Economic Espionage


A small Mississauga electronics safety equipment company is broken into.
Although filing cabinets and desks were rummaged through, nothing was seemingly
taken. An officer discovered the company had drawn up a bid for $7 million
dollar contract a day or so before the break-in. The contract in question was
for a foreign country. It was later discovered that the company in question was
known for its aggressive economic espionage. An iron ore shipping company was
also broken into. At first it was thought that the target had been the firms
computers. But, nothing was taken, it was assumed that the burglars had been
scared off. Within thirty minutes it was discovered that the company was
approaching its fiscal year end. staff eventually found that most of the recent
database backup tape was missing. A Quebec based company with the laser-based
system for inspecting materials used in, among other things, the stealth
aircraft, had three computers stolen. On their harddrives were confidential
codes for specialized software used by the Canadian Armed forces. The above are
all true examples of the modern threat facing international business today
known as industrial or economic espionage. The end of the cold and economic
pressures have increased the risk of economic espionage. The collapse of the
Soviet Union has left unemployed KGB and other former communist bloc
intelligence agents selling everything from Russian night vision devices to
completely assembled and functional bugging devices. Even friendly western
European governments have been caught spying on private corporations based in
the U.S. and other countries, while industrial competitors sometimes hire
private companies to collect competitive intelligence from their corporate
rivals( Lester:96). What exactly is economic espionage? how prevalent is it?
Who does it? How do they do it? and what can we do to stop it. These are the
questions that will be looked at in the following pages.
First lets look at, what exactly is economic espionage. Espionage and
intelligence is no longer the exclusive domain of monarchs and governments, it
has become a must for modern international business. Large corporations around
the world particularly in western Europe and Asia now hire agents to gather
intelligence on their competitors and other countries. The goal of economic
espionage is to steal trade secrets, plans and confidential procedures or
anything to give your company or country a competitive edge over another
(Perry:1996). The areas that interest industrial spies the most include
radiation transfer technology, systems diagnostic and testing software,
traveling wave tubes, aviation technologies, microwave monolithic integrated
circuits, inferred signature measures software, radar technologies, wet
processing systems, information management and processing, simulation
technologies, physical security technologies, ram-jet engine and ram-jet
technologies.(Special Security news letter:1995). Although this is not all of
the areas that modern spies target, it will give you an idea of the scope of the
problem. Peter Schweiser author of the book “Friendly spies” speculates that
for the most part, modern industrial spies are motivated by pure greed of money.
If we look back in history we can see that the majority of the spies that were
caught, were motivated by the money. John walker head of the notorious Walker
spie ring, sold submarine secretes to the Soviets for 17 years for one million
dollars. Larry Wu-Tai Chin and analyst of the CIA, passed secrets to China
and was paid $180,000 over a three year period. Richard Miller worked for the
FBI and was to be paid 2 million dollars to pass counter-intelligence secrets to
the Soviets, but he was caught and was only paid one quarter of this amount. It
is easy to see that spying for friendly countries is a profitable business.
Is economic espionage really as bad as it is made out to be? Since 1985
economic espionage directed at American companies has increases 260 percent and
the FBI\'s industrial espionage caseload has jumped to well over five hundred
investigations. Espionage is costing American companies well over a 100 billion
dollars a year in lost sales infact some sources put the loss at 260 billion.
In Canada that Number translates to 10 billion a year and companies with
overseas operations are estimated to lose 140 billion dollars per year. It is
hard to get accurate numbers when it come to losses due to espionage for the
simple reason that companies don\'t want to admit to being victims, in fear of
undermining the confidence of their suppliers and shareholders (Lester:1996).
The visible damage of economic espionage takes the from of Lost contracts, jobs
and markets, and overall a diminished competitive edge. The companies
that are hurt the most are the ones that earn under 11 million dollars annually.

How do industrial spies