zyx zyxw Counterinttlligence ni the 1990‘s: The Thrtat to Corporate Rmerica* Jonathan P. Rinnie Federal Bureau of Investigation The 1980s were designated the “Decade of the Spy” due to the unprecedented number of serious espionage cases prosecuted by the Federal Bureau of Investigation (FBI), the U.S. Government’s primary counterintelligence service. It remains to be seen how the 1990s will be characterized by watchers of the U.S. Intelligence Community, but the decade is off to a curious start. There have been arrests and prosecutions for intelligence activities conducted by or on the behalf of the intelligence services of Greece, the Philippines, and one of the warring factions in Liberia. An astrophysicist in C a b fornia has also been sentenced to prison for dlegally selling unclassified but highly sensitive proprietary export restricted technology to a major Japanese trading company. To cap it off, Pierre Marion, the past head of the French Intelligence Service, has openly stated that in economic matters France is a competitor with the United States (and presumably with other Western democracies) and therefore uses its intelligence services to promote its economic interests. Until recently, unless a US. corporation was a defense contractor engaged in classified work for the d t a r y or the Intelhgence Community, it would not be exposed to the FBI’s counterintelligence awareness program and come under its protective umbrella against assaults by foreign intelligence services. But this has changed. It has changed because the world has been dramatically altered since the “Decade of the Spy.” As the Cold War reached its conclusion, the FBI determined the following: zyxw zyx zyxwvut zyxwv 0 A number of our traditional geopolitical adversaries continue to use their intelligence services to aggressively conduct activities to acquire clasrijied information. They are also targeting nonctassijied technological and corporate information from nongovernmental sources. 0 A surprising number $longstanding allies are also targeting this nonclassijed information. In both cases the foreign intelligence services are passing the sensitive dormation to their national industries in order to gam an advantage over U.S. competitors. zyxwvuts zyxwvutsr Competitive Intelligence Review, Vol. 5(3) 17-21 (1994) 0 1994 John Wiley & Sons,Inc. *This article is a US Government work and, as such, is in the public domain in the United States of America. CCC 1058-0247/94/03017-05 aD zyxwvut Threat? Why is tlus? Simply enough, governments have recog- Who Poses the nized that economic security is as much an integral part Intelligence services remain shadowy tools of governof their overall national security as is d t a r y security. Ef- ments despite all that has been written about them. What fectively conducted against economic targets, clandestine is to be believed? O n the one hand, conventional wisdom intelligence activities can bring billions into a national relegates them to the ash heap of Cold War hlstory, ofien economy. The debate continues on the propriety of the claiming they were never really effective anyway. They Central Intelligence Agency (CIA) and other foreign inare sometimes described as a collection of charlatans, mistelligence collectors in the U.S. Intelligence Community fits from the mihtary and academics who were unable to retaliating by engaging in such activity. play in the great arenas of statecrafi and armed conflict. One of the issues that arises in this debate is if the CIA O n the other hand, there have been accounts of intelacquires economic intelligence, what U.S. corporation ligence services successes which are staggering. Because does it share it with? Who gets the competitive advanof the efforts of Soviet intehgence officer Richard Sorge tage? But for the FBI there is no debate. When a foreign in Tokyo, Stalin was able to concentrate his forces against power’s intelhgence service uses clandestine means against Hitler and prevent Germany from takmg Moscow rather a U.S. corporation to acquire information affecting the than dividing them to protect against a nonexistent economic security of the nation, there w d be a response Japanese threat. Soviet agents Kim Philby, Donald to counter that action. MaClean, Guy Burgess, and Anthony Blunt recruited at The purpose of the article is to examine this threat and Cambridge in the 1930s became privy to a vast array of to explain what the FBI is doing to keep U.S. corporaBritish and U.S. sensitive information fiom their respections fl-om being victimized by some of the most sophisti- tive assignments in MI6 (the British foreign intelhgence cated foreign intelhgence services currently operating. service), the Foreign Office, and the Palace. The CIA and MI6 ran a Soviet d t a r y intelligence What Is (GRU) officer in Moscow during one of the most danA simple test to determine what a corporation has that gerous periods of the Cold War. Colonel Oleg Penkovsky is targetable by a foreign intelligence service is to ask warned of Soviet missiles in Cuba. With tlus knowledge what information it would not share with a competitor. and with other extraordinary information he provided, Clearly, this category would at least include research the U.S. was able to fiame a response to Soviet aggresand development information, marketing plans, sales sion. And what about all the fantastic things Tom Clancy strategies, and cost and pricing data. In addition to the has been writing about? Is there any truth to them? information itself, the corporate employees who have Intelligence services are human institutions and as such access to this information are also targets of intelligence are reflections of their often talented but fallible memberservices. shp. Intelligence Services are not all knowing but neither are they gangs that can’t shoot straight. If there is anydung What fie to remember, it is that an intelhgence service is composed The effect of a foreign service acquiring sensitive informa- of men and women who are trained and experienced in tion and passing it to its national industry can have a num- acquiring information in such a fashion that those who ber of consequences. In the short term, market share can possess the information will not know it has been taken. sh& away from the target corporation to the foreign