Corporate Espionage

“The growing corporate espionage activities due to intense competition lead to highly controlling security measures and intensive employee monitoring which bring about distrust in the workplace” Part I . What I already know The reason I chose this topic is due to the fact that a class called human resources management which by the way is my major, once we discussed the topic of ethics the professor covered corporate espionage and determined it as a federal crime. Professor Valdivieso felt very passionately about this topic because his thesis was based on this area.

He is a professional who I admire very much, and I was looking forward to developing a research paper on this topic. Day by day the news portrays crimes like assault, murder, etc. but rarely do we learn about industries committing corporate crimes for example price fixing or corporate espionage. Both this crimes are common yet because the massive amounts of money and very important prestigious people involved in most of the cases, the media and the government do not share with the community the real and darken side of the companies.

From what I can recall corporate espionage arises when peer competitors are looking to improve their products and services or just to sabotage the launch of a competitor’s creation. Why should we be interested in this topic? Well to let you know corporate espionage or economic espionage affect the economy as a whole and is the reason for the majority of lay-offs around the world. Ethics is a key word when talking about business.

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Intellectual property stealing is a world-wide problem the fact that we as citizens should pay more attention to the “strategies” employed by governments and in our own businesses starts monitoring every move we can to make the employers clear and committed as possible. Part II. What I want to find out I am aware of the threats that economic espionage represent to the stability of a county and therefore its citizens. Within this research I hope to accumulate information about how to prevent corporate espionage, how to andle it once it happens and the laws supporting the employees. Throughout the search I will be presenting interviews with specialists such as Human Resource experts and managers. In my opinion the best way to learn about something is through practice so I hope to present case studies reveling real life cases and their resolutions. Some questions I would like to answers are: who is he most vulnerable candidate to be temped into espionage? Are there security companies that prevent intellectual property theft?

I look forward that once I culminate my research, the work will make people aware of the real situation, put the cards on the table and will encourage business owners to take some preventive actions in their companies. Part III. The Search Book I am going to use a Book called Journal of Business Ethics, Volume no. 42 written by a well-known professional, and Dr. Marjorie Chang who has won numerous awards for her outstanding performing in the fields of research, banking, and advertising. The book was published in the Netherlands by Culver Academics Publisher, in January 2003.

The book describes and gives and overview about what creates or pushes people to contribute to corporate espionage. I am summarizing Part V under the title of “Corporate Espionage and workplace trust/ distrust” pages 45-58 The basic idea discussed in the part of the book is the fact that today even though security measures are all over the workplace and some people can even claim “invasion of privacy”, (Chang, 50) the average number of people betraying their employers is growing incredibly fast.

For this reason an employer should always be a step ahead in order to prevent espionage inside a corporation. By a step ahead the book means constant monitoring in subtle way, because intensive actions will create distrust inside the company and this will open the doors to the competition to see you as a potential target for espionage. It also refers to how managers should diminish espionage activities by creating trustful relationship and focus on creating strong bonds between the internal customers who are the key asset of the company.

She also compares case studies which basically portray the fact that empowering your employees and having a clear framework of values in the company, makes them feel important and needed and can contribute as a countermeasure to control corporate espionage. Some action that can be taken according to the book depends on the threat you’re facing and believe it or not the difference between regular spies and corporate spies is very small so the same so the means to control it are alike.

There are four countermeasures that are commonly used by industrial spies: technical, operational, physical and personnel security, these will later on be discussed in depth due to the harm that can be caused to a company by a lack of security not only financially speaking but also the workplace environment distrust that can only be corrected by reorganizing employees. This will represent time and money wasted. Clearly Dr.

Marjorie Chang believe corporate espionage is everywhere today and should be considered as a potential threat especially in big corporation when the competition rises daily and technological access is just a click away. The question is how do we draw the line between excessive monitoring and preventative actions to diminish distrust? In my next source one of my concerns form part II is met, showing the most vulnerable parts in a company that can be targeted by espionage.

