Over the years, research for my thrillers has resulted in a box full of tapes containing recordings of various radio documentaries. Having recently decided it was time to modernize that collection, I set about transferring them from compact cassette to MP3, and in the process, came across a two-part series from BBC Radio4 entitled “Bugging The Boardroom”. I listened to it again with fascination.
The main focus was on how companies can lose their trade secrets (what we tend these days to call “intellectual property”). In some cases, having those stolen and sold to competitors has caused companies to make massive losses, even to point of being forced to shed staff to stay afloat.
One such example came from an engineering company in Sheffield, England, that had a patented method to produce valves that worked in very high temperature environments for much longer and with greater reliability than their competitors. The first they knew that something was wrong was when their U.S distributor, with whom they had signed an exclusivity agreement, called them in a very agitated state and demanded to know why they’d broken their agreement and were allowing another distributor to sell their parts. Worse, they were selling them for much less. Shortly after, he got an irate call from his Japanese distributor, asking why another supplier had been allowed to sell products there – apparently the other company was promoting them from a stand directly opposite his own at a trade show.
Investigations soon showed that another firm had suddenly started producing identical valves at close to cost price. Sales plummeted as a result and redundancies had to made to prevent the company sliding into receivership.
Suspicious at how this new company was managing to sell very similar products at such an incredibly low cost, they employed a firm of private investigators to get inside the factory and take a look at their production environment. The investigators employed the oldest method known to espionage – and one of the most successful – and it worked perfectly: they sent a very pretty girl down to the factory with a charming smile. She carried a bucket and sponge and told them she was earning money to help fund her degree course by washing cars, and could she possibly wash the ones in their car park?
Her charm and smile got her inside the building and she was soon chatting to the mechanics and engineers. They were so taken in by her that they even showed her the machinery they were using. What they didn’t realise, of-course, was that her handbag carried a hidden camera that videoed the complete visit.
The company that employed her gained so much evidence from that video that they were able to force their rival to agree to cease trading.
In that instance, the technical documents that had been stolen had been taken by a disgruntled employee – he was annoyed at having been passed over for promotion, and when a death in his family delivered him a large sum of money, he set up on his own, taking the secrets with him to kick-start a rival business.
The underhand action of employees like that is of the most common ways for trade secrets to leak from a company, but more sophisticated methods are not unknown. Accessing your competitor’s computer over the internet is also an effective way to obtain confidential documents. A good example of that is the story of one particular Israeli couple based in London. The pair had created a very effective and highly targeted piece of Trojan software. They created DVDs containing business proposals and mailed them to several CEOs. Once placed in the computer’s hard drive, the Trojan software secretly went to work and expertly studied all the files on the computer and company network. Within thirty minutes, it had downloaded masses of highly sensitive information which the two spies copied and sold to competitors. In some instances, these were documents related to imminent company takeovers, and the purchasers of that information were able to make a great deal of money by buying shares just before it was publically announced. Because of how targeted the spy software was, the normal virus and malware protection mechanisms never spotted it.
The operation of this couple and their theft of secrets in this manner went unnoticed for a long time, and they built it into a highly profitable business – targeting, stealing, and selling. Their handiwork was only discovered when they decided to use their Trojan in a vendetta against a family member: after an acrimonious marriage breakup, they targeted their software at him. He was a university academic and writer, and he soon found extracts from the book he was working on were being published online with defamatory comments. When he studied those comments, he thought he recognized the turn-of-phrase of his step-daughter’s husband. Unaware, of-course, that of how massive an espionage operation he was about to uncover, he employed a cyber-security firm to study the person he suspected. They followed leads that led to the servers the spies were using, on which were found secrets from top companies around the globe.
Spying like this, then, can affect all companies from heavy engineering companies to high-tech start-ups. The big problem in the UK is that stealing trade secrets isn’t actually a criminal offence. The 1968 Criminal Theft Act excludes intellectual property from its scope, and the police are therefore not interested in such cases. Other laws need to be brought to bear to get police support: for instance, it isn’t actually illegal in the UK to steal trade secrets by planting a radio bug in your competitor’s boardroom. If someone is caught doing that, the only recourse to criminal law is to use the fact that it’s illegal to transmit radio signals. That makes it far more difficult to make effective charges stick to the culprits, if they are ever caught, that is.
The theft of trade secrets, this BBC programme explained, is surprisingly large. Experts reckoned that it could be losing the country £200billion a year, but companies tend to hush up anything that happens like this in order to keep face.
Do you know of any companies that have lost trade secrets and suffered as a result? It’s been suggested the company morals have declined over the years and that it’s a lot more common these days. If you left your employer, what would tempt you to take their secrets with you? I find it hard to believe that people would do that, but perhaps I’m too nice; the evidence suggests it’s a growing trend.
Coming soon: Eavesdrop by Ian Coates.
Smuggling and industrial sabotage leave customs investigator James Winter’s career in tatters. Who arranged his dismissal, and what’s their link to Middle East Assassins?
Published by Bad Day Books, an imprint of Assent Publishing