This annual examination by US government agencies of the
threat of foreign
economic collection and industrial espionage is conducted in compliance
with Congressional mandate. Information obtained during the past year
showed no reduction in attempts by foreign government, corporations, and
individuals to acquire US proprietary economic information:
- The increasing value of trade secrets in the global and domestic
marketplaces and the corresponding spread of technology with dual
applications have contributed to a significant increase in both incentives
and opportunities for economic espionage.
- Foreign counties continue to target items in all 18 categories of
the Department of Defense Militarily Critical Technologies List. The
most sought-after critical technology categories in 1999 in rank order
were information systems, sensors, lasers, electronics, and aeronautic
- In addition to activities in the United States, foreign collectors
also operate against US economic interests in their respective countries
and in third countries. These activities conducted outside US territory
are more difficult to identify and counter.
The Intelligence Authorization Act for Fiscal Year 1995,
Section 809(b), Public Law 103-359 requires that the President annually
submit to Congress updated information on the threat to US industry from
foreign economic collection and industrial espionage. This report updates
the brochure Foreign Economic Collection & Industrial Espionage Remains
a Threat-Are You a Target, 1999.
The Authorization Act specifies that these annual reports
examine three aspects of the threat to US industry: the number and identity
of the foreign governments believed to be conducting industrial espionage,
the industrial sectors and types of information and technology targeted
by such espionage, and the methods used to conduct espionage.
In coordinating a community-based response to the stated requirement,
the National Counterintelligence Center (NACIC) requested the assistance
of the Intelligence Community and the private sector. The following government
components provided information for this report:
- Air Force Office of Special Investigations.
- Central Intelligence Agency (CIA).
- Defense Intelligence Agency (DIA).
- Defense Security Service.
- Department of the Army.Department of Energy (DOE).
- Department of State, including the Bureau of Intelligence and Research
and the Bureau of Diplomatic Security.
- Federal Bureau of Investigation (FBI).
- National Reconnaissance Office.
- National Security Agency (NSA).
- Naval Criminal Investigative Service.
- US Customs Service.
In addition to information provided by the Intelligence
Community, NACIC officers also interviewed a number of industrial security
specialists from selected Fortune 500 companies, representing different
sectors of the US economy.
There are no agreed upon definitions of economic or industrial
espionage. For the purposes of this report NACIC will heed to the US Attorney
General's definition of economic espionage as "the unlawful or clandestine
targeting or acquisition of sensitive financial, trade, or economic policy
information; proprietary economic information; or critical technologies."
This definition excludes the collection of open and legally available
information that constitutes the overwhelming majority of economic collection.
Aggressive intelligence collection that is entirely open and legal may
harm US industry but is not espionage. This, however, can help a foreign
intelligence service identify and fill information gaps, which in some
cases may be a precursor to economic espionage.
Industrial espionage is defined as activity conducted by
a foreign government or by a foreign company with direct assistance of
a foreign government against a private US company for the purpose of obtaining
commercial secrets. This definition does not extend to activity of private
entities conducted without foreign government involvement, nor does it
pertain to lawful efforts to obtain commercially useful information, such
as information available on the Internet. Although some legal actions
may be a precursor to clandestine collection, they do not constitute industrial
espionage. Some countries have a long tradition of ties between government
and industry; however, it is often not easy to determine what is foreign
government- sponsored espionage, a necessary requirement under the Economic
Espionage Act, Title 18 U.S.C., Section 1831.
Another term used in this report is proprietary technology
and economic information, the definition of which is information not within
the public domain and that which the owner has taken some measures to
protect. Generally, such information concerns US business and economic
resources, activities, research and development, policies, and critical
technologies. Although it may be unclassified, the loss of this information
could adversely affect the ability of the United States to compete in
the world marketplace and could have a detrimental effect on the US economy,
ultimately weakening national security. Commonly referred to as "trade
secrets," this information typically is protected under both state
and federal laws.
of the Threat to US National Security
In a world that increasingly measures national power and
security in economic as well as military terms, the United States continues
to be threatened by the theft of proprietary economic information and
critical technologies. The risks to sensitive business information and
advanced technologies have dramatically increased in the post-Cold War
era as foreign governments-both former adversaries and allies-have shifted
their espionage resources away from military and political targets to
commerce. The information they seek is not simply technological data but
also financial and commercial information that will give their countries
a competitive edge in the global economy.
