Industrial Espionage - Keeping an ear to the ground

Have you noticed a competitor gaining sudden ground at your expense, or achieving targets your company has been planning confidentially for months? Are you suspicious about the behaviour of one of your colleagues who indulges in low-voiced conversation that seem to finish quickly when you move into earshot?

Do you work for a company with disaffected employees high up enough to do some damage if they told a competitor what they knew? Have you also been wondering about the departure of a colleague whose future with your company looked so bright, but whose career there was so short? If so, you could have a “sleeper” in your midst and your company could be the victim of a valuable trade-off of information, valuable not only to yourselves, but to a competitor.

Stealing information is on the increase and so is the use of “sleepers” – the practice of installing undercover informants as employees. As the term implies, these usually lie dormant for a while and then, once they have worked their way into a position of trust and into the requisite information chain, pass information to outside parties.

Increasingly, sleepers in a company are planted by a competitor and they can do real and lasting damage. Other tactics to gain information or steal corporate secrets are also used, most of them already well-proven in the ever-present world of commercial espionage. All this explains the increasing popularity of electronic surveillance, more usually known as “bugging”, which is not only becoming one of the fastest-growing business practices, but also gaining a new respectability.

Electronic surveillance has become akin to the use of video cameras in public spaces or sensitive areas: no one will admit to wanting to use such devices, but they are already proving their worth for defensive and protective purposes, especially where they are installed on an organisation’s own premises.

“Stealing secrets has become big business and so has electronic surveillance,” says David Benn, founder and managing director of Lorraine Electronics, the UK’s oldest established and largest manufacturer of electronic surveillance equipment. “Electronic surveillance has expanded in line with people’s dishonesty and while we all know that it can be used for dishonest purposes, the vast majority of companies we supply use it for better security and protection, especially against the loss of valuable and potentially costly corporate secrets.”

Benn, who founded Lorraine Electronics 21 years ago having himself been the victim of stolen secrets as a leading business consultant, numbers virtually every one of the UK’s public companies on his client list. Too discreet to name any names, he nonetheless admits to supplying the police and the Ministry of Defence (MoD) and to working closely with them where necessary.

The soaring incidence of fraud and dishonesty and the sheer weight of respectable big-name companies forced into using surveillance to stop the drain of competitive information, have together removed much of its seedy and disreputable connotations. “Licensed” corporate surveillance, carried out on a company’s own premises and used strictly as a deterrent or preventive measure, is light years away from the wanton “celebrity bugging”, the results of which are so eagerly carried by the tabloid press.

Lorraine Electronics (some of whose R&D staff and service engineers have been recruited from government departments) will supply both audio and video surveillance equipment, but specialises in audio surveillance of which it is the largest such manufacturer in the world. The company also provides counter surveillance products – which warn customers whether they themselves are under illicit surveillance – and sophisticated voice and data encryption systems.

Audio, rather than video surveillance equipment is particularly suitable for detecting leakage of information and it is information which is becoming one of the most commonly stolen commodities.

“If you’re going to steal from your company you can still take money or something equally tangible, but it’s becoming more difficult, because of the growing number of corporate security staff and other safeguards.

Nowadays, people tend to specialise in stealing information,” says Benn.

“Information can be worth far more than physical cash or even stocks or shares because it can be so fundamental to a company’s performance and future prosperity.

“In stealing and leaking information, both those in the surveillance industry and the potential thieves are greatly aided by gaps and anomalies in UK law relating to the theft of information and intellectual property rights. These gaps are unique in Europe and virtually unknown in the US.

Our laws relating to intellectual property rights are still being formulated and we still have no law of privacy. It’s a thieves’ charter.”

Statistics from the recent Ernst and Young survey on international fraud (Fraud – The Undamaged Risk), make grisly reading. Companies everywhere are losing billions of pounds every year from fraud, but it is fraud committed by their own staff that the report puts under the spotlight.

Major companies from eleven countries took part in the survey. Alarmingly, more than half discovered the frauds by chance; still more alarmingly, an astonishing three-quarters had been committed by company employees.

Benn believes that a substantial proportion of the fraud has arisen from the theft or manipulation of information where, if staff knew they could be listened to or confronted by evidence gathered by electronic recording devices, it would have acted as a significant deterrent.

“Corporate information is an eminently marketable commodity and is relatively easy to steal and pass to competitors. Unlike money or goods, you may not be aware that it has been stolen until such time as it has been duplicated or used elsewhere and by then, of course, it’s often too late to prevent the damage.”

Given that theft of information is so widespread, how does it get stolen and who steals it? The type of person ranges widely, but the motives do not. Information is traded for money, because of grudges, feelings of ill-usage, or to benefit careers or competitors – quite often to benefit a perpetrator’s career within a competitor.

The perpetrators in these instances tend to be those needing money badly, maybe through domestic “overstretching” or extravagance; employees who feel slighted or ill-used, perhaps through being passed over for promotion or through reaching a career cul-de-sac; those who trade information to a competitor in return for a good job offer, or those planted within a company for a space of time by a competitor – the ubiquitous sleeper.

The recent economic recession has undoubtedly been another cause of the growth in information stealing and there are also those who, according to Benn, actively pursue a career in corporate espionage, serving paymaster after paymaster.

If a business is suffering as a result of a leakage of sensitive information, then clearly, to minimise the losses, it may not only be justified in eavesdropping, but may find it the only course open.

Most information leakages can be detected by audio surveillance equipment of one kind or another. These range from devices which can bug whole rooms, to conversations taking place around a desk or over a telephone.

It makes sense to monitor conversations since most of those stealing information tend to give it away verbally, rather than going to the risk of extracting papers or files. The majority of the audio products run off batteries (for mobility and to avoid give-away trailing wires) and can therefore be left wherever a suspicious conversation is likely to take place.

In addition to the more common bugging devices mounted in a brief case or telephone, another method is through a wall mounted transmitter, inserted into an ordinary plug socket; there is also a wafer-thin listening device shaped like a credit card and of much the same dimensions, which can be slid under a door, carried in one’s pocket, or left in the back of a file or book. Another ingenious device comes in the shape of a calculator, which not only listens but also calculates.

On top of this, and through a piece of equipment called an ultimate infinity receiver, illicit conversations can be listened to from anywhere in the world, simply by accessing the “bugging” device via the public telephone system.

“The average person still tends to shy away from the idea of electronic eavesdropping, but there’s no doubt that it serves both as an active means of detection and also as a deterrent,” says Benn. “We have to remember that corporate fraud and conspiracy are said to cost over # 200m a year in London alone.

“The great majority of our clients are common or garden businesses. Many of them are household names, but where they aren’t businesses they tend to be either government departments or law enforcement agencies. We have a close relationship with the police and the MoD. Indeed, the growing standing of corporate surveillance clients generally has made surveillance itself more respectable and helped to impose much higher standards on firms in our line of business.”