| From: | Willerer Greg <ugwiller@***.ECN.BGU.EDU> |
|---|---|
| Subject: | Corporate Espionage Today |
| Date: | Sat, 30 Sep 1995 03:14:46 -0500 |
http://www.acsp.uic.edu/oicj/pubs/cji/110203.htm
Economic Espionage and Corporate Responsibility
by Sam Perry
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It is now a given fact among intelligence professionals that virtually every
traditional espionage technique used in time of war is being employed in
today's business sector. Many nonU.S. companies and countries routinely
insert agents into American firms, compromise key employees, or otherwise
subvert company operations. The goal is to steal trade secrets, plans, and
confidential procedures. The protection of such "intellectual property" is
fast becoming a key issue in international business activities.
How real is the economic espionage threat? According to the American Society
for Industrial Security (ASIS), cases of economic espionage directed at
American companies have grown 260 percent since 1985. The FBI industrial
espionage caseload has jumped to 500 current investigations. The cost of
economic espionage to corporate America is now estimated conservatively to
be at least $50 billion a year.
According to Professor James Chandler, head of the Institute of Intellectual
Property Law, if the full marketing ramifications of intellectual property
theft and unrestricted technology transfer are factored in, estimates rise
to some $240 billion a year.
U.S. corporations operate in a legal culture that respects the sanctity of
private property ownership. This philosophy is not shared by every country
in the world. In some cases, these adversaries include politically
"friendly" nations. Countries that were and are military allies. American
companies and those of other nations who share the United States' open,
innovative business and legal culture are illprepared to combat the
resources of foreign intelligence services. Intellectual property law is
recognized to be weak and provides little or no protection to U.S. companies
targeted by foreign agents. The U.S. patent system is an open source of
information. American patent laws have not been revised since the computer
revolution. Currently, digital and biotechnology companies are believed to
be at particular risk. A major security concern centers on the GATT treaty
and efforts to lessen its provisions for intellectual property provisions.
Local police, the Federal Bureau of Investigation and the Central
Intelligence Agency are severely limited under the law in their ability to
help corporations combat economic espionage. They also face vastly expanded
missions. Street crime, international money laundering, narcotrafficking,
and terrorism are stretching resources already thin. The security previously
provided by a large U.S. military presence abroad has all but evaporated.
Traditional protection options are just not working as deterrents to
economic espionage. Corporate security systems often fail because they are
set up essentially to protect people and physical assets-not the ephemeral
information flooding the world's new electronic highways. Trusting that
conventional resources will protect a company's trade secrets and operations
from foreign espionage is out of date. According to emerging legal thinking,
it may actually border on managerial and fiscal irresponsibility. A
counterintelligence expert recently put it this way, "The problem is that
American companies are naive about what's going on. Americans have such an
entrepreneurial spirit that many see this kind of activity as being good for
competition and technology." An alarming number of companies seem to have
resigned themselves to the loss of their trade secrets. The treasurer of a
research company who is producing leading edge technology for the wireless
communications industry voiced this strategy for combating economic
espionage: "We assume there is `migration' of our ideas to other countries.
But, our R&D engine is just warming up. We will produce more ideas." This
"Take the loss and move on" approach is becoming increasingly unacceptable
to shareholders, financial institutions, and insurance companies who must
bear the losses.
There is no one, easy solution to countering economic espionage. However,
there are ways to approach the problem and they focus on topmanagement
involvement. Few corporate leaders today have military experience. Nor have
they had much contact with intelligence services. In fact, there is a
tendency to keep government of any description at a distance-in many cases
with very good reason. Yet, understanding the "intelligence function" and
its role in modern economic warfare is absolutely essential to corporate
survival. Countering economic espionage will increasingly demand that
corporate leaders arm themselves with a working knowledge of intelligence
and counterintelligence. Then, they must equip their companies with business
intelligence and counterintelligence systems. The first step is to realize
that a business counterintelligence system is quite different from a
conventional security program. The emphasis in intelligence is on
information: the collection, analysis and uses of information, and on
countering the theft of company information through subversion and other
forms of espionage.
It is estimated that fewer than 5 percent of major U.S. companies have a
business intelligence system in place. In contrast, estimates by those with
long CIA experience in Asia, are that 100 percent of Japanese companies have
such a system.
Economic espionage is the front line of a new world economic war. It is a
war that most companies from open, democratic nations are illprepared to
fight. There is an old business adage that says, "Surprises end a career."
Corporate leaders need to get up to speed, fast, on the "gray people and
gray areas" of economic espionage. Because, we know that farflung
competitors already are.
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About the Author
Sam Perry is an internationally published journalist and business
consultant, specializing in intelligence, counterterrorism and
counterespionage. He addressed the Royal Institute of International Affairs
in London, March 7, on "Corporate Survival in the Economic Espionage Wars."
) Copyrights Perry Corporation, Inc., 1995
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