corThey are people who spend their adult lives planning, exeporation. (This assumes that the foreign corporation is in a cuting, and analyzing intelligence activities. While the speposition to gam a decisive competitive advantage; if the cific task they may be assigned requires only their solitary target corporation’s market position is simply too strong, participation, they are supported by large bureaucracies. mere knowledge of its marketing strategy (for example) is During the Cold War, intelligence services (both East not enough.) and West) operated against very dificult, informed tarIn the long term, the loss of sensitive information gets. Extraordinary steps were taken to safeguard classified could be sufficient to disrupt an entire industry. A worst information. Communications were protected by encrypcase scenario for the targeted corporation would be the tion so complex that acres of computers are unable to loss of its abdity to compete in the marketplace and its break it. Persons having access to classified information consequent bankruptcy or takeover. pass rigorous background investigations to get access and zyxwvu zyxwvutsrqponmlk Being Targeted? Are Consequences? reinvestigations once they have it. Cleared personnel were routinely briefed on how not to be vulnerable and how to r e c o p z e operations directed at them. The physical security (gates, guards, and locks) of this information was taken most seriously and elaborate measures were employed. If d u s was not enough, countermeasures involving dlsinformation to mislead adversaries as to plans, intentions, and capabilities were common. Both sides had their counterintelligenceservices to ferret out the other’s agents, officers, and operations. Western intelligence services had the additional burden of operating against totalitarian, communist regimes which were strongly xenophobic. Yet despite this,both sides had their triumphs. Many of these intehgence services have now set their sights on corporate targets d-prepared to meet the challenge. and take steps to reduce that vulnerability. The FBI has a program designed to assist U.S. corporations to reduce their vulnerability and to neutralize foreign intelligence attempts to operate against them. In many respects this is an expansion of what the FBI has been doing during the Cold War for defense contractors. The FBI’s newly articulated foreign counterinteuigence program is called the National Security Threat List (NSTL). Threats to national security are dlvided into two categories: What Intelligence Services 00 The contents of the second list are classified. However, the independent activities that have been designated as hostile to US. national interests are not. Of particular interest to the readers of this journal are four of the seven activities (the others pertain to government and defense functions): zyxwvutsr zyxwvu zyxw zyxwvu zyx zyxwvuts zyxwvutsrqp Sensitive information can be acquired by intelligence services in a variety of ways. There are two basic means of collection: technical and human. Technical means make use of technology to intercept communications. Information can be acquired through microphones in a conference room, a telephone tap, the penetration of a computer, the use of satellites, or through the use of any adaptable technology. Collection by human beings means using spies (or agents, as they are known as in the trade). Even with the remarkable advances in technology, the use of people to collect information and to conduct other intelligence activities has never really been in danger of being replaced by technical collection. An effective agent can be anyone fiom the janitor who empties the trash, a highly placed official in the corporation (both may have access to similar information) to the bartender at the favorite watering hole. People can be u d z e d wittingly where they are knowingly employed by an intelligence service or they can unwittingly pass on what they think is innocuous information to another who works for the intelligence service. The most effective targeting is often a combination of both technical and human methodologies in support of each other. The National Securitq Threat list 0 A list ofactivities which, yconducted by a foreign power, would trigqer a responsefrom the FBI 0 A list offoreign powers whose activities have been deemed so hostile to U S . national interests that they are actively monitored by the FBI 1. Clandestineforeign intelligence activity in the United States 2. Foreign intelligence activities involving the targeting o f U S. intelligence and foreign affhirs information and U S. Government ojicials 3. Foreign intelligence activity directed at the collection of information relating to defense establishments and related activities o f national preparedness 4. Foreign intelligence activities involved in the prolijieration ofspecial weapons o f mass destruction to include chemical, biological, nuclear weapons, and delivery systems o f those weapons o f mass destruction 5. Foreign intelligence activities directed at U S . critical technologies as identfied by the National Critical Technologies Panel 6. Foreign intelligence activities directed at the collection .f U S . industrial proprietary economic infrmation and terhtzoba, the loss ofwhirh would undermine the U S . strategic industrial position 7 . Foreign intelligence activities involving perception management and active measures activities zyxwv zyxwv zyxwv zyxwv Ths melancholy litany of what an intelligence service can do to disrupt a corporation’sbusiness operation is meant to make you aware. The best way to prevent an intelhgence service fiom operating successfully against your corporation is to recopze that everyone is vulnerable RctivitiesHostile to U.S. National Interests The foundational activity is “clandestineforeignintelligence activity in the United States.” If an intelhgence service is detected running a clandestine operation in the U.S., the FBI w d respond. The specific purpose of the clandestine zyxwvut zyxwvu zyxwv zyxwvutsr zyxwvuts competitor attempts to use clandestine methods to acquire sensitive information, the FBI would not becamme involved unless there was a violation of federal law. liowever, steps taken to reduce vulnerabdity to a foreign intelligence service attack will similarly reduce vulnerability to domestic competitor problems. Throughout t h s dwussion, reference has been made to the FBI responding should a foreign intelligence service be found conducting any of the above enumerated 0 Materials activities. What is it that the FBI can do? Before address0 Manufacturing ing this question directly, please recall this article’s opening remarks concerning the 1980s being the decade of o Information and communications the spy because of the unprecedented number of cases in0 Biotechnology and l@ sciences vestigated by the FBI and successfklly prosecuted. 