During the past year, foreign governments, corporations,
and individuals have continued to collect economic, technological, and
trade secret information through a variety of legal and illegal means.
The global spread of technology and the corresponding increase in the
value of trade secrets have contributed to a significant increase in both
the incentives and opportunities for conducting such activity. Much of
what these foreign rivals (and allies) seek is in the public domain. Just
as with traditional political-military espionage, however, trends in the
collection of open-source information can be important indicators of strategic
objectives that might ultimately be met by resorting to collection methods
that are not legal. This report notes such trends.
US Defense Information and Technology
A review of reported suspected targeting incidents against
critical technologies categorized in the Department of Defense (DoD) Militarily
Critical Technologies List (MCTL), Part I: Weapons Systems Technologies
in 1999 reaffirmed that all 18 categories of critical technologies continue
to be the subject of foreign interest for military and economic exploitation.
The 18 categories are, in order of suspected targeting: information systems;
sensors and lasers; electronics; aeronautics; armaments and energetic
materials; marine systems; guidance, navigation, and vehicle; signature
control; space systems; materials; manufacturing and fabrication; information
warfare; nuclear systems technology; power systems; chemical-biological
systems; weapons effects and countermeasures; ground systems; and directed
and kinetic energy systems. In 1999 as in 1998, foreign governments and
commercially sponsored entities continued to target US companies involved
in developing weapon components, new technologies, and technical information.
Figure 1 illustrates the four categories
with the highest percentage of reported targeting and the subcategories
most often reported as being targeted in 1999. The DoD MCTL can be viewed
on the Internet at www.dtic.mil/mctl/
Attempt To Acquire Laser Gun Sights and Potassium Cyanide
On 30 September 1999, the Department of Commerce imposed a $10,000
civil penalty on Laser Devises, Inc., a Monterey, California, exporter,
to settle allegations that the company attempted to illegally ship
laser gun sights to Taiwan. Commerce alleged that in March 1995
Laser Devices attempted to export US-origin laser gun sights to
Taiwan without the required Commerce authorizations.
On 30 September 1999, Commerce imposed a $5,000 civil penalty on
Gilbert & Jones, Inc. of New Britain to settle allegations that
the company exported potassium cyanide to Taiwan without the licenses
required by the Export Administration Regulations. Commerce's Bureau
of Export Administration alleged that on two occasions-one in 1994
and the other 1995-Gilbert & Jones, Inc., exported US-origin
potassium cyanide to Taiwan without obtaining the required export
The extent of foreign interest in specific categories of
technology varied dramatically from country to country. Contrary to private
industry's belief, the leading-edge technologies are not the only technologies
being targeted. Countries with less developed industrial sectors often
prefer older "off-the-shelf" hardware and software. They will
also seek military technologies that are at least a generation old because
such technologies cost less, are easier to procure, and are more suitable
for integration into their military structures.
More developed and traditional threat countries seem to
seek technical information that will enable them to disable, copy, neutralize,
or cause significant change to US military systems. By contrast, other
countries often seek command, control, and decisionmaking systems, and
information on major ground, airborne, and seaborne weapon systems, sometimes
to enhance interoperability.
illustrates the origins and the associated percentages of the targeting.
According to US defense industry reporting, targeting connected to commercial
and individual foreign collectors accounted for 58 percent of the total
suspicious activity. Government-sponsored targeting, including military
and other official government activity, accounted for 22 percent of suspicious
activities. Targeting activities by government-affiliated entities - including
institutes, laboratories, and universities-accounted for another 20 percent.
The majority of the technology targeted in 1999 consisted of components
rather than complete systems. This collection trend is associated with
both developed and developing countries and seems to be driven by a requirement
to upgrade existing platforms, rather than obtain new systems.
Foreign collectors seldom use one method of collection;
they combine collection techniques into a concerted effort that includes
legal and illegal methods, while becoming more innovative in the new millennium.
