Capgemini to sell the biz that works for US government amid criticism of ICE contract
'The nature and scope of this work has raised questions' says CEO, who swears he couldn't spot it sooner
French consulting and tech services giant Capgemini has decided to offload Capgemini Government Solutions (CGS), the entity it uses for some work with the US government – including a controversial gig assisting immigration authorities.
The company on Sunday issued a brief statement that says it “determined that the customary legal restrictions imposed for contracting with federal government entities carrying out classified activities in the United States did not allow the Group to exercise appropriate control over certain aspects of the operations of this subsidiary to ensure alignment with the Group’s objectives.”
Capgemini will therefore “immediately” commence a divestiture process, a move that won’t cost it much because CGS delivers just 0.4 percent of global revenue and less than two percent of US revenue.
But in recent weeks CGS has been responsible for a huge percentage of Capgemini’s problems, after it won a contract with the United States Department of Homeland Security’s Immigration and Customs Enforcement (ICE) agency for services described as “Investigation and personal background check services” and contracted by an office named “Detention Compliance And Removals.”
The DHS, ICE, and US Border Patrol are currently conducting operations to find, detain and deport suspect illegal migrants – with a focus on those who have committed crimes, per the policies of the Trump administration.
Those efforts have become controversial as they have sometimes resulted in detention of US citizens, or people lawfully resident in the USA.
Two US citizens who protested the immigration crackdown have died after federal agents used firearms, and those incidents have attracted widespread condemnation and protest. Faced with community anger, President Trump appointed a new leader to oversee operations in the state of Minnesota, and administration officials – some of whom labelled protesters terrorists and said agents acted justifiably in self defense – have queried whether agents involved in one of the shootings followed protocols correctly.
Capgemini’s contract appears to contribute to ICE’s activities, and the company’s CEO Aiman Ezzat last week used his LinkedIn account to comment on the deal.
“The nature and scope of this work has raised questions compared to what we typically do as a business and technology firm,” he wrote.
Ezzat also pointed out that CGS has a structure that means it “operates under a Special Security Agreement, which allows it to work on classified work for the US government and requires separation of its operations from the Capgemini Group.”
In his LinkedIn post, the CEO seemed uncomfortable with that arrangement.
“This creates many restrictions, notably CGS has a board that is controlled by ‘cleared’ independent US directors, decision making is separate, networks are firewalled, and the Capgemini Group cannot access any classified information, classified contracts, or anything relating to the technical operations of CGS, as required by U.S. regulation,” he wrote.
Despite the legal distance between Capgemini and CGS, Ezzat learned “the independent board of directors has already begun the process of reviewing the content and scope of this contract and CGS contracting procedures.”
Ezzat’s LinkedIn post caught the eye of France’s finance minister Roland Lescure who last week told media he felt Capgemini’s CEO should have known about the deal with ICE. Other French lawmakers have protested Capgemini’s involvement with DHS and ICE is inappropriate.
Capgemini slipped out news of its divestiture plans on Sunday.
It is unclear whether divesting CGS means the organization will not use any Capgemini intellectual property or other assets. Nor has Capgemini said if anyone wants to buy CGS, or when a divestiture might happen.
Capgemini’s FY 2024 revenue was €22 billion, so based on Ezzat’s numbers CGS appears to have revenue of around €88 million ($104 million).
The Register offers the following verbiage to Capgemini as it tries to offload the unit: “For Sale – $100 million consultancy, with one large but currently very controversial client, and a very motivated current owner looking to do a deal.” ®