0 Aeronautics and surface transportation Whde the number of FBI employees working fo:reign counterintelligence is classified, it is submitted that dur0 Energy and environment ing the Cold War there was a healthy number given the While some of these technologies have military applicaimportance attached to counterintelligence during lthat tion, that was not a criteria for inclusion. time. So, if one uses criminal espionage prosecutions as The third is “Joreign intelligence activities directed at the colthe sole measure of effectiveness, U.S. taxpayers do not lection of U.S. industrial proprietary economic information and seem to be getting their money’s worth. technology, the loss ofwhich would undermine the U S . strategic But criminal prosecutions are not the only resolution industrial position.” Any clandestine activity by a foreign to counterintelhgence investigations. Neither are th.ey power directed at proprietary information which could necessarily the most effective resolution. What then can a hminish the U.S. strategic industrial position would trigU.S. corporation expect from the FBI when it thinks it ger an FBI response. has a problem with a foreign intelligence service? A critical technology does not need to be involved. First, the corporate leadership can expect &scree:tacFor example, an intelligence service’s clandestine collection. The FBI does not publicize the fact that it is contion of proprietary information from the U.S. petroleum ducting an investigation for a number of well-founded industry would result in FBI counterintelligence action. reasons including that, until the situation is better underThe fourth is “@reign intelligence activities involving perstood, it is prudent to keep one’s investigative options ception management and active measures activities. ” The term open. “active measures” comes from a Russian phrase used by There is the possibdity of criminal sanctions through a the KGB who practiced it with varying degrees of success number of federal statutes (Interstate Transportation of during the Cold War. Active measures are deceptive clanStolen Property and Fraud by Wire, for example) and 33 destine operations initiated and carried out by foreign states have trade secrets laws that can be used if prosecupowers and their agents that are designed to alter the pertion is desired. Also, the executive branch could decide to ception of the public or U.S. officials of U.S. policies. impose trade sanctions against the offending nation. SimiThese are activities beyond lobbying and diplomats advolarly, there can be dplomatic resolutions such as declaring cating their nation’s position on a U.S. policy matter. a foreign lplomat involved in these proscribed activities For example, a journahst clandestinely directed and persona non grata and expekng him kern the United controlled by an intehgence service to advocate a position States. is an active measures operation. Given the regulatory naThe most desirable resolution could be an opera.tiona1 ture of society, U.S. government policy, whether executive resolution. With this resolution, the FBI takes control of or legislative, can have a grave effect on corporate health. the foreign intelhgence service’s operation without its knowledge. This opens the way to identitjring the :foreign What Can the FBI003 service’s personnel, its methods of operation, and what It is important to note that FBI jurisdiction is limited to else it is targeting. These are activities the FBI is highly countering intelligence activities of foreign powers. If a skilled at doing. activity does not need to be initially identified nor does there have to be classified information involved. The second is “joreign intelligence activities directed at U.S. critical technologies, as identified by the National Critical Technologies Panel.” In March 1991, this panel identified 22 technologies critical to U.S. national economic prosperity and to U.S. national security. These technologies are found within six general areas: zyxwvuts zyxwv zyxwvut zy zyxw zyxw zyx zyxwvut zy C tounterinlellipencein Me 1990's Preventative Measures '3 tional and nontraditional adversaries of the U.S. The FBI is actively taking measures to counter t h s threat. An informed work force is the best way for U.S. corporations to minimize their risk. Of course, the best way to avoid problems is to employ preventative measures. Makmg employees at risk aware of their vulnerabihy and what to be sensitive to, can go a long way to stopping problems before they start. Rbout the Ruthor Through its DECA program (Development of EspiSupervisory Special Agent (SSA)Jonathan l? Binnie has onage Counterintelligence and Counter-terrorism worked foreign counterintelligence mattersfor the FBI for 11 Awareness), the FBI has provided security briefings and years and is currently assigned to the Miami Field Ojice. He training to thousands of defense contractor employees. Now DECA briefings are being provided to employees of was educated at North Park College ( B A History) and critical technology corporations. There are also a number Northern Illinois University OD). He is a member of the Illinois Bar Association and has previously published a law of very practicaI brochures and video tapes which are available to supplement the DECA briefings. A telephone review article on intellectual property. Prior to his FBI career call to the DECA coordinator a t any FBI field o6ce is all he was the Production Managerfor a Chicago based publishing house. S S A Binnie can be reached at PO. Box it takes to arrange a briefing. 592418, Miami, F L 33159; 721: 305-787-6517; Fax: The foreign intelligence threat to US. corporations is 305-787-6538. a very real one. The threat can come from both tradi- zyxwvu zyxw