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O'Malley was an apt choice to act as emissary. Not only was he a former FBI chief of counterintelligence, he was famous for helping IBM nail a Japanese competitor in a complex sting operation in the early 1980s. This resulted in two employees of Hitachi pleading guilty to conspiring to transport stolen documents and components for IBM's then-snazziest generation of computers. "Meetings between Hitachi officials and our undercover IBM agent showed Hitachi officials saying, `Yes, we want to beat IBM to market,' and caught the Hitachi officials paying $650,000 for the information," O'Malley says. "It was then easy for the feds to come in and arrest them."
After skimming the tarmac at Charles de Gaulle International Airport the former G-man gave his briefing, noting "a certain amount of discomfort," he says. "I told the audience the act was not aimed at CI [competitive intelligence] professionals. It was aimed at those who steal corporate trade secrets. Collecting can be done legitimately, but stealing is not okay."
There was some Franco-style grumbling, and someone who identified himself asbeing from DGSE, France's version of the CIA, asked a few questions. O'Malley characterizes the tone as "hostile." Afterward O'Malley was invited to give a personal briefing to a retired French general, accompanied by a colonel. He briefed them on the new law, the same presentation he had given earlier.
When he finished, the general asked for a copy of the act. "Now let me give you a message to take back with you," he told O'Malley with the imperiousness of a nobleman addressing an errand boy. "If you Americans enforce this act, we French will retaliate against American corporations who are stealing French corporate secrets."
As an intelligence professional O'Malley knew that France, the nation that put the "gall" in Gallic, had no intention of curtailing its corporate espionage activities. Three former heads of DGSE openly admitted that France engaged in spying on American business and that computer hacking is illegal only if the victim is located on French soil. But France hasn't been the only ally sifting through American corporate R&D, it has just been the most open about it.
A 1997 report to Congress compiled by the CIA, FBI, and military intelligence grabbers concluded that foreign governmentbacked corporate espionage "poses a direct threat to the health and competitiveness of the U.S. economy." Repeat offenders: China, France, Japan, the United Kingdom, Mexico and Russia, South Korea and Taiwan. Although it is not on the list, you can add Israel, too. "We have an agreement with Israel not to spy, though they spy on us, so it's b.s.," says Guy Dubois, former chief of the CIA's operations group Committee on Imagery Requirements and Exploitation, which specializes in industrial counter-espionage. "With the possible exception of the British, American intelligence has no friends."
Now more than ever corporations rely on information about competitors-their products, strategies, marketing, pricing, and corporate leadership. It is often the difference between a fat, happy hundred-million-dollar company and bankruptcy. Of course, if you are the victim, it can be the difference between suffering bankruptcy and being that fat, happy hundred-million-dollar company.
The U.S. Chamber of Commerce believes espionage has led to losses to corporate shareholders of about $25 billion a year in intellectual property. But companies are reluctant to report infobreaches, afraid of public humiliation or that shareholders will hold them accountable and mount multimillion-dollar class-action suits. They are also leery of being forced to divulge even more information about their tightly held secrets in the discovery phase of a trial. So the usual victim strategy is to do nothing except try to correct the security flaws. Normally corporate espionage is written off as a cost of doing business. This has made it easy for America's allies and enemies alike.
Israeli and Chinese spies are notorious for setting up front companies to purchase technology they are barred from obtaining on the up and up. Israel, for example, was not able to purchase highspeed computers on the open market because of the belief they could be diverted to the plucky desert nation's nuclear arsenal, so it found alternative methods. One blown operation: In 1987 a group of Israelis went to negotiate a joint venture with Lockheed Saunders, an electronics firm in New Jersey...
|1||The Intelligencing of Corporate America||1|
|2||Motorola: First in Business Collection||23|
|3||The Mole--Victor Lee||47|
|5||Trade Show Cowboy||85|
|6||Spy Trap--P. Y. Yang||99|
|9||Chief Hacking Officer||151|
Posted April 9, 2001
If you ran into two guys in a bar and you all had had a few alcoholic beverages, you might hear war stories about how they had turned up people doing unseemly things. It would be fun. Take the same two guys, and have them write down a few strung-together stories in a book with little substance and style. When you read the results in the sober light of day, it's not very good. That's the feeling I got here. Mr. Penenberg is a business investigative journalist. As such, he knows how to dangle a promise. The trouble is, he doesn't seem to have the material to support his promise. The few stories about corporate intelligence gathering in this book are uninspiring in the extreme. Anyone who has worked in a company for a few months could tell better stories than these. Mr. Barry is an intelligence gathering practitioner, and he provides one interesting, cogent account of finding out about better ways to make frozen pizza crusts. It was the only story in the book that moved smoothly from promise to fulfilling the promise. The rest just seemed to ramble. The bulk of the book is about the case of a Taiwanese company caught in an FBI sting taking confidential Avery Dennison 'trade secrets' from an Avery Dennison employee. You first learn how the employee came to steal from Avery Dennison. Then you find out how his employer caught on. Next, the book describes how the employee was hung out to dry so he could be bait for his illegal employer, the Taiwanese company. Following that you get the videotaped sting. The rest involves legal maneuverings through a criminal and civil law suit, the other suits filed by the Taiwanese company, and how the two companies competed with each other while this was going on. You are intended to end up disgusted with everyone, and you probably will be. A good editor could have reduced this material by over half and improved it a lot. The book constantly slams individuals and firms who perform corporate intelligence gathering, accusing them of not abiding by ethical standards. In other cases, those described look silly because they or their clients don't do well in the marketplace anyway. The book ends up describing what happened to each person in the book. With one or two exceptions, being in corporate intelligence didn't seem to pay off very well. To give you an example of the weakness about details in the book, let me describe the material about commercial spying by France. This has been alleged in the press for as long as I can remember. Magazines constantly warn you not to take laptops to France, because maids may download your files. In a book like this that makes many references to commercial spying by the French government, I expected lots of great stories that I had not heard before. I didn't find them. There were just a few allegations about who might have stolen what from whom. One thing is clear. There are people out there who like to misrepresent themselves and try to steal intellectual property and information that doesn't belong to them. And it doesn't look like it's too hard to do. Be prepared to defend yourself. This book won't tell you how to do that, though. You'll have to look elsewhere.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted March 17, 2001
This book is an excellent journalistic exploration of modern corporate espionage, the players, and methods. Adam Pennenberg is to be commended for such a well written, insightful, and objective work.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.