Economic Espionage and Business Intelligence

If you mention the words intelligence, espionage, and sabotage there is a very good chance that the listener will go to a place where the thoughts of dry Martinis, fast cars, and pretty women in scanty designer outfits comes to mind. People will think about the world of superhero intelligence agents and all that goes with it. Many will be disappointed to learn that often the real world of economic espionage and business intelligence usually has to do with things that are much less glamorous.

One of the difficulties at the beginning of any discussion on economic espionage and business intelligence is that the degree to which it is frowned upon, or considered illegal, varies from country to country around the globe. Additionally, reaching agreement on what constitutes economic espionage versus good old competitive intelligence gathering can be difficult.

© The Author(s) 2017

L. Wright, People, Risk, and Security,

DOI 10.1057/978-1-349-95093-5_7

The Basics of Economic Espionage and Business Intelligence

The US Federal Bureau ofInvestigation (FBI) has published a brief paper on the subject of economic espionage on its website.¹ The briefing document indicates that economic espionage, while not new, is an ever growing threat to US companies and that it costs businesses and the economy hundreds of billions of dollars per year. The FBI believes the efforts of foreign entities are behind these losses. The FBI is able to go after perpetrators of this crime because of legislation entitled the Economic Espionage Act.^{[1] [2]} The act describes economic espionage as being done by ‘whoever knowingly performs targeting or acquisition of trade secrets to knowingly benefit any foreign government, foreign instrumentality, or foreign agent’. The legislation makes economic espionage a criminal offense which has severe penalties. The penalties cover the theft of intellectual property and other protected data that may occur inside the USA, or outside the country’s territorial boundaries, if the violator is a US citizen. If it is determined that the economic espionage was for the benefit of a foreign government, there is a possible maximum sentence of 15 years in prison and a fine of $5 million. If an organization is found guilty of economic espionage, then the penalty is the greater of $10 million or three times the value of the stolen trade secret. If there is an instance of the theft of trade secrets and a foreign government is not involved, the prison sentence and fines are somewhat reduced but are still very serious.

Depending on the nature of the business, some organizations may be subject to specific government regulations. These laws are intended to make sure there are sanctions against actions by employees that could compromise sensitive data. The nuclear industry is a prime example. In the USA, employees in this industry are subject to provisions of the Atomic Energy Act of 1954 and the Economic Espionage Act of 1996. The Atomic Energy Act, like the Economic Espionage Act, has severe penalties for persons who violate it, including fines and imprisonment.

Historically, the targets of economic espionage were companies in the high tech or defense industries. However, with the increased sophistication of developed economies, the FBI points out that any company, large or small, with an innovative and money-making idea can now be a target. As discussed earlier in Chap. 5, economic espionage and cyber snooping are linked. Many people in the United States business community believe the problem with China and Russia’s economic espionage is so great that in 2014 legislation was introduced titled The Cyber Economic Espionage Accountability Act.^[3] The legislation states that ‘the United States should intensify diplomatic efforts in appropriate international forums such as the United Nations (U.N.), the Organization for Economic Cooperation and Development (OECD), and summits including the G-8 and G-20 summits, to address the harm to the international economic order by cyber economic espionage’.

In July 2015, the FBI announced that it would conduct a nationwide campaign to help heighten awareness about economic espionage cases involving the attempted theft of trade secrets from American businesses by foreign competitors. It is the FBI’s intention to gear their campaign toward business leaders. However, members of the American business community have long suspected that the Chinese government was involved in attempting to gain intelligence regarding US technology secrets, production methods, innovations, and anything else that might give them an advantage on the economic battlefield. This suspicion existed for years before it was eventually publicly acknowledged by government authorities.

Over the years, the techniques used in military and governmental intelligence have found their way into the practices of many sophisticated companies. Known as ‘open source intelligence gathering’, the technique involves rigorous analysis of data and other bits of information that may be readily available in newspaper articles, press releases, advertisements, and even business industry rumors. The purpose of engaging in this exercise for many organizations is to not only keep an eye on the competition’s approach to a segment of business, but to identify, or surmise, what may be ‘coming down the road’ that will need to be met as a future market challenge.

Virtually every major country has military and government agencies that use this technique of intelligence gathering. Located about a 20-minute drive outside of Washington, DC is the massive complex of the Central Intelligence Agency (CIA). External aerial shots of the sprawling facility located in Langley, Virginia have been used in countless movies and television shows. Invariably, the focus is on the spine-tingling activities of covert agents supervised by some amoral government bureaucrat in that building. However, what is rarely focused upon are the hundreds of conscientious people working away every day at activities that involve data gathering and analysis similar to what is done at an accounting company, advertising agency, or public relations firm. The same probably holds true for MI6 in the United Kingdom, and other intelligence agencies. Nevertheless, there are individuals in intelligence agencies and military organizations who are involved in covert activity and employ ‘spy craft’ to secure information that is considered to be in the vital interests of the country and citizens involved.

While the bulk of competitive intelligence gathering may not involve activities that ‘step over the line’, there has been a rapidly expanding use of some of the typical spy craft techniques of covert activities as part of increasingly sophisticated economic espionage. Before now, in the USA, the companies that were likely to be the primary target of economic espionage were those who had direct ties to the US government as contractors, suppliers, or technology developers. For the most part, this involved companies in defense and highly sensitive technology areas. During the Cold War, the USA, the UK, and France, were probably flooded with spies attempting to get their hands on the latest information concerning a powerful new computer, or fighter plane, or tactical military weapon that was being developed. As a result, companies in the USA such as IBM, or Bell Laboratories, or Lockheed Martin, or Boeing had to be particularly vigilant about the possibility of being subjected to economic espionage.

• [1] https://www.fbi.gov/about-us/incestigate/counterintelligence/economic-espionage. AccessedDecember 8, 2015.
• [2] Economic Espionage Act (EEA), Title 18 U.S.C., Section 1831.
• [3] H.R. 2281-113th Congress (2013—2014) Cyber Economic Espionage Accountability Act; https://www.congress.gov/bill/113th-congress/house-bill/2281; accessed December 7, 2015.