AUGUST IN AUGUST

by K.J. Howe

August Thomas, new Rogue Woman

It's August, and the Rogues are very excited and proud to welcome a new member to the crew--August Thomas!  August has taken the publishing world by storm with her debut thriller, THE LIARS' CANDLE, the story of summer intern Penny Kessler at the U.S. Embassy in Ankara, Turkey who survives a bomb that kills and injures hundreds.  Penny is under suspicion and the CIA, State Department, and Turkish government have their own agendas, determined to figure out what Penny may or may not know.  On the run, clock ticking, Penny is a fresh and dynamic character in modern-day international intrigue.  We'll be showcasing August's first post this Friday, so please stay tuned.  We're so happy and proud to call her a Rogue.  And in the vein of intrigue, my post today zeroes in on the fascinating world of industrial espionage.

FOR THE LOVE OF MONEY

When we see news reports about spying and espionage, we conjure up images of countries spying on each other for national security reasons, or perhaps the state using intelligence techniques against criminals, terrorists or other non-state actors.  But another world of spying exists in the shadowy business world, with the express purpose of making money.  While industrial espionage rarely involves high speed car chases, radiation poisoning or dead drops, it can be equally fascinating and mesmerizing.

This form of espionage stretches back as far as recorded history.  One of the most infamous cases dates back to the 6^th century. China had closely guarded the method of manufacturing silk from silk worms and had a monopoly of producing the valuable cloth.  In fact, they engineered a propaganda campaign to make it appear to the Europeans that silk came from India, not China to keep their secret safe.   But two monks travelling from Byzantium to China took an interest in silk manufacturing and learned how and where it was created.  They reported their findings to Justianian I, the Byzantine emperor.  In exchange for generous promises, they agreed to smuggle silkworms to him.  Adult silkworms were rather frail so they smuggled out young silkworms and silkworm eggs inside the bamboo staves they used to assist their walking.  Shortly after their return, silk factories popped up in five Byzantine cities, shattering the Chinese monopoly, allowing the Byzantines to dominate the European silk trade for 650 years.

The Chinese were also on the losing end when the British East India Company hired Scottish botanist, plant collector, and adventurer Robert Forest to venture into China on their behalf.   Disguising himself as a Chinese merchant, Forest travelled all over China for three years purchasing tea plants, smuggling them out of the country through a number of ingenious methods.  He even succeeded in smuggling out a team of Chinese tea workers under the watchful eye of the authorities.  This operation changed the course of history and allowed the British East India Company to produce tea in India to great profit.  Many experts propose this was the most significant act of corporate espionage in history.

It should come as no surprise that industrial espionage and spying has continued in modern day with high-profile and high-value cases making the news.  In 2001, Proctor and Gamble hired a team of “operatives” to go dumpster diving in the garbage bins outside their rival’s headquarters at Unilever.  After six months, this resulted in at least eighty confidential documents making their way to P&G.  These corporate spies were caught and had to pay ten million dollars in restitution.  Similarly, Oracle hired agents to spy on Microsoft. These agents bribed janitors to secure Microsoft documents, even those from the trash.

But an operation perpetrated by Hilton against Starwood in 2009 really set the bar high—or low.  Hilton paid two Starwood Executives to steal approximately 100,000 documents related to Starwood’s plans to develop and market niche “lifestyle” hotels.  They literally drove a truckload of sensitive documents from their employers and turned them over to Hilton.  A lawsuit erupted after the theft was discovered, and the Hilton had to cough up a settlement that included a cash payment of $75 million, hotel management contracts worth another $75 million, and they were ordered by a federal court judge to avoid developing any “lifestyle” hotels for a period of two years.  The reason you can’t book a room in a Hilton “Denizen” property today is because they pulled the plug on the project after this debacle.

Moneywise, it would be challenging to compete with the case involving Volkswagen and General Motors.  The President of the GM subsidiary Opel left that company and moved to competitor VW, bringing seven key executives with him.  GM alleged that they had absconded with many confidential documents and that VW had used their propriety information and trade secrets to enhance their own business and manufacturing operations.  A nasty four-year court fight ensued which ended with VW paying GM $100 million in cash and agreeing to buy one billion dollars worth of GM parts over a seven-year period.

These examples are just the tip of the iceberg. For every act of espionage that has been discovered and publicized, how many go undetected?  In today’s world, corporate cyber-espionage is the new frontier, but now hackers are more likely to be going through the trash folder on your computer than your actual trash.  When discussing spying and espionage, it’s important to remember that it’s not just the purview of government, law enforcement, terrorists, or evil organizations like Spectre involved in this world, this illicit behavior is also conducted by some of the world’s largest companies, many of which are household names.