Origins of industrial espionage

The work of Father Francois Xavier d'Entrecolles to reveal to Europe the manufacturing methods of Chinese porcelain in 1712, is sometimes considered an early case of industrial espionage

Economic and industrial espionage has a long history. The work of Father Francois Xavier d'Entrecolles in Jingdezhen, China to reveal to Europe the manufacturing methods of Chinese porcelain in 1712 is sometimes considered an early case of industrial espionage. Historical accounts have been written of industrial espionage between Britain and France. Attributed to Britain's emergence as an 'industrial creditor,' the second decade of the 18th century saw the emergence of a large-scale state-sponsored effort to surreptitiously take British industrial technology to France. Witnesses confirmed both the inveigling of tradespersons abroad and the placing of apprentices in England. Protests by those such as iron workers in Sheffield and steel workers in Newcastle about skilled industrial workers being enticed abroad, led to the first English legislation aimed at preventing this method of economic and industrial espionage.

During the Cold War

With Western restrictions on the export of items thought likely to increase military capabilities to the USSR, Soviet industrial espionage was a well known adjunct to other spying activities up until the 1980s. Operation Brunnhilde" Some of these activities were directed via the East German Stasi (Ministry for State Security). One such operation, known as "Operation Brunnhilde" operated from the mid-1950s until early 1966 and made use of spies from many Communist Bloc countries. Through at least 20 forays, many western European industrial secrets were compromised. One member of the "Brunnhilde" ring was a Swiss chemical engineer called Dr Jean Paul Soupert, also known as 'Air Bubble,' living in Brussels. He was described by Peter Wright inSpycatcher as having been 'doubled' by the Belgian Sret de l'tat. He revealed information about industrial espionage conducted by the ring, including the fact that Russian agents had obtained details of Concorde's advanced electronics system. He testified against two Kodak employees, living and working in Britain, during a trial in which they were accused of passing information on industrial processes to him, though they were eventually acquitted.

Soviet spetsinformatsiya system

A secret report from the Military Industrial Commission (VPK), from 197980, detailed how spetsinformatsiya could be utilised in twelve different military industrial areas. Writing in the Bulletin of the Atomic Scientists, Philip Hanson detailed a spetsinformatsiya system in which 12 industrial branch ministries formulated requests for information to aid technological development in their military programs. Acquisition plans were described as operating on 2 year and 5 year cycles with about 3000 tasks under way each year.

Efforts were aimed at civilian as well as military industrial targets, such as in the petrochemical industries. Some information was garnered so as to compare levels of competitor to Soviet technological advancement. Much unclassified information was also gathered, blurring the boundary with 'competitive intelligence'. The Soviet military was recognized as making much better use of acquired information, compared to civilian industry, where their record in replicating and developing industrial technology was poor.

The legacy of Cold War espionage

Following the demise of the Soviet Union and the end of the 'Cold War,' commentators, including the US Congressional Intelligence Committee, noted a redirection amongst the espionage community from military to industrial targets, with Western and former communist countries making use of 'underemployed' spies and expanding programs directed at stealing such information. The legacy of 'Cold War' spying included not just the redirection of personnel but the use of spying apparatus such as computer databases, scanners for eavesdropping, spy satellites, bugs and wires.

Notable cases
France and the United States
In 1991 Air France was accused of helping its spy agency garner corporate secrets through installing microphones in its seats. Between 1987 and 1989, IBM and Texas Instruments were also thought to have been targeted by French spies with the intention of helping France's Groupe Bull. In 1993, US aerospace companies were also thought to have been targeted by French interests. During the early 1990s, France was described as one of the most aggressive pursuers of espionage to garner foreign industrial and technological secrets.[ France accused the U.S. of attempting to sabotage its high tech industrial base. The government of France has been alleged to have conducted ongoing industrial espionage against American aerodynamics and satellite companies.

Volkswagen
In 1993, car manufacturer Opel, the German division of General Motors, accused Volkswagen of industrial espionage after Opel's chief of production, Jose Ignacio Lopez, and seven other executives moved to Volkswagen. Volkswagen subsequently threatened to sue for defamation, resulting in a fouryear legal battle. The case, which was finally settled in 1997, resulted in one of the largest settlements in the history of industrial espionage, with Volkswagen agreeing to pay General Motors $100 million and to buy at least $1 billion of car parts from the company over 7 years, although it did not explicitly apologize for Lopez's behavior.

Hilton and Starwood

In April 2009 the US based hospitality company Starwood accused its rival Hilton of a "massive" case of industrial espionage. After being purchased by private equity group Blackstone, Hilton employed 10 managers and executives from Starwood. Under intense pressure to improve profits Starwood accused Hilton of stealing corporate information relating to its luxury brand concepts, used in setting up its own Denizen hotels. Specifically, former head of its luxury brands group, Ron Klein, was accused of downloading "truckloads of documents" from a laptop to his personal email account.