Lao Securicor Company Limited was established through utilizing the services of the law firm, Dirksen Flipse Doran and Le [DFDL] in Laos through the joint venture partnership of Jardine Securicor [70%], and the Laos Ministry of Interior (MOI) [30%].

Lao Securicor experienced an array of problems within only weeks of commencing operations (October 1998). Listed below are several promises that were formulated into the joint venture agreement that was designed to protect the integrity of the relationship between the foreign investor and the Laos Government.

Lao Government promise:	Skilled workforce trained from military, police and government sectors were promised in lucrative supply but no such experts were provided. Lao Securicor was forced to recruit from the villages and neighboring provinces. The majority of recruits had little to no education and their English speaking skills were in most cases non existent.
Lao Government promise:	1000 guards were guaranteed to contract in first year but only 450 guards were engaged over two years.
Lao Government promise:	Highly educated human resources were promised but only poor to no educated human resources were made available.
Lao Government promise:	Capital injection of US$350,000 was promised but no actual capital was invested by the Ministry of Interior but this was not revealed until after the signing of the joint venture agreement. The Ministry of Interior also demanded all the projective profits in advance despite the fact that Lao Securicor hadn't any clients.
Lao Government promise:	Fully functional Security Training Academy and Administration Offices were offered but these were again, not provided. The Laos authorities seized property from the village community which immediately caused ill-will between Lao Securicor and the community. Lao Securicor forced to engage local contractors to renovate the buildings in accordance with health and safety standards adopted by the company. Joint Venture partners [Ministry of Interior] forced Lao Securicor to engage their contractors at a higher cost than reputable licensed contractors.
Lao Government promise:	No competition within the Industry was guaranteed but the Ministry of Interior Joint Venture partners maintained major shares in the competing company and despite promises to close Laos Security Keeping Company down, it was kept running in direct competition. Businesses were forced to engage their services despite the fact that Lao Securicor were able to offer a better quality of service.
Lao Government promise:	English speaking staff was promised but actually most of the staff had very limited English. Lao Securicor management alleviate this problem by engaging Lao teachers and training them in the security industry at instructor level to implement the new bi-lingual training syllabus developed by Kerry Danes specifically for Lao PDR.
Lao Government promise:	Radio Frequency and permission to use Radio equipment was granted in accordance with security requirements but the Radio frequency and permission to use radios was denied. This was a major setback to the foreign investment company that relied heavily on monitoring their client's premises in order to ensure the best protection and responsive action in time of need. Effectively the joint venture partners restricted the foreign entity from providing a service that was associated with their world renowned brand name.
Lao Government promise:	1% Import duty was granted to enable Lao Securicor to import company vehicles. When Securicor sought to import vehicles from neighboring Thailand they were denied permission. This had a detrimental effect on the investment and resulted in considerable financial loss.
Lao Government promise:	Marketing and advertising support was approved by Lao Ministry of Interior but Securicor was told that they were not allowed to advertise and/or market the company as a result of the then Managing Director falling into a dispute with a member of the joint venture partnership.
Lao Government promise:	Three senior Executive Staff were promoted into the company but these members refused to support the appointments when it was made known to them that their extortion attempts were impracticable.
Lao Government promise:	Full Government support and protection from corruption but Lao Securicor was subjected to continual daily harassment and extortion attempts until eventually the company closed.

LAOS GOVERNMENT OFFICIAL EXTORTION
One of three MOI representatives, Captain Khamphy Sulivong, secretary to former Vice Minister (MOI) Mr. Sem Xiong, was appointed contract manager. Mr. Kamphay approached the Securicor Managing Director and demanded a number of entitlements and a four-wheel drive motor vehicle for his own personal use. The Securicor manager explained the impossibility of the situation, which resulted in threats from Mr. Khamphay Sulivong as he declared he would destroy the joint venture partnership and close the operation. With effect 20 December 1998 a letter was sent to Lao Securicor from the Minister Asang Lao Lee of the Ministry of Interior (MOI) suggesting the company commence to close the operation. Additionally, recommendations were made by the MOI to the Foreign Investment Management Cabinet (FIMC) regarding Mr. Khamphay Sulivong's suggestions. After considerable debate, the notion was formally rejected in correspondence from the Prime Minister's Office on two separate occasions acknowledging support to the Securicor Company and directing the FIMC resolve the concerns of the MOI. Upon later discovery, it was found the directive had been put aside as a result of the joint efforts from Mr. Khamphay Sulivong and his long-standing friend Mr. Bounmaly Vilayvong. The Securicor Manager was compelled to leave Laos as confirmed in a letter he wrote dated 28 October 1998 terminating the lease of the house he rented claiming "due to difficulties with the Lao Government". A new manager was engaged on the 24 January 1999, that being Mr. Kerry Danes of Australia. He quietly raised concerns regarding the matter to a select group of existing clients (ADB, IMF, World Bank) who were obviously well respected for their experience when dealing with departments in Lao PDR. Although sympathetic to the situation and obviously committed to developing the infrastructure required for economical growth, they said that they were not in a position to offer any support.