Specialized training and instruction courses in business intelligence
collection methodology are becoming increasingly available. Such courses
provide instruction on how to conduct HUMINT operations, including how
to develop, create, and maintain dossiers and psychological profiles on
potential sources; exploitation and elicitation techniques; debriefing
methodologies; competitor targeting, including how to exploit industrial
conventions, seminars and meetings; and real-world practical exercises.
In addition to traditional HUMINT recruiting strategies,
studies of economic espionage consistently identify two primary techniques
as the methods used to acquire economic intelligence:
- Open-Source Collection
- Requesting information through e-mail or letters.
- Exploiting Internet discussion groups.
- Exploiting multinational conferences, business information exchanges,
or joint ventures.
- Misleading open-source collection.
- Illegal Collection
- Acquisition of export-controlled technologies.
- Theft of trade secrets, critical technologies, and critical information
in host country.
- Agents recruitment, co-optees, and US volunteers.
Requesting Information Through E-Mail or Letters. Request for information
is the most often reported method of operation by foreign collectors to
obtain trade secrets, critical technologies, and sensitive and classified
information. The use of e-mail is the vehicle of choice to solicit information,
and the use of e-mail is becoming more common in countries with limited
or highly restricted public Internet access. However, use of postcards
and letters for information requests continues.
The majority of the suspicious requests reported by industry
are indirectly solicited. Requests can be linked to information available
on Internet Web sites, in advertisements, in articles in trade journals,
and in marketing materials at trade shows and seminars. The requests range
from legitimate inquiries to those clearly seeking information that is
restricted or sensitive. The inquiries may start as mundane solicitations
for price lists, catalogues, published papers, research assistance, or
for assistance in finding employment. Requests become suspicious when
they originate from embargoed countries, pose questions that would reveal
sensitive or classified information, or indicate that the requester is
trying to evade export control or security procedures. Persistent requests
from the same source also raises suspicion.
Company annual reports, patent data, corporate and government
Internet sites, and marketing materials are exploited. Open-source research
can inadvertently provide a collector with sensitive or restricted information,
or assist in further targeting efforts by identifying industry and government
relationships with specific technologies and activities. Many foreign
collectors are technically astute and diligent readers of company publications;
they attend industry conferences and trade shows; and they exploit professional
contacts through memberships in trade and professional associations.
Highly assertive collection efforts are dubbed by some government
agencies and private industry as aggressive open-source collection or
Exploiting Internet Discussion Groups. The anonymity
of the Internet makes it a perfect medium for collection attempts using
e-mail, search engines, and discussion groups. One technique is the exploitation
of listserv, an e-mail-based discussion group organized along topics of
interest and open to anyone. Subscribers who join a list may send an e-mail
message to the list.The message in turn is sent to all members of the
group by the listserv, which provides subscribers with e-mail addresses
of all other members. This procedure facilitates a discussion involving
research advice on specific technical challenges, which are permanently
archived and searchable. Such exchanges can pose a serious threat to economic
and technological security for two reasons. First, it is not uncommon
for concepts, research, development, testing, and evaluation of a technology
to take place in an open or unclassified environment. This is particularly
significant when it comes to sensitive but unclassified or dual-use technologies
and proprietary information. Second, a foreign national involved in collecting
information on future programs or in acquiring research being conducted
in another country could have an e-mail address from within the United
Avery Dennison: Target of Trade Secret Theft
In April 1999, two Taiwan executives and a Taiwan
company were found guilty of violating Title 18 U.S.C. Section 1832
(Theft of Trade Secrets). Pin Yen Yang, president of Four Pillars
Company, and his daughter Hwei Chen "Sally" Yang were
accused of stealing adhesive formulas and innovations from Avery
Dennison Corporation with the help of an Avery Dennison employee.
This case marks the first conviction of foreign individuals or a
foreign company that has gone to trial under the Economic Espionage
On 5 January 2000, a Youngstown, Ohio, federal judge
sentenced Pen Yen Yang to two years probation along with six months
of home detention for violating the 1996 Economic Espionage Act.
