The New York Times is out with a story today, entitled, “U.S. Companies Are at Risk of Spying by Their Own Workers.” It is a fascinating and downright chilling story. Though there will no doubt be many who believe the story is over-dramatic, I think it actually grossly understates the problem.
The article discusses various instances where Chinese employees of United States companies engaged in espionage for the Chinese government. According to the article, espionage against U.S. companies is on the increase and not just by China:
As China and other countries broaden their efforts to obtain Western technology, American industries beyond the traditional military and high-tech targets risk having valuable secrets exposed by their own employees, court records show.
Rather than relying on dead drops and secret directions from government handlers, the new trade in business secrets seems much more opportunistic, federal prosecutors say, and occurs in loose, underground markets throughout the world.
Prosecutors say it is difficult to prove links to a foreign government, but intelligence officials say China, Russia and Iran are among the countries pushing hardest to obtain the latest technologies.
“In the new global economy, our businesses are increasingly targets for theft,” said Lanny A. Breuer, the assistant attorney general in charge of the Justice Department’s criminal division. “In order to stay a leader in innovation, we’ve got to protect these trade secrets.”
Other than once consulting for attorneys defending Chinese-Americans charged with selling company secrets, I am NOT directly or even indirectly (other than through the media) of any incidents of government espionage.
But, I am aware of at least a half dozen cases where clients have caught employees engaging in information peddling. I will briefly describe three of them:
1. An employee of a very successful international food company was passing all sorts of information from my client to a company in Vietnam. The employee doing this is a Caucasian born and raised in the United States. My client became suspicious and then examined his computer.
2. An employee of another international food company was caught sending trade secrets to a company in Russia. This was back when faxes were the thing and this person left a telling fax in a copy machine. The company for whom he worked was primarily Russian. This was back when it was relatively easy to secure access to someone’s bank account information and we did so and saw payments we believed were coming from the competitor. Again, the perpetrator was someone (not of Russian descent) born and raised in the United States.
3. A computer company (I am being intentionally vague here) learned of an employee who was giving out trade secret information to a competitor. We then realized that this employee had downloaded key information onto his laptop. We contacted the local police to try to get them to secure the return of the company laptop containing the trade secret information. The police (wrongly) insisted it was a civil problem. Again, American born and raised.
4. I fairly recently helped to oversee a case for a Chinese company whose Chinese-American employee had used the company’s buyer list to start his own business.
5. We have had two cases where our clients entered into joint venture deals with Chinese companies that were very different from the deals our clients (who were not represented by my firm at the time) thought they were entering. In both instances, they blamed (and fired) their Chinese employee for having lied to them about the nature of the deal and in both instances it did appear that the employee was working on behalf of the Chinese company in the joint venture while on the payroll of the American company.
I could go on and on.
The point of this post is NOT to say that any Chinese employee could be a spy and it is NOT to say that the kinds of thefts described above rise to the level of espionage, because they do not. No, the point of this post is to highlight that the risk of your employees (no matter what their nationality or ethnicity) selling your company secrets is always there, no matter how big or small your business and no matter what your industry.
What do you think?