Article Richard Power and Christopher Burgess wrote an article on June 08, 2006; entitled “Industrial Espionage: Secrets stolen, fortunes lost” published by CSO I think that it will work perfectly as my second source since the have worked in the Clandestine service of the US Central Intelligence Agency (CIA) for about 30 years and have served as Chief of Station and Senior operations officer, so they are very knowledgeable on the topic.

The article exposed how easy it really is to be a victim of espionage without realizing how big of a threat could be being too open and trustfully not only with the employees but also in relation to informational System (IT) play and important role and create a potential risk. The reality is that once you see yourself in a position that can manipulate lots of information you can find yourself empowered to use it as you hose; temptations can get to you and can make your ethical reasoning unstable.

For this reason the article suggests some countermeasures to diminish espionage without investing large amounts of money in security systems can prevent your company from failure: * Do not expose your internal network ( Burges, Power, “Industrial Espionage” par 32) * Make sure that intermediate storage is secure ( including utsourcing) ( Burges, Power, “Industrial Espionage” par 33) * Encryption and backup ( Burges, Power, “Industrial Espionage” par 37) * Auditing and Monitoring ( Burges, Power, “Industrial Espionage” par 38) One common mistake the top managers or shareholders make is that they think that espionage will affect only the industry involved in the situation but it affects the whole economy specially the country’s GDP average therefore society. There are three main methos of attack that we should consider or are the must vulnerable to becoming part of an act of espionage.

These methods are: * When individuals and competitors target business. ( Burgues, Power, “Industrial Espionage”; par 4) * When state entities target intellectual property. ( Burgues, Power, “Industrial Espionage”; par 4) * When counterfeiters, pirates and organized crime target products. (Burgues, Power, “Industrial Espionage” par 4) Thanks to this article I found out that countries that have high measures controlling intellectual property per se are more trustworthy in the investment sector. As a result the GDP of the country will rise.

This is clearly beneficial for the economy. But if the monitoring and controlling measures fail the economy will also decline for example in the US corporate espionage represents more than $100 billion losses. As a part of the article states “officer increased protection of the investors intellectual property, investors increase their investment in the nations economy” (Burgues, Power, “Industrial Espionage”; par 6) To sum up, in my opinion the most effective countermeasures are in your hands and should be applied depending on your business and level of confidential information involved.

Providing effective leadership is essential to your own continue economic viability in the global economy of the 21th Century. Now I hope to find more information to support my thesis statement about trust. Article Trust is going to be the main element, since distrust in my thesis statement is as a cause of corporate espionage. I will be presenting and analyzing a survey done by a group called Development Dimensions International which published “A Survey of Trust in the Workplace “by Paul Bernthal, in 1993. Basically this survey presents statistical evidence of about 57 organizations.

Each organization, in turn, surveyed up to 20 employees (both managers and nonmanagers), totaling 1,108 respondents (Bernthal, “A Survey of Trust in the Workplace “, par 4) In fact the survey helped the author to come up with a list of trust-builder and trust-reducing behaviors that people committed on a daily basis in the workplace. Trust is the foundation of every single relationship we can think of. Business is not the exception and it is directly connected to loyalty. I am going to present some of the results that the survey exposed.

A general reaction towards the importance of trust in the survey indicated that a lack of trust is a huge and growing problem inside companies. Only about thirty percent of the polled population did not agree that trust is a problem inside the work environment. That thirty percent were more task related meaning that communication is not an important tool to achieve their work and nor is productivity affected. Regarding job position trust is becoming a key factor to retain good employees and increase loyalty between them.

According to the survey trust is easier to be held between supervisors and supervised staff than between peers. “Important behaviors associated with trusted leaders were consistent behavior, dependability/ reliability, support during risk taking, and keeping the direct reports’ best interests in mind”. (Bernthal, “A Survey of Trust in the Workplace “, par 8) Trust is a must do inside a company. Lack of trust can lead to serious peer and managerial chaos pulling corporate espionage to the forefront.

Not only because employees are ambitious, but also due to trends, is corporate espionage something that is happening every day. The fact is that a large majority of people who gets involved in this type of action are not caught; people with financial needs will consider getting involved. The problem is the consequences as I showed in my previous source. Corporate espionage is not a kid’s game, but a low cost countermeasure can be taken and by building trust step by step, once you have a reliable and supportive environment the rest comes by itself.

