The Secret Snatchers
November, 1961
Basically, There Are two ways to make money in business. One is to get a good idea and exploit it. The other is to steal a good idea and exploit it. And since the demand for good ideas always exceeds the supply, idea stealing is one of the most important, if least advertised, activities in the world of business. Swaddled in secrecy, shrouded in hypocrisy, idea snatching today is as prevalent as the padded swindle sheet. The nation's biggest corporations practice it cheerfully. Professional spies do a thriving business in the executive suite. And thousands of Americans who would shudder at swiping a nickel newspaper from an unguarded kiosk are busily raping the files of their bosses for private gain.
Enterprising businessmen have stolen fashion designs from Christian Dior, geological maps from Gulf Oil, and details of chemical processes from Monsanto. They have stolen price lists from steel companies, bid information from liquor companies, and blueprints from machine builders. In Detroit spies perennially peddle filched photos of advanced-model autos. And at Idlewild Airport last March, the president of a Midwestern bubble-gum company was arrested for allegedly bribing the employee of another bubble-gum company to deliver to him the plans for what one newspaper described, tongue stickily in cheek, as "a revolutionary new machine for wrapping bubble gum with pictures of sports stars."
The most authoritative study of business espionage yet made was issued in 1959 by a team of Harvard Business School graduate students. More than a quarter of the 1500 company executives surveyed replied that "spying or other types of undercover information collection had recently been discovered in their industry." Since industrial espionage -- or I.E., as it is called by its professional practitioners -- is, by definition, sub rosa, its extent may have been understated, the study noted. Howard Winter, manager of the William J. Burns International Detective Agency, puts the case bluntly, if euphemistically: "I don't see how companies can exist in this highly competitive era without some intelligence work."
Today's bumper-to-bumper traffic in other people's ideas and information is partly a consequence of the recent revolution in research and development. Industry today spends $9,500,000,000 a year on R & D, and a single new product can sometimes launch even a small company into the big time almost overnight -- unless a competitor gets it first. Never before has business placed so large a premium on brains -- and brain picking. At the same time, the more competitive industry becomes, the more valuable is strategic intelligence in the internal politics of the big corporation. The hungry-eyed executive panting up the hierarchical ladder can, with the help of a bit of inside poop, ram a rival out of his path -- and frequently does. For both companies and individuals, then, nothing is quite so useful in the passionate pursuit of profit as a working knowledge of an adversary's plans or processes.
All companies engage in some kind of data collection, whether it is simply reading about the competition in the trade press, sending men to industry meetings to scoop up the latest scuttlebutt, or interrogating suppliers and customers about the opposition. But not all information is so readily available; frequently one must snoop to conquer. Thus, enterprising entrepreneurs have bribed janitors and charwomen to save the wastepaper in their competitors' offices. With typists and secretaries casually pitching spoiled copies of letters, contracts and other documents into the round file, the wastebasket often turns out to be as full of data as an executive's head.
Sometimes more high-flown measures are used. When a chemical firm opened a new phthalic anhydride plant in Chicago recently, the head of a competing firm asked if he could be given a tour of the installation. Politely rebuffed, he turned up an hour later hovering over the new plant in a helicopter, looking, it might be said, for phthalic symbols.
Other companies are less creatively competitive. Through a customer, the Seismograph Service Corporation of Tulsa learned that a man named Charles Hastings had invented a system, which he dubbed "Raydist," for determining the precise location of seismographic mapping ships. The company, on the hunch that Hastings had been too poor or too negligent to have nailed down a patent, collected as much information as it could about the system, and rushed to apply for a patent itself. What followed has been described in a remarkably vivid court opinion: "Seismograph invited Hastings to its home office, further to pick his brains and milk him of the information on Raydist he had been so long in acquiring. During the time Seismograph was deluding Hastings with the offer of a joint venture, its own technicians ... were perfecting their own version of the Raydist system based on the information Hastings had given them." When Seismograph's brain pickers were finished, the company waltzed into court to sue Hastings for infringing on its patent on the system, thus setting off a tremor in the presiding judge. Fuming, he ruled that any patent "obtained through fraud" was worthless.
But such crude skull pumping is generally unnecessary. The Compleat Idea Stealer has a whole catalog of more polished procedures at his command these days -- such as the often-used Fool's Job Gambit. In this ploy, a well-paying, but purely mythical, job is offered to a competitor's employee who has some desired information. When he expresses interest, as most men will do if the offer is juicy enough, he is asked to submit a memo about his present job responsibilities -- the procedures and equipment he supervises, etc. The memo, it is explained, is merely to establish that he has sufficient experience for the job. To impress the prospective employer, the gull drafts a memo filled with details. When it is handed in, the job offer suddenly vanishes; and the dazed victim is in no position to tell his own boss what has happened -- if, indeed, he comprehends what has happened, which is unlikely.
Of course, a legitimate job offer, too, may be the key to a lot of locked-up data. Technical and trade conventions swarm with executive recruiters who specialize in pirating skilled personnel. Most of the job trading they encourage involves the swapping of what the hip businessman refers to nowadays as "competitive intelligence" -- for one of the easiest ways to snag a piece of desired data is to hire the man in whose brain it resides.
Pirating a skilled man, says one copper-industry executive, "is the quickest, least expensive and most reliable way to enter an established field." Such piracy has mushroomed in recent years, with everybody from zipper-production foremen to synthetic-sapphire makers merrily switching jobs and allegiances. Sometimes the job switcher takes with him more than just what happens to be in his brain. Consider the case of Hiram J. Kinkade. Hiram J. was sