growing threats, warns Mr Wallace: PA

As corporate espionage stories go, they don’t get much more intriguing than the cold war erupting at private investigations agency Diligence.

The company known for employing former spies is one of the best known detective agencies in London, having worked with clientele ranging from Russian oligarchs to blue chip operations such as Stagecoach and Lloyd’s of London.

However, after an apparent boardroom bust-up, Diligence is suing its founder-chief executive Nick Day, a former MI5 officer, for a welter of alleged misdemeanours including potentially “stealing” a whole division of the firm for himself.

Day set up Diligence in 2000 with a London-based CIA man, Mike Baker, to deploy their intelligence gathering skills for private sector clients. Argentinian private equity fund Exxel Capital Partners bought a majority stake five years later through a subsidiary and now appears to be behind a multi-million pound legal action filed by Diligence against Day in a Delaware court.

At the heart of the claim is a row over ownership of Diligence’s Swiss division, Diligence Global Business Intelligence (DGBI) which Day launched in 2007. The litigants claim he established the division in Geneva with Diligence’s funds and ran it using the company’s resources and brand. However, the lawsuit alleges, Day has now declared himself the sole beneficial owner of the division.

The claim contends Day only owns the shares as a nominee in his role as Diligence chief executive, not as the true owner.

“Thus,” the suit alleges,”if Day owns DGBI, it is only because he stole it.”

The claimants say Day engaged in “self dealing and misappropriating corporate resources for his own benefit” and was potentially involved in “corporate looting” including $2.5 million in allegedly unjustified expenses on a company credit card which, the suit claims, he refused to explain.

The lawsuit declares: “Day’s egregious breaches of his duty of loyalty to Diligence and its stockholders cannot be countenanced.” It demands damages and “disgorgement of Day’s ill-gotten gains.”

It is believed that Diligence’s board of directors includes four representatives of the Argentinian investors plus Day and London office chief Trefor Williams.

Diligence claims when it started investigating the management’s running of the business in more detail last year it discovered they had split it into “separate fiefdoms run by unaccountable executives” and that employees including senior management “were spending corporate resources for personal purposes.”

It also alleges Day allowed members of his management team to charge “plainly unjustified” personal expenses such as their children’s tuition and family travel to the company.

Last month, Day resigned as chief executive of Diligence but “purports” to continue as managing director of the Swiss business, the suit says.

Day, whose legal defence to the claim is yet to be filed, declined to comment. Williams also declined to comment.