Interview I thought that it was about time to get more information on the problems of corporate espionage. I selected an article called “The Economic Espionage Act of 1996: Are We Finally Taking Corporate Spies Seriously? ” published in the “Houston Journal of International Law in 1999 vol. 22”. This article was written by the journalist Thierry Olivier Desmet. The article gives an overview of what corporate espionage really is and the laws behind what a company should do in order to get away from this type of problem.

It describes how to recognize the threats and it proposes to be proactive against corporate espionage. According to the article the corporate espionage era started just after the cold war ended. Everyone was trying to recover, make profits and gain competitive advantage and high tech product were the most wanted targeted not only by national companies but also worldwide competition rose. By the year 1996 the Economic Espionage Act (EEA) was created to fight against white collar crimes; this act makes the theft of proprietary economic information a felony and protects trade secrets at the federal level. By discouraging improper trade conduct by both foreign governments and private parties, it reflects Congress’s recognition of the need to protect U. S. technology from unethical business competitors. The EEA does so by providing severe criminal penalties for those prosecuted under its provisions”. (Desmet, “EEA act”, par 2) “The penalties for economic espionage depend on the type of crime committed. Those using stolen trade secrets to benefit a foreign government face a fine of up to $500,000 and/or up to 15 years in federal prison.

Those who steal trade secrets for their own gain may be fined or put in prison for up to ten years. Companies that engage in economic espionage also face consequences they can be fined up to $10 million for stealing trade secrets for another government and up to $5 million for using stolen secrets for their own gain”. (Desmet, “EEA act”, par 10) This clearly shows that getting involved in corporate espionage is not a good choice especially when the law as strict as the article shows.

The best way to prevent becoming a victim is to first create a trustworthy environment and invest in security programs using technology. This will only take seconds and will clearly save you millions of dollars in the long term, and last but not least hire high profile employees with neat backgrounds. Remember that is better to be safe than sorry. Further on in my research I hope to find examples or findings that support my point. Article An article I found on the CBS interactive business network caught my attention. It is an Interview done by Rob Rosner in April 2001 about how real is corporate espionage.

The interviewer (Adam Penenberg) was an expert on the field; he is also the co-author of a book called: Espionage in Corporate America, they discussed the role that HR should play in keeping corporate secrets secret. Due to the length of the interview I chose certain questions relevant to my topic to make my point of how real corporate espionage is, how long it has been around and what measure we can take: Rob Rosner: Corporate espionage is a relatively recent phenomenon, isn’t it? Adam Penenberg: Corporate espionage has been around forever. Now it’s just been professionalized.

In 1811 Francis Cabot Lowell traveled to England and ripped off the plans for the Cartwright loom, which he memorized while touring a factory. With it, Lowell brought home the blueprints for America’s industrial revolution. RR: What is the shortest speech you’d give to an HR person who doesn’t believe this is a problem for her company? AP: Well, a person or a company that takes that attitude I would call a victim. Odds are, if they have something worth stealing — whether it’s sales information, or marketing information, or their budget, or new technologies — if they don’t think it’s happening, they’re wrong.

It is. Competitors may be looking at trying to hire away whole sections of their company, or looking at their internal decision making, or looking at their internal network. Just about every 500 company is engaging in some sort of Cl, or “competitive intelligence. ” RR: How is competitive intelligence done? AP: Much of the time it is straightforward market research, done by professional librarian types, who dig up publicly available material like publications, market studies, etc. But sometimes companies hire people who break the law, or at least without breaking the law, work as spies.

Many of them were trained by the CIA and the DIA (Defense Intelligence Agency) and at the FBI. They’re former three-letter-agency people who are now working for companies. And what do they do for companies but take the expertise, the skills, and the knowledge they learned in their agencies and apply it to the private sector. For example, say I’m a mid-sized company in a field of very large companies that make sneakers. I find out that my competitor is about to do a massive national TV ad campaign for a new line of sneakers.