Mr. Yang's daughter was sentenced to one-year probation on the same
charge. The Yangs each faced a maximum penalty of 10 years in prison
and $250,000 in fines. Four Pillars, itself also was fined $5 million
by a US District Court for accepting the pilfered secrets.
In February 2000, a jury verdict in US District Court,
Cleveland awarded Avery Dennison at least $40 million in damages
in a civil case against Four Pillars. The judge increased the award
to $80 million.
Exploiting Multinational Conferences, Business Information
Exchanges, or Joint Ventures. International technical and academic conferences,
both home and abroad, offer an excellent venue for foreign collectors
to obtain information and to spot and assess experts in a given field
of interest. Many contractors involved with US Government and DoD contracts
attend such conferences on behalf of their companies' commercial interests
and thus can become targets of foreign collection. There have been many
instances when US participants at international conferences have been
contacted at a later date and asked to provide information on a given
technology or proprietary data. Probing for information outside the scope
of the conference is also a common activity. Often these approaches play
on cultural commonalties as a reason to cooperate.
Misleading Open-Source Collection. Practitioners
of economic and industrial espionage may employ legal, but misleading
steps to hide a collector's true interest, affiliation, or location. For
example, a collector may use public access Internet connections found
at public libraries and educational institutions for browsing Web sites.
This type of activity can protect the collector's identity and provide
a means to "lose" the requester's individual inquiry amongst
the multitude of requests generated from the public and educational computers.
A public library presents a disarming persona, and the credibility of
an educational institution inadvertently adds a measure of legitimacy
to a request. Such misleading measures reduce the chance of a request
raising suspicions and being reported to security personnel, while increasing
the likelihood that a request will receive a response. Other misleading
techniques include routing e-mail through one or more countries to hide
the true point of origin and using contacts established through membership
in professional organizations and at conference to unwittingly broker
foreign visits or obtain the required information.
Acquisition of Export-Controlled Technologies. The unlawful acquisition
of export-controlled technologies by foreign collectors is of growing
concern. Methods of operation employed to circumvent the export-control
process include: the use front companies within the United States and
abroad, the illegal transportation of goods to an undisclosed end user
by utilizing third country cut-outs or false end-user certificates, and
the purchase of an exportable version of a product and then having it
modified during the manufacturing process to meet the specifications of
the export-controlled version. In 1999, for example, a US company reported
that it received a telephone call from an individual in New York who wanted
to purchase thousands of dollars worth of computer equipment, under a
United Nations program, for shipment to Jordan. Several minutes into the
conversation, the perspective buyer admitted that the computers were to
be transshipped from Jordan to Iraq, an embargoed country.
Theft of Trade Secrets, Critical Technologies, and
Critical Information. The theft of trade secrets, critical technologies,
and critical information knows no boundaries. As recent cases indicate-from
the insider threat, to laptop computer thefts, to hotel room intrusions
abroad-foreign entities employ a wide range of redundant and complementary
methods of operation. The perpetrators of economic and industrial espionage
include traditional foreign intelligence services, state-sponsored educational
and scientific institutions, and independent, nonstate-sponsored companies
and individuals. The increased identification of nonstate sanctioned industrial
espionage, however, should not be viewed as the demise of traditional
foreign intelligence service clandestine espionage. US businessmen traveling
abroad routinely report incidents of suspected targeting. Their briefcases
and laptop computer have been tampered with, or outright stolen; they
have reported excessive elicitation by foreign officials at border crossing
points, and their hotel rooms have been searched.
Agent Recruitment, Co-optees, and US Volunteers.
US persons with access to trade secrets, critical technologies, and classified
information are potential recruits to aid in foreign collection operations.
Some become unwitting facilitators by brokering foreign visits, the process
of using a third party to arrange visits that circumvent official visitation
procedures. In addition, foreign collectors have enticed US experts to
present papers overseas as a means to exploit their knowledge of export-controlled
information, or to facilitate their recruitment as agents or co-optees.
