All entries for December 2016

The Real-Life SPECTRE | The $500 Billion Economic Espionage Problem

Ask most Americans what they know about the word “espionage” and they might answer something about the CIA battling the KGB during the Cold War, maybe a tuxedo-clad James Bond drinking martinis, or big brother spy satellites reading license plates from space. All kidding aside, most Americans are unaware of the serious problem which the FBI labels as the “second greatest threat (behind terrorism) to the US homeland.” So what is this menacing threat? I am, of course, speaking of economic espionage from hostile foreign entities - essentially the real-life SPECTRE!

Just like the fictional SPECTRE from the classic (and most recent) James Bond films, hostile foreign intelligence services (FIS), hacktivists, business competitors, and cyber-criminals have gotten into the act of stealing billions of dollars-worth of American intellectual property and business intelligence (IP/BI) for their own staggering financial gain.

While most Americans probably recognize that governments spy on each other for national security reasons, it may surprise them to know that the theft of military secrets has been supplemented by governments stealing secrets which pertain to corporate investment plans, competitive bidding strategies, research and development formulas, and other business related areas. If you were to take a poll of all the Fortune 500 CEOs in the United States, and asked what keeps them up at night, you might be surprised to discover that economic espionage ranks very high among their most worrisome concerns. In fact, one out of every four cases that the FBI is currently investigating involves economic espionage!

According to the Economic Espionage Act of 1996, economic espionage is defined as the theft or misappropriation of a trade secret with the intent of knowledge that the offense will benefit any foreign government, foreign instrumentality, or foreign agent. As such, it should come as no surprise that countries such as China, Russia, France, Iran, Cuba, Israel, Japan, and India are commonly alleged to have involvement with the theft of valuable U.S. business secrets. Most of the time these countries deny any involvement with economic espionage activities, however on some occasions they are caught “red-handed” or simply boast about their successes. One of the most notable cases (or myths – depending upon who you ask), involved the admission from retired director of the French intelligence service (Direction Generale de la Secuirite Exterierure – DGSE) Pierre Marion. Marion, on more than one occasion confessed publicly to installing audio devices in the business class cabin of Air France flights to listen in on the conversations of American businesspersons.

To justify the action, Marion was quoted as saying:

“This espionage activity is an essential way for France to keep abreast of international commerce and technology. Of course, it was directed against the United States as well as others. You must remember that while we are allies in defense matters, we are also economic competitors in the world.”

In 2013, I released my first book entitled, Among Enemies: Counter-Espionage for the Business Traveler. While performing research on global espionage cases, my conclusion was that $300 billion dollars-worth of American intellectual property and business intelligence (IP/BI) was stolen annually by hostile foreign intelligence services (FIS), economic competitors, and “private collectors” (i.e., cyber thieves/hackers selling stolen information to the highest bidders). Later that same year, the US Congress released their own findings from the IP Commission on the Theft of American Intellectual Property, which was led by former Director of National Intelligence, Denis Blair, and former Ambassador to China, Jon Hunstman. The study concluded similar findings that the US was losing $300 billion annually. At the writing of this article (December 2016), the FBI reports that the number has now increased 40% to $500 billion. In fact, Forbes Magazine – citing Juniper Research – claimed that increased levels of hacktivism, coupled with bigger targets of opportunity, will push that figure up to $2.1 trillion by 2019!

So Where Does it End? Protecting Against Economic Espionage

Self-preservation in the competitive corporate arena has always been about survival of the fittest. Now, however, it is not just about having the best product, the smartest employees, or most financial resources. Economic espionage has become such an equalizer that smaller international firms can skip the expensive R&D phase and simply cheat their way into the market. Although the FBI and other US Government agencies, such as the Office of National Counterintelligence Executive (OCNIX), are doing their best to educate the business community about the threats of espionage, the onus will still fall on the individual companies in the future.

Only through internal employee training programs, which focus on the importance of adhering to enhanced counter-espionage policies and procedures, will valuable IP/BI stay out of foreign hands. Sorry James Bond, but it looks like you will need help from the private sector if you’re going to stop these SPECTRE-like organizations from committing economic espionage in the coming years.

Luke Bencie is the Managing Director for Security Management International, LLC a global intelligence advisory firm located in the Washington DC area. He is also the author of Among Enemies: Counter-Espionage for Business Travelersand Global Security Consulting: How to Build a Thriving International Practice. He can be reached at

Corporate Espionage: Modern Updates to an Ancient Tactic

The contemporary business tie has a long and unexpected history behind it tracing its way back through Victorian fashion and Fifteenth Century Parisian fancies it seems as if the necktie originated originated as a cravat worn by Croatian Warriors so modern business men wear your armor boldly. Preventing corporate espionage is as important as your professionalism!

Corporate Espionage: Modern Updates to an Ancient Tactic

"One good spy is worth ten thousand soldiers" - Sun Tzu The Art of War

Spying has been called the world's second oldest profession (you can guess the first...) Since the dawn of civilized man only time itself has proven to be more valuable commodity than information. In the cut-throat world of business Warfare this gathering of information because of a competitor comes in a variety of forms and take several names. On the "ethical" end of the spectrum, business professionals May refer to this collection of effort as:

These terms represent how a company legally acquires dirt on their rivals. However, what if a company wanted to know more about their competition than just a few clicks on Google can tell them? And in these particular instances, the information becomes exponentially more valuable - with sometimes millions, if not billions of dollars at stake. Think Pepsi going after Coke's secret recipe. Or Mrs. Fields hunting for the Keebler Elf Cottage. When we transition from dealing with balance sheets that contain a few zeros to ones with 7 or 8, the knowledge desired ceases to be called information and becomes known as intelligence worthy of corporate espionage.

According to the US intelligence Community (IC), the folks who played James Bond for a living, intelligence is defined as:

A body of evidence and the conclusions drawn therefrom that is acquired and furnished in response to the known or perceived requirements of consumers. It is often derived from information that is concealed or not intended to be available for use by the acquirer.

Differentiating Between Information and Business Intelligence

Remember, the major difference between information and intelligence is that intelligence is something you do not want your competition to know. It's that not yet patented schematic that you have stowed under your mattress or that business plan you made your partner swallow.

Now, acquiring got intelligence need not be illegal or unethical, but it does require a degree of vigilance and perception above and beyond the gathering of basic information. However, to gain access to this intelligence, many individuals, companies and governments do in fact engage in the more dubious legal side of the scale, practicing what is known as: economic espionage or industrial espionage. Corporate espionage although slightly variable in definition, it can be equally damaging to the person or organization targeted for attack.

Every level of your business can be suspectible to corporate espionage. By assessing and analyzing your business, creating policies that prevent disclosures, and train employees to be aware of risk you can minimize your exposure. Read more from our Art of Business White Paper.

SMI offers additional training courses for executives and business travelers. Click to find out more about our Traveler Safety Courses including: Kidnapping Prevention and Awareness CourseKidnapping Prevention and Awareness Course and Hostile Travel CourseHostile Travel Course.

In addition, SMI provides Security ConsultingSecurity ConsultingSecurity ManagementSecurity Management, and Intellectual Property ProtectionIntellectual Property Protection for executives, business owners, and Fortune 500 companies.

Hotel Espionage Revealed: Museum on Corporate Espionage

corporate espionage

If you think about it, business travelers are very predictable. International, C-suite executives are even more predictable. Even the most populous cities in the world have limited hotels that executives would consider appropriate accommodations. The average business traveler might think that foreign intelligence or other agents wouldn't bother to track them. However, the task can be as simple as monitoring a few hotels.

One International Business Hotel: Major Business Risk for Corporate Espionage

In Tallin, Estonia that hotel was the Hotel Viru. The Hotel Viru was the only accomodations in town appropriate for foreign visitors. Thus in 1972 until until the collapse of the Soviet Union the hotel was bugged and monitored by the KGB. Today, the hotel has converted the top floor, former command station, into a museum. It is a relic to the real dangers facing business travelers today.

Lessons for International Business Travelers

If the technology existed in 1972 to bug an entire hotel, today the risks are even greater. The founder of SMI, Luke Bencie has written several white papers and a book on how to protect yourself. An essential book for every business traveler, Among Enemies: Counter Espionage for the Business TravelerAmong Enemies: Counter Espionage for the Business Traveler.

Key Ways to Prevent Corporate Espionage

Assume private phone or hotel conversations are not private. Do not bring valuable information on electronics. Do not use the hotel safe or leave electronics unattended. Find out more detailed tips from his book or one of our training courses!

SMI offers additional training courses for executives and business travelers. Click to find out more about our Traveler Safety Courses including: Kidnapping Prevention and Awareness CourseKidnapping Prevention and Awareness Course and Hostile Travel CourseHostile Travel Course.

In addition, SMI provides Security ConsultingSecurity ConsultingSecurity ManagementSecurity Management, and Intellectual Property ProtectionIntellectual Property Protection for executives, business owners, and Fortune 500 companies.

Top Security Tips on International Hotel Rooms: The Enemy’s Gateway to Economic and Industrial Espionage

For most international business travelers, overseas hotel accommodations can conjure up an array of images. Depending on the region of the world they travel, frequent fliers know that lodging is never... More »



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