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Corporate Espionage is a Big Business

By GEOFF MORRELL

July 6, 2006 — Corporate espionage used to be the stuff of children's books. Arthur Slugworth, a rival of the infamous Willy Wonka, is probably the best-known culprit.

In Roald Dahl's "Willy Wonka and the Chocolate Factory," Slugworth tries to steal Wonka's secret recipes by bribing young visitors to the Oompa Loompa sweets maker.

Today corporate espionage is more cloak-and-dagger than chocolate-and-bubble-gum. It is big business, and with globalization, getting even bigger.

"This goes on every day," says Ira Winkler, a top corporate security analyst. "Whether or not people want to admit it, it is very, very common."

Big Business

Common and expensive. In his book "Spies Among Us: How to Stop the Spies, Terrorists, Hackers, and Criminals You Don't Even Know You Encounter Every Day," Winkler estimates American companies lose as much as $300 billion a year to pirating, counterfeiting and other corporate theft.

Hacking into a company's computer system may be the most modern way to steal trade secrets, but experts say most thefts still occur the old fashioned way, by sneaking into a company's offices and making off with classified information.

Inside jobs are another tried-and-true method. We just saw an example of that when several people were busted as they attempted to sell Coca-Cola secrets to rival cola giant, Pepsi.

Global Thieves

"Everybody does it," says Pat Choate, author of "Hot Property: The Stealing of Ideas in the Age of Globalization," and companies big and small fall victim to it.

While most theft involves American companies stealing from one another, more and more theft is being committed by companies overseas, especially in Russia, China and Taiwan. Of the 3,000 Chinese firms in the United States, Choate claims "a large number of them are engaged in piracy or stealing secrets and sending them back to China."

That's nothing new. Choate reminds us that in World War II, Japan built its Zero fighter plane from designs it had stolen from billionaire aviator Howard Hughes.

Best Defense

"You have to protect yourself," advises Choate, "just as when you go into certain bad neighborhoods, you protect yourself."

Experts agree that the best defense against corporate theft is to thoroughly vet employees who have access to sensitive information. Then make sure that that information is secure. If a breach occurs, report it to law enforcement as soon as possible.

Winkler — who performs simulated espionage to test a company's security systems — says that when investigating reports of one crime, he often finds evidence of dozens of others the company was not aware of.

Securing intellectual property can be very expensive, Winkler says, but not nearly as costly as losing years of research and development to corporate theft. "I think the problem is bad and going to get worse in the future."

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