Foreign intelligence services and other government-sponsored entities
continue to employ traditional clandestine espionage methods to obtain
US trade secrets, critical technologies, and critical information. These
methods include agent recruitment, US volunteers, and co-optees.
to the Challenge
In a rapidly changing but still-hostile world, NACIC coordinates the US
Government's effort to identify and counter foreign intelligence threats
to US national and economic security. Operating under the auspices of
the National Security Council, NACIC draws it staffing from counterintelligence
and security professionals from the FBI, CIA DIA, NSA, the Office of the
Secretary of Defense, the armed services, the Department of State, and
DOE. In addition to producing the Annual Report to Congress on Foreign
Economic and Industrial Espionage, NACIC's activities include a proactive
industry outreach program. The NACIC outreach mission provides industry
with threat awareness materials (literature, posters, videotapes, and
briefings), and it sponsors regional awareness seminars and security fairs.
For information on NACIC's activities and educational materials, visit
the NACIC Internet Web site at http://www.ncix.gov.
Bureau of Investigation
The FBI's public voice for espionage, counterintelligence, counterterrorism,
as well as for economic espionage and cyber and physical infrastructure
protection, and all national security issues is the Awareness of National
Security Issues and Response Program (ANSIR)-this is the FBI's national
security awareness program. ANSIR is designed to provide unclassified
national security threat and warning information-specifically related
to foreign-sponsored or foreign-coordinated intelligence-to US corporate
security directors and executives, law enforcement, and other government
agencies. The ANSIR program focuses on the "techniques of espionage,"
giving industry representatives tangible information to help them identify
their own vulnerabili-
ties. These techniques include the compromise of industry information
through "dumpster diving" (searching through trash and discarded
materials) where foreign intelligence services and competitors may try
to obtain corporate proprietary information. They many also include listening
devices that could be as simple as using a police scanner used to tune
in the frequency of the wireless microphone being used in a corporate
Each of the FBI's 56 field offices has an ANSIR coordinator
who meets regularly with industry leaders and security directors for updates
on current national security issues within their jurisdiction. Dissemination
nationwide occurs through ANSIR e-mail and ANSIR fax networks. ANSIR fax
was the first initiative by the US Government to provide 25,000 individual
US corporations with critical technologies or sensitive economic information
targeted by foreign intelligence services or their agents. ANSIR e-mail
increased the capacity to over 100,000 recipients, which is expected to
accommodate every US corporation that wishes to receive information from
the FBI. Through the ANSIR program and the discussion of techniques of
espionage, corporations are able to learn from the experiences of others
enabling them to protect their commercial technologies.
For additional information concerning the FBI, visit its
Internet Web site at http://www.fbi.gov.
Information on the ANSIR Program can be obtained from the Web site http://www.fbi.gov/ansir/ansir.htm
or sending an e-mail to firstname.lastname@example.org.
US Customs Service
The US Customs Service, as the principal law enforcement agency charged
with enforcement of US international trade laws at its national borders,
is the first line of defense in preventing illicit trafficking in strategic
and controlled commodities, and in enforcing international economic sanctions
and embargoes. It is the only border agency with an extensive air, land,
and marine interdiction force and with an investigative component supported
by its own intelligence branch. Illicit trafficking in weapons of mass
destruction and their delivery systems, conventional weapons and firearms,
dual-use technology, and stolen property and trade secrets pose serious
threats to the United States, its economy, and its international partners.
The US Customs Service's Internet Web site is http://www.customs.treas.gov.
of Commerce, Bureau of Export Administration
The primary roles of the Bureau of Export Administration's (BXA) export
enforcement program are to prevent the illegal export of dual-use items;
investigate and assist in the prosecution of violators of the Export Administration
Regulations (EAR) and the Fastener Quality Act (FQA); and inform and educate
exporters, freight forwarders, and manufacturers of their enforcement
responsibilities under the EAR and FQA. Export enforcement personnel also
work closely with
the BXA's Office of Chief Counsel and the US Attorneys Offices
in bringing enforcement actions against violators of the EAR. A list of
denied persons contains information on the names and addresses of firms
and individuals denied access to US goods, in addition to the reasons
for the denial action. The BXA's Internet Wed site is http://www.bxa.doc.gov.
