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World: Economic Espionage Rising, Say Experts

  • Julie Moffett

Washington, 27 February 1997 (RFE/RL) -- Experts attending a conference on economic espionage say the theft of U.S. trade secrets is on the rise and American businesses need to be aware of how to protect themselves against such efforts.

The two-day conference held in Washington this week was sponsored by the Society of Competitive Intelligence Professionals, a private organization. A wide array of representatives from the U.S. business community, government and academia attended.

Experts say that economic espionage against the United States has increased dramatically since the end of the Cold War.

According to James Pooley -- a lawyer whose company, Fish & Richardson, represents clients involved in intellectual property disputes -- it was the sudden contraction of former communist economies and the rise of many new industrialized nations that forced the United States to take a hard look at the threat of economic espionage.

Pooley says that after a lengthy investigation, the Federal Bureau of Investigation (FBI) determined that a large number of countries -- including some East European countries, but also involving several U.S. allies -- had officially established programs aimed at stealing American trade secrets.

Pooley said many of these countries are engaging in practices similar to those conducted in many nation's counterintelligence programs such as infiltration, disinformation, theft and electronic intrusion and tampering.

As a result of the FBI's investigation, several bills to combat economic espionage were introduced in the U.S. Congress in 1996. The result was the Economic Espionage Act of 1996 (EEA) which was signed into law by President Bill Clinton in October.

The act makes the theft of a company's trade secrets a federal crime, punishable by imprisonment of up to 10 years and a fine of up to $500,000. Corporate fines may be as high as $5 million. However, if the theft is determined to benefit a foreign government or agent, a corporation or organization can be fined a maximum of $10 million, and prison sentences imposed for up to 15 years.

Analysts say this is a major development regarding global economic espionage. The law gives the U.S. Department of Justice sweeping authority to prosecute economic espionage whether it is conducted domestically, via the Internet, or abroad.

Yet many experts say that economic espionage against the United States -- even that conducted by American allies -- is not a new phenomena. As recently as 1993, Pierre Marion, the former director of France's intelligence agency, was quoted in an American magazine as saying: "In economic competition, in technological competition, we are competitors, we are not allies."

Peter Kalitka, president of Delta Four Associates -- a private organization which provides research, security counterintelligence and investigative support services to companies worldwide -- says a major problem in countering economic espionage is that most people involved in global business are hesitant to recognize the fact that "business is a form of warfare." According to Kalitka, as global economies become more competitive and complex, intelligence gathering to obtain a real or perceived advantage becomes more elaborate and more aggressive.

Kalitka says that there are more than 40 foreign intelligence services, and many more of their surrogates, working to penetrate a variety of American companies. He specifically names Russia, France, Israel, China, Sweden, Germany, South Korea, Switzerland, Taiwan and Great Britain among those actively participating in economic espionage against the United States.

He adds that "without question" the Soviet Union and Russia "have been, and continue to be the most pervasive" in economic espionage by targeting America's sensitive industrial and economic base. Kalitka says that in the early years, the Soviet Union used the New York-based trading company "Armtorg" to do most of its espionage. Kalitka says the former KGB even had a "red book" which reportedly contained a list of desired technical information.

In an effort to assist American businesses fight economic espionage, the FBI has set up a program called the Awareness of National Security Issues and Response (ANSIR). ANSIR has offices in nearly every state in the United States and is available to help businesses sort through what constitutes the theft of a trade secret and what to do if it happens.

FBI special agent Larry Watson, manager of the ANSIR program, told conference attendees on Monday that "economic security is national security" and businesses should consider economic espionage a serious threat.

Other experts at the conference urged American businesses that steps be taken to protect against economic espionage by ensuring that sensitive data was well-protected, especially that which is stored electronically on computers or on a computer network.

Experts also encouraged companies to educate their employees in the methods of economic spies -- such as the incessant asking of questions regarding company policy and goals, attempts to acquire personal information on employees, or requests for access to certain computer data bases or networks.

Background investigations of employees who will be trusted with sensitive information is also a must, say the experts. Moreover, they add that assigning full-time personnel to provide trade secret security is an important investment that businesses cannot afford to ignore.