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World: Economic Espionage Generates Global Problems

Washington, 10 February 1999 (RFE/RL) -- The former chairman of the U.S. House of Representatives Intelligence Committee, Dave McCurdy, says economic espionage is costing American business as much as $100 billion in lost sales and added research and development costs every year.

McCurdy, who now heads the trade association for American electronic manufacturers, says this espionage -- the collection of business information to obtain unfair competitive advantage -- lost six million jobs in the U.S. between 1990 and 1996.

The problem has been growing so rapidly in the U.S. and around the world that the largest American organization of businesses, the Chamber of Commerce, sponsored a conference in Washington Tuesday to alert business leaders of the dangers.

The Director of the U.S. Federal Bureau of Investigation (FBI), Louis Freeh, told the meeting that his organization has vastly expanded its work in battling economic espionage, both within the U.S. and around the globe.

Freeh said the advent of high-speed portable computers and the easy access of the Internet has made businesses everywhere vulnerable to external attack.

Freeh says that in one recent case, a Russia sitting in his living room used a laptop computer to break into a New York city bank to try to steal millions of dollars. He said it took a great deal of time and work to detect the attack and repel it, although some money was transferred out before the scam was stopped.

A young man who used to be a computer hacker -- someone who electronically breaks into computers -- but now works in the computer security field, told the conference that the only real protection against outside computer attacks is by constant diligence and updating of equipment.

Jeffrey Moss, once known as the notorious hacker "Dark Tangent," says that the expanding availability of computers, cell phones and other electronic devices whose signals are easily intercepted means business people must understand that little communication is safe from eavesdropping.

But Freeh says that while electronic espionage -- hacking into computers and listening into cell phone calls -- is serious, the greatest danger any business faces is that posed by its own employees.

Freeh says the main source of vulnerability is from disgruntled employees, those who were recently fired or those who are just plain dishonest and greedy. That covers a lot of people, he says, but companies need to pay more attention to people who leave a firm and take the company's secrets with them to try to sell either for profit or retaliation against the company.

The President of the U.S. Chamber of Commerce, Thomas Donohue, told the conference that for too long, business people have been very reluctant to talk about the problem.

Donohue says it's kind of a family secret that nobody wants to let out for fear of hurting the company's reputation or diminishing shareholder value. If it were just going on between U.S. companies, it would be easy to deal with under the law, he says. But most business people are surprised to learn when they start working internationally that many countries use their intelligence agencies to find out what firms in the U.S. and other countries are doing and then sharing that information with their own firms.

Freeh says that 23 countries use their intelligence gathering agencies to get information for their national companies, but that eight -- whom he declined to identify -- are "extremely active" employing every one of governmental espionage's tools to gain an advantage for domestic businesses.

McCurdy says the question isn't which countries are committing economic espionage, but which aren't. He identified Japan, France, Russia, the United Kingdom, Germany, the Netherlands, Israel, Taiwan, South Korea, as well as various Middle Eastern and Latin American countries as the most active in economic espionage.

The FBI and the Chamber of Commerce announced at the meeting Tuesday a new initiative to try to combat the growing problem of economic espionage. The Chamber and the FBI will combine to alert the business community to new espionage threats, to work to encourage businesses to come forward when they have been victimized and to put together a global clearing-house for information on the problem.