Security Advisory Council
The Department of State established the Overseas Security Advisory Council
(OSAC) to foster the exchange of security-related information between
the US Government and US private sector operating abroad. Administered
by the Bureau of Diplomatic Security, OSAC has developed into a successful
joint venture for security cooperation. OSAC maintains an Internet Web
site that provides timely news items and travel warnings at http://www.ds-osac.org.
of Energy: Economic Espionage
The DOE's Office of Counterintelligence (OCI) is currently engaged in
a threat assessment on economic espionage with an emphasis on Cooperative
Research and Development Agreements (CRADAs). CRADAs are agreements between
one or more federal laboratories and one or more nonfederal parties under
which the government, through its laboratories, provides personnel, facilities,
or other resources with or without reimbursement. As an outcome of the
threat assessment, OCI will make recommendations that will reduce the
opportunities for economic espionage within the DOE.
Within the DoD are agencies tasked with protecting technology and supporting
cleared defense contractors. Cleared defense contractors are encouraged
to contact the appropriate local representatives of these agencies: the
Defense Security Service, the Air Force Office of Special Investigations,
the Naval Criminal Investigative Service, and the Army Intelligence and
As long as the United States remains the world's leading
industrial power and US industry continues to lead the world in technology
development, the United States will remain a prime target of foreign economic
collection and industrial espionage. Indeed, economic collection against
the United States, including the theft of trade secrets and competitive
business information is likely to intensify in the new millennium as the
race to control scarce resources and global markets intensifies. Not only
have traditional allies and adversaries increased their economic collection
activities against the United States, but as developing countries emerge
as potential new economic competitors, they can be expected to increase
their collection efforts against US targets, as well. Traditional allies
as well as adversaries have increased and will continue to pursue economic
collection activities against the United States.
Private industry and the counterintelligence community will
continue to face the challenge of distinguishing legitimate competitive
collection activities from those whose ultimate aims are the illegal transfer
of trade secrets and critical technologies. It is the scrutiny of open-source
collection that frequently reveals other illegal activities or intentions.
Among economic collectors, malicious intentions may be more difficult
to detect, but the increasing competition for limited global resources
suggests that the problem will only increase.
Additional factors make the true extent of economic espionage difficult
to measure. Successful espionage seldom comes to light, and even when
economic espionage is discovered, companies are often reluctant to report
to authorities that they have been the victim of such activity because
of the embarrassing publicity and legal complications that may follow.
The findings of a recent survey sponsored by PricewaterhouseCoopers indicate
that Fortune 1,000 companies sustained losses in the billions in 1999
from the theft of their proprietary information. Some of the other key
findings of this survey indicate:
- The greatest known losses to US companies involve information concerning
the manufacturing processes and research and development.
- The global Internet and proliferation of information systems have
significantly increased the risks to corporate proprietary information.
- On-site contract employees and original equipment manufacturers
are now perceived as the greatest threat to proprietary information.
- The majority of companies have not effectively met the challenge
of providing a framework for safeguarding proprietary information.
- Most companies lack a mechanism and process by which to assess the
value of proprietary information.
- The leading collectors of technical intelligence are most interested
in the following information: classified US defense information-information
systems, sensors and lasers, electronics, and aeronautic systems technologies-trade
information, and commercial technologies. Collection efforts, either
open-source or illegal collection are gradually increasing.
Here is who to contact if further assistance is required in the following:
- Industrial espionage: the local office of the FBI.
- Export violation: the local office of US Customs Service.
- Export control: the local office of the Department of Commerce,
Bureau of Export Administration.
Officers of the National Counterintelligence Center contacted
nearly a dozen selected Fortune 500 companies to obtain their views on
the problem of foreign economic collection and industrial espionage. Following
is a distillation of corporate responses to questions concerning their
Is foreign economic information collection and/or industrial
espionage a problem for your company or industry?
Yes. Each day America is driven more and more by information.
Proprietary information is the chief competitive asset, vital to both
our industry and our society. Our livelihood and our national strength
depend on our ability to protect industrial and economic data. As the
marketplace evolves and new technology is developed, information collectors
are seeking competitive information we believe is intended to be used
to gain competitive advantage over US corporations in several fields.
To what extent, if any, has your company and/or industry
experienced aggressive economic information collection or industrial espionage
by foreign entities?
Espionage can go on for years without a specific incident
to trigger the situation; therefore, it is difficult to estimate the extent
of economic information collection and/or industrial espionage by foreign
entities. The economic resources of a potential enemy and their disposition
offer it a selection of a range of possible or probable course of action.
Suspicious activity-such as using excessive Xerox paper, reading technical
manuals on a Saturday evening, wandering through restricted areas, and
aggressively recruiting employees-has been observed.
What are the types of information or technology being
o Export-controlled information.
o Government programs.
o National Missile Defense.
o Unclassified and open-source information.
o Neurological technology.
o Leverage technology.
o Business plans.
o Pharmaceutical intellectual property.
o Formulas and research.
o Manufacturing process.
o Computer storage, memory, source codes, processors, and encryption.
What are the collection techniques employed?
Employees-not only disgruntled employees-contractors, consultants,
and adversaries are viewed as great threats. Using today's technology,
information can be downloaded into small disks and readily removed from
US companies' new initiative proprietary information tends
to be contained in such an electronic format making it more vulnerable
to economic espionage. Other collection techniques include:
- Breaking away from tour groups.
- Attempting access after normal working hours.
- Different personnel appear at the last minute.
- Theft of laptops.
- Customs holding laptops for a period of time.
- Requesting technical information.
- Social gatherings.
- Conferences and symposiums.
- Trade shows.
- Dumpster diving (searching through trash and discarded materials).
- Nonencrypted Internet messages.
Who are the most active collectors?
What initiative has your company or industry taken to
counter foreign economic collection?
Senior business leaders, who have acknowledged that economic
espionage is a real problem and it may affect the bottom line, have developed
initiatives ranging from better control of physical security and access
by foreign nationals - such as limited access-being in compliance with
government contracts, and developing strong proprietary safeguards.
Although there is no absolute defense against covert attack,
being alert to the possibility of danger and adherence to reasonable and
prudent precautionary measures tend to reduce the threat. In this effort,
businesses have developed security briefings, educational pamphlets, technical
training, and on-line security information.
Are there any examples or case histories of aggressive
foreign collection or industrial espionage you would be willing to share?
In August 1999, an employee of an aerospace engineering
company approached the Security/Ethics Officer with a counterintelligence
issue related to an overseas trip to China. The employee admitted that
he had an outside business arrangement in the works with an individual
from the West Coast. Under advisement from the FBI and US Customs Service
he was asked to cooperate with his business associate. The technology
at risk was a highly sensitive infrared camera, which can be used in missile
guidance systems. The business associate was accused of violating the
US Arms Export Control Act, which regulates defense articles (military
weapons and munitions), defense services, and related technical data.
What should the US Government do to better support the
private sector in countering this threat?
The US Government should foster the development of closer
relations with the private sector, get to know the threat information
needs of business, and help prevent companies inadvertently pairing up
or doing business with those who are known to present a threat. Government
must also do a better job of understanding and identifying what the United
States must protect. In other words, identify the economic and technological
"crown jewels" that we all must protect.
Industry security specialists find it difficult to convince
their senior managers that the threat from foreign economic collection
is a real and persistent one. This often means that the necessary resources
to enhance protection and security are not allocated. They blame the government,
in part, for not showing sufficient interest in their plight. To capture
the attention of senior corporate managers and have them allocate sufficient
resources into efforts enhancing security, the US Government should institute
a more robust program to reach out to the business community, targeting
senior corporate leadership with timely, credible, and specific information
on the threat. Dated and anecdotal information will not do. To get buy-in
from senior corporate management, government must be prepared to take
some risks and share some relevant threat information in a timely manner.
This has to be part of a continuing dialogue if there is to be partnership
between government and the private sector.
Government must gain a better understanding of how businesses
are run and the way businessmen think. There must also be a significant
effort to better educate judges, prosecutors, and government investigators
concerning business trends and techniques. This education would foster
the development of new approaches to investigations, prosecution, and
adjudication that are more responsive to the needs and limitations of
business. Businesses find that economic espionage complaints, when handled
in foreign counterintelligence investigative channels rather than criminal
investigative ones, become immediately classified and, much to the frustration
of the business involved, inaccessible.
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