Well, I was also planning on doing a national TV thing, but I realize, oh my god, I will get buried by them. So I’ve got to do a different strategy. That information may have prevented me from spending tens of millions of dollars on an ad campaign that wouldn’t work. After some explanation of the basics of corporate espionage Rob Rosner asked about the Economic Act of 1996, and whether that measure is enough to control it or something else needs to be done, how can you get information without getting involved in corporate espionage? : RR: Doesn’t this solve the problem of corporate espionage?

AA: No. Sales figures are not trade secrets. Factory production is not a trade secret. The next advertising campaign that you’re going to run or inside scoops or anything like that, everything, any piece of information like that, is not a trade secret. You have to define what your trade secrets are. CI involves, let’s say, the acquisition of information that’s quite valuable to a competitor but is not a trade secret. RR: Give me an example of how you can legally acquire valuable information about a company. AA: Microsoft posts lists of every available job on its Web site.

If you are telling your competitors what jobs you’re looking to fill, that means they can figure out what areas you’re looking to invest in R&D, and looking into new technologies and looking at areas you want to beef up. For example, if you had, all of a sudden, four new marketing jobs open, that could indicate that you’re moving toward marketing some new product in a huge way, or you’re moving your whole marketing department in-house, perhaps. These are all pieces of information that are valuable to know. Take it a step further so that it’s not exactly illegal, but not exactly ethical, either. I love this one.

If you ever want to find disgruntled ex-employees of a company who are specifically trained in a technology or skill that you want to target as a journalist, or as a corporate spy, or as anyone who wants to find out, just type in the word “resume,” the name of the company you’re targeting, and the technology you’re interested in. You get those three things together in a search engine, and you’ll pull up a lot of resumes of people in that area. It’s great to debrief them, because they love to dish about the company. From what I have read in the interview it supports what I have presented so far in the research.

Corporate espionage is here and is everywhere. There are various ways of committing it and the best way to do something to protect your company from this is to prevent instead of do something to correct it. The specialists involved in this type of activity are highly trained and most of the time have a connection with governmental institutions. Trying to achieve a comparative advantage is possible through other mechanisms without falling into an unethical act. For every situation you have two options, one right and one wrong in order to get what you want and there is no useless information when taking about the competitors.

Beware and select how much security you will have and the human resources you will select. Interview An online book called Building Trust at the Speed of Change by Edward M. Marshall published by Amcom in the year 2000. I will be discussing pages 6 through 32 which talks about elements that make society work and emphasizes trust as the key to make the organization work in your favor, be productive, and have total quality, unrivaled customer service and high performance (Marshall, 12).

The author prints an interview he conducted with a new consulting client’s Operations Manager; where he asked specific questions about trust and the benefits of building a trusting environment inside the company. Edward Marshall: Ken, what is your top challenge? Operation Man: Consistent performance at the highest level so we can hit our quarterly goals. Things change so fast it’s hard to keep up. EM: What prevents you from achieving that? OP: Many of our people – leaders and staff – get embroiled in conflict, turf wars and ego battles. Some teams don’t trust others even though we have embraced the latest “TQ team philosophy.   The relation inside the company are crucial to make the company successful, people should be looking to the same point and believe in the company’s vision. The people who have the duty to make everyone look at the same place are the top managers. The problem is that some of them still believe in the old school wrong doing methods of imposing instead of proposing or guiding. The author invites worldwide manager to move from fear to cooperation, from the transaction-based corporation to the relationship-based corporation (Marshall, pag 22), learn how to be good leader and leave behind coercive leadership.

This can in a blink of an eye change rapidly the way subordinates see you, see the company and better improve the commitment towards the company. It is not about becoming touchy or that you will send everyone a massage for they you believe your care about them, its about good training and training by example is proved that is the best way to lead and as the author states in the acknowledges “You don’t get speed by going faster, doing more, or telling people what to do. Speed comes when people feel trusted.

