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Corporate spies everywhere, stealing secrets worth billions every year

http://www.jewishworldreview.com | (KRT) Every year, secrets worth billions of dollars are stolen from U.S. companies by men and women seeking money, new jobs, revenge or a leg up on competitors.

So it should have come as no surprise last week when Boeing Corp. revealed that some of its employees may have used a competitor's trade secrets to help win a lucrative government contract in 1998.

After all, in the world of business, corporate espionage is about as old as the wheel itself. Imagine the surprise on its inventor's face when he saw a fellow in the next cave selling an exact replica.

Information thievery takes many forms. It can be as mundane as paying a cleaning crew to steal garbage - considered a potential treasure trove - from an executive's office. Or it can be the stuff of spy films, with undercover agents - Eastern European companies are known for using ex-KGB agents - infiltrating a company to pilfer secrets.

What these thieves want is just as varied as the techniques they use to get it.

There is, however, an easy way to figure out if you or your employer might be a target: If you sell anything worth buying, you've got something worth stealing.

"Every product that is manufactured or sold today - there is something about it that is special," said Joe Anastasi, author of "The New Forensics: Investigating Corporate Fraud and the Theft of Intellectual Property."

It may be a customer list, supplier database, project timetable, business model, prototype or plans for an expansion.

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In this recent affair, Lockheed Martin Corp. is accusing Boeing of using Lockheed trade secrets supplied by a former employee who switched teams in 1997.

Last week, the nation's No. 1 defense contractor filed a lawsuit in federal court in Orlando, Fla., alleging that Boeing's use of those secrets helped it win the bulk of a $2 billion Air Force missile contract in 1998.

Boeing, for its part, has tried to distance itself from several former workers, saying they may have behaved unethically during the competition. The company has given back more than 37,000 pages of documents, according to Lockheed.

It's not the first time industry heavyweights have clashed in the public arena.

In the mid-1990s, auto-giant General Motors went after Volkswagen A.G. with accusations that a former GM executive took thousands of documents with him when he went to work for the German automaker. The documents detailed GM's relationship with parts suppliers, including the prices it paid - a closely guarded topic in the industry.

After several years of legal maneuvers, Volkswagen settled the case in 1997 for $100 million and a pledge to buy $1 billion worth of GM parts.

Such disputes, however, are not just the product of a fast-paced modern world.

Indeed, 1893 witnessed a pair of electric industry founders - General Electric and Westinghouse Electric - sling mud at one another with allegations of thievery while bidding for a power project.

"In general, the competition between the two was intense and nasty," said Mark Essig, author of Edison & the Electric Chair, a book on the early days of the electric industry.

General Electric was accused of paying a Westinghouse employee to steal blueprints and other documents, including details on a new light bulb design. The case went to trial, but ended with a deadlocked jury, Essig said.

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While virtually every company is a potential target for information thieves, certain industries attract more attention, including technology, pharmaceutical research and anything involving competitive bidding for government contracts.

Companies operating in those arenas generally fall into two categories, said Wayne Black, with Miami-based Riley Black Kiraly, a private security firm that helps victims of information theft.

"There are those who have been attacked. And those who don't know it yet," Black said.

Experts say it's difficult to estimate how often these misdeeds occur - most incidents, they say, are never discovered. But they estimate the impact at more than $100 billion a year for U.S. companies.

Driving these thefts are intense pressures to turn profits, win contracts and avoid expensive research and development costs. Companies can gain leverage quickly by taking a peek at what a competitor is up to.

"If I wanted to open a stock brokerage, if I could get a list of all your customers and their assets, imagine how much money that would save me," said Neal Rawls, a former corporate security director and author of "Security: Protecting People, Property and Profits." "I'd have a list of people who buy and sell stock on a regular basis."

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In the old days, securing a company's secrets generally was as simple as hiring a few security guards and putting a fence around your building.

But with society's increasing reliance on technology, companies find themselves more vulnerable than ever.

"There are so many different ways to get inside to the critical secrets of a company," said Anastasi, the author of "The New Forensics."

One of the most common is through a company's garbage.

Once discarded from the premises, a company's trash essentially becomes public domain - open to the so-called Dumpster divers, who rifle through it for tidbits.

"That happens every single day. There are people making a very good living doing that," said Ron Campbell, chief executive officer for Proshred Security International, a Canadian firm specializing in document destruction.

Former employees who have gone to work for a competitor also represent a significant avenue for the loss of information, though there is little the company can do about a worker's training and experience.

"If it's in his head, it's in his head. You can't use a magnet or something to zero-out his memory," said Ken C. Wright, a partner in Baker & Hostetler's Orlando office.

But a disgruntled worker - or one who has been actively recruited by a competitor - can take more than just memories when he walks out the door.

In the GM-Volkswagen case, for example, the former GM executive was accused of systematically copying thousands of pages of documents in the weeks before his departure.

There are, however, more sinister methods available.

One of the more unusual scams - sometimes referred to as "help wanted" - uses a person posing as a corporate headhunter who approaches an employee of the targeted firm with a potentially lucrative job offer.

During the interview, the employee is quizzed about his responsibilities, accomplishments and current projects. The goal is to extract important details without the employee realizing there is no job.

And then there is the business of using foreign intelligence officers - the downfall of the Soviet Union left many former spies out of work - to infiltrate U.S. firms.

Posing as engineers, researchers and other professions, they can spend years slowly pilfering documents, patents, blueprints and research without being caught.

"It's hard for companies to respond if they don't see someone as a threat. These people are often regarded as star performers," said Shelley Kirkpatrick, director of psychological assessments for Psynapse Technologies, a Washington D.C.-based firm that is developing software to help predict such things before they occur.

Still, some experts say the biggest threat to a company's secrets comes from within.

Too often, companies fail to recognize the importance of what they possess, said Mark Halligan, an attorney with Chicago-based Welsh & Katz, which specializes in intellectual property laws.

"Our whole society is based on the right to copy what your competitor does," he said.

The only way to protect inventions and ideas is through patents, trademarks, copyrights and trade secrets. The latter is the most difficult, requiring a company to strive to keep something secret. And that means more than just forcing employees to sign a contract saying they won't disclose anything important, Halligan said.

"Most U.S. companies are negligent. They have no system to identify and protect their trade secrets," he said. "Usually there's just some boilerplate contract that all employees sign, and nobody knows what it means."

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