Two separate meetings (August 1999 & July 2000) occurred later and were attended by Kerry Danes, Mary Flipse (DFDL), Mr. Bounmaly Vilayvong and another member of the Foreign Investment Management Cabinet [FIMC]. Mr. Bounmaly Vilavong stated at both meetings that he had received a letter from the Prime Minister's office directing the FIMC to resolve the differences in favor of Securicor. Mr. Bounmaly Vilavong requested a one off payment of US$50,000 to which he ensured the resolution in Securicor's favor. He said the money would be paid to Deputy Prime Minister Mr. Somsavat Lengsavad to ensure top cover protection against the partners. He said Mr. Somsavat Lengsavad was the most powerful person in Laos. No money was ever paid.

EVIDENCE OF EXTORTION ATTEMPTS BY LAO TAX OFFICIALS

In July 1999, the Lao Tax officials visited the office of Lao Securicor to conduct a random government audit of the foreign investment company in accordance with the terms of the joint venture agreement providing for regular auditing.

Despite the company having a valid tax license the Tax officials argued its validity. The main purpose of their visit became clear that they were seeking to extort more company taxes than what were due. The company records showed that all transactions were in accordance with Lao Tax Department regulations on recording and reporting, however, the officials attempted through intimidation tactics to extort a cash donation. Threats were made against Kerry Danes as the Manager of the Company and this resulted in Kerry Danes contacting DFDL Lawyers to advise.

The tax officials went to the office of DFDL and as reported later by the DFDL office, the same attempt of extortion was presented to them. Kerry Danes told the officials that he was going to halt all future taxes to the Government until they could confirm his tax license was valid. He said that it was illegal for his company to pay taxes without the correct tax license according to the Lao Tax Law and would set future taxes aside in a trust account managed by DFDL Lawyers until the matter was resolved. The tax officials withdrew their demands and confirmed that he was the holder of a valid tax license but could still make a donation if he wanted to.

THE AD HOC COMMITTEE FORMED TO ASSIST FOREIGN INVESTORS

The Laos Government established the Ad Hoc Committee. The then Laos Prime Minister Sisavath Keobounpanh had initially been appointed the Chairman of Foreign Investment Management Cabinet (FIMC), however, the Politburo suspected his involvement with misappropriation of public money and later gave the position to the Deputy Prime Minister and Foreign Affairs Minister His Excellency Somsavat Lengsavad who had been the Vice-Chairman of the FIMC at the time.

The main function of the Ad Hoc Committee is to support and assist foreign investors in resolving their investment concerns. Common knowledge within the Foreign Investor community suggests the committee's activities as inappropriate and a front for the illegal expropriation of foreign investor assets. The reputation of the Ad Hoc Committee became infamous in the year 2000 throughout Foreign Investment circles and which saw election hopes dashed of Foreign Minister Somsavat Lengsavad. He was not promoted to Prime Minister as expected, nor was he accepted into the ranks of the Politburo.

AD HOC COMMITTEE HARRASS FOREIGN INVESTORS & STAFF

As advised by DFDL Lawyers in the year 1999, Securicor continued operations with only mild interference from the Laos Government. By early December 2000, Mr. Bounmaly Vilayvong, being a representative of the Foreign Investment Management Cabinet [FIMC] telephoned Lao Securicor staff and made threats against them and their employers.

PRIME MINISTERIAL DECREE TO STAMP OUT CORRUPTION.

In the later part of 1999, the President of Laos issued a decree stamping out corruption. This was the first time that the word 'corruption' had been used in such a public way. But this important gesture was not wholly embraced by all members within government and thus continues to present problems for investors.

It is not in dispute that economic development is critical for improving the quality of life for people in developing countries. The stability of free and democratic societies can enrich and accelerate human development by providing standards and direction for social and economic growth. But let us not be confused about the society we are discussing. It is not one which is based on democracy that respects the human rights of citizens and foreigners alike, nor is it one that respects the rights of foreign investors who are continually subjected to harassment and illegal expropriation of their valued assets.

Clearly, the Laos Government holds firmly to its communist, totalitarian regime practices. The Western World must be realistic about the 'non-democratic' nature of the Laos Government. Similarly, Laos must be realistic and accept that there are valid concerns within the global community and in particular, the foreign investment community.

It is vital for effective foreign policy of any sort to uphold current agreements. It creates confidence in investors and governments, and thus lends to the greater opportunity for investment and trade. The Laos Government has readily agreed to uphold the use of UN mandates as guided by the UN Commission on Human Rights, foreign investment agreements, as appropriated by legal entities through Joint Venture agreements but sadly, the Laos Government continues to fail to uphold the principles of these agreements.

LAO SECURICOR MANAGERS TAKEN HOSTAGE.

In late 2000, Australian couple Kerry and Kay Danes, who had been working in Laos for a security company [Lao Securicor], were arrested and charged with theft. The couple were detained in Phonthong prison and since their release in 2001 have reported suffering torture and ill-treatment at the prison, and of witnessing appalling treatment of other prisoners. Their case shows the concern of a government and nation that is an important aid donor to Laos. In this case, Australia did not prevent the torture and ill-treatment of the Danes. The bilateral trade agreement bore no bearing on the case other than enabling diplomatic negotiations that concluded with the granting of a Presidential pardon to the Danes.

Kerry Danes was secretly abducted from his office. He was not given any opportunity to access a fair legal process to prevent his further unlawful detainment. Agencies like the UNDP claim to be supporting in Laos in developing a fair legal system but in reality, it does not exist and is unlikely to exist whilst the government agencies continue to secretly abduct foreigners as in the Danes case.

WHAT TREATMENT WAS GIVEN BY THE FIMC TO THE FOREIGN INVESTOR IN THIS CASE?

Kerry Danes was taken from his office to the Immigration Office and confined in an interrogation room where he was given a pen and paper. He was told to write a confession that would implicate the foreign investment of Gem Mining Laos in illegal activity. The accusations against the Lao Securicor client were unfounded, unsubstantiated and clearly false. When Kerry Danes refused to make a false confession against the Securicor client, he was handcuffed by four policemen who then proceeded to slap, punch and kicked him for approximately an hour. He suffered a bruised face, cuts inside his mouth, a bleeding nose, abdominal pain, temporary hearing loss and pain in his ear, and pain in the rib cage.

After an hour, Kerry Danes was secretly transferred to Phonthong prison [the foreigner's jail]. He was held in a cell with one other prisoner, and was kept in wooden leg stocks for 48 hours. His wife Kay Danes tried to leave the country with their young children but was arrested, and also brought to Phonthong prison on 25 December 2000 following the secret evacuation of their children by the Australian Embassy.

Kerry Danes was subjected to a further six interrogations at the prison, all of which involved physical violence. During these interrogations, there was no attempt to provide Kerry Danes with access to a lawyer or to Australian consular officials. Kay Danes was also interrogated, and was threatened with death and told that her husband would be killed if she did not confess to the theft of precious gems that the Lao authorities accused her and her husband of stealing.

Both the Danes were ill-treated and tortured but refused to sign false confessions.

As a result of her own traumatic experience, Kay Danes now suffers the effects of post-traumatic stress disorder and chronic depression as diagnosed.

The case of Kay and Kerry Danes showed very clearly that even with the support of determined consular officials, foreign nationals arrested in Laos are vulnerable to serious human rights abuses. Lao nationals under arrest are even more helpless.

DO BILATERAL TRADE AGREEMENTS OFFER ANY PROTECTION TO INVESTORS?

Foreign Embassy's promote Bilateral Relations and trade agreements as a form of protection as translates the message by some foreign diplomats in Laos. But in reality, such agreements do not guarantee protection.

What was most intriguing about the Danes case was that the bi-lateral relationship between Australia and Laos did not deter the Laos Government from ill-treating and torturing the Australian couple, nor did it prevent the unlawful detainment of Kerry and Kay Danes for almost a year in sub-humane conditions, nor did it enable the couple to a fair hearing in a court, or the right to defend themselves through a proper legal process.

As with the Danes case, there have been many other reports that suggest a serious problem with foreign investment in Laos. There is clearly an inability of foreign government agencies and donor organisations to provide any significant protection.