You get speed by breaking down the walls of the silos. Speed comes with ownership and alignment”. Having presented much evidence in support of my thesis, I will show the dark side in real life case. Article I found a very interesting article talking about how multinational and certain empires still run de world as they wish, putting aside other people’s lives, happiness and even lives. Because all what they care is about the quarterly reports of their company and realizing how much profits they have made. The article name is ? Corporate espionage in Ecuador? ritten by Mary Cuddehe on Thursday August 12th, 2010. Since the situation I am about to expose was held in Ecuador I found it appropriate to make a link with the Ecuadorian society. The author describes a law suit from the Ecuadorian amazon community to Texaco Company about oil dripping over the river causing serious damage over 20 years to the people, damages such as: cancers, mutations and skin rashes. Mary Cuddehe is an actual journalist-spy that was hired by Kroll Company which is one of the most respectful and accurate private investigation firms.

First he received a called from a colleague who was in Mexico, the next day he was on a plane flying to Colombia to meet the Kroll representatives to find out what was the job really about. He arrived and a documentary was play, showing the whole situation in Lago Agrio, Ecuador where the damage was done. The author could stand the way these people lived due to the consequences and abuse of Texaco Company. By the year 1993 Chevron bought Texaco so this now the one suit was Chevron, they spend around $40 million in cleanup efforts.

Then governmental laws changed in Ecuador and they hired an expert to really set an estimation to compensate the affected, this was settled around $27. 3 billion. This was when Chevron hired Kroll in order to turn the whole story around and make them look not as bad as they taught, and the other hand portray Ecuadorian government as corrupt by making false allegations. Kroll ask her to instead of do journalism to be a spy for the Chevron Corporation and tear down the law suit, they offered her $20,000 for six weeks of espionage.

Off course the offer was tempting; he turned down the job it was just not ethical. Clearly espionage is present even in the least expected places and affects not only industries but whole communities linking amounts of people, manipulating them and manipulating information. Such and unethical behavior damages millions and hurt more people than anyone can even imagine. When are companies going to realize that social corporate responsibility is must and not privilege? When are they going to realize that preventing save them millions and using people as pawn is just not right?.

Hopefully the cases that are brought to light such as this one can guide and even scare companies to get involve into espionage and unethical practices and make people conscience before selling their integrity to such parties and practices. Article I want to analyze a power point presentation by Brian L. Whisler – Partner Washington, DC on May 18, 2010. The presentation is titled “Corporate Espionage and Global Security: Protecting Your Business Interests” and talks about basic definitions, defining threats, current trends, protection, etc. (Whisler, “Corporate Espionage and Global Security, page 2).

I am going to pass on some topics explaining what we already know and focused on the ones that we have no knowledge of. While defining the magnitude of the problem the authors explain in recent facts that theft of trade secrets exceeded $1 trillion losses in 2008 and continues to escalate. Don’t you think is insane how much money and time companies spend misleading bench marketing which is a legal strategy to gain competitive advantage? Most of the affected companies are inside the U. S and over 40% of U. S. businesses have reported intellectual property losses (Whisler, “Corporate Espionage and Global Security, page 4).

These corporate spies focused on certain information such as: Financial, manufacturing process and customer data (Brian L. Whisler – Partner, “Corporate Espionage and Global Security, page 4) and commit from street crimes to sophisticated threats to the employees or top management level. The assessment of threats is based on the different ways to get information and the weakest point to enter employee’s minds is through IT systems of a company. An insider threat which is the most common one refers to: Bribery, social engineering, exploiting privileges, and disgruntled employee, sadly this type hard to distinguish because happens slowly.

But rising trends in corporate espionage are external threats that a company or even a government can have, it involves: foreign countries, individual hackers, dumpster divers, the ones that actually do the dirty job. The most risky sectors or industries to be harmed are the high technology sector, energy, military, due to their vulnerabilities of high volume of off-shore outsourcing and foreign engineering talent imported into companies and research institutions (Whisler, “Corporate Espionage and Global Security, page 5).

One important point I found was the part on Trade Secret Protection referring to what measures you should take, because most of the other slides refers to information I had already explored. Whisler recommends always have a plan in place beforehand and identify the type and amount of information in case you catch someone doing wrong. Call your lawyer and review the employee’s confidentiality agreement to define where to start and follow the law because most of the time the individual committing the crime is not the one interested in the information.

If he or she gets scared, you will diminish your chance of catching the mind behind the crime. Implement security to check on the employee’s file specially monitor what they take home. A weakened economy, reduced profits, unstoppable global competition, massive layoffs, and general financial distress create a perfect mixture of factors contributing to a corporate environment falling into espionage due to opportunistic employees and competitors. How can we manage this ongoing treat and achieve success? The answer is effective risk management and trade protection compliance as the author describes.

I found a very interesting article talking about how multinational and certain empires still run the world as they wish, putting aside other people’s happiness and even lives. Because all what they care about is the quarterly reports of their company and realizing how much profits they have made. The article name is ? Corporate espionage in Ecuador? written by Mary Cuddehe on Thursday August 12th, 2010. Since the situation I am about to expose was held in Ecuador I found it appropriate to make a link with the Ecuadorian society.

The author describes a law suit between an Ecuadorian Amazon community and Texaco about oil dripping over the river causing serious damage over a perceived if 20 years, damage such as: cancers, mutations and skin rashes. Mary Cuddehe is an actual journalist-spy that was hired by Kroll Company which is one of the most respectful and accurate private investigation firms in the world. First, he received a called from a colleague who was in Mexico, the next day Mary was on a plane flying to Colombia to meet the Kroll representatives to find out what the job was really about.

He arrived and a documentary was play, showing the whole situation in Lago Agrio, Ecuador where the damage was done. The author could stand the way these people were living due to the consequences and abuse of Texaco. By the year 1993 Chevron bought Texaco so now the suit was against Chevron, who spent around $40 million in cleanup efforts. Then governmental laws changed in Ecuador and they hired an expert to really set an estimate compensation for the affected. This was settled as around $27. 3 billion.

This was when Chevron hired Kroll in order to turn the whole story around and make them look better, and on the other hand to portray the Ecuadorian government as corrupt by making false allegations. Kroll ask her to be a spy for the Chevron Corporation and tear down the law suit, they offered her $20,000 for six weeks of espionage. Of course the offer was tempting; he turned down the job it was just not ethical. Clearly espionage is present even in the least expected places and affects not only industries but whole communities, manipulating them and manipulating information.

Such unethical behavior damages millions and hurt more people than anyone can even imagine. When are companies going to realize that social corporate responsibility is a must and not a choice? When are they going to realize that saving them millions and using people as pawns is just not right?. Hopefully the cases that are brought to light such as this one can guide and even scare companies not to involved into espionage and unethical practices and make people aware before selling their integrity to such parties and practices.

One way for the reader to feel more connected to be topic is to find some link to it, something in common and a perfect example could be a case held in the country Article I want to use a recent article that talks about an employee who was sentenced for committing espionage, trading secret in fact. The article was written by Frank Green and published on March 18, 2010 in the Richmond Times-Dispatch; the article’s tittle was “DuPont employee sentenced in industrial espionage case”.

I chose it because it is an example of how risky it is to get involved in this type of dirty work, not only because it hurts the person and the company financially speaking but it also creates a world-wide reputation for the spy in consequence the doors of future jobs shut. Michael David Mitchell was an employee on the DuPont plan which specializes in material for construction. The company hired him because he had the profile they were looking for: chemical engineering and sales skills. DuPont was developing new materials that largely improve their sales.

This was product that was developed inside the corporation and financed by them for a long period of time. It supposed to be a fiber five times stronger than steel in use for products ranging from brake pads to body armor, the name of the product was Kevlar. (Green Frank, DuPont employee sentenced, par 4). After Mitchell was fired from DuPont industries due to the fact that security found classify information in his power he created a consulting firm and went to work with Kolon (a former competitor of DuPont) located in Korea.

When he worked in DuPont he signed a confidentiality agreement in order to protect all the hard work and investment made in the Kevlar project. Mitchell revealed trade secrets about Kevlar with Kolon headquarters. Mysteriously, the call was recorded and he was questioned by the FBI and US Department of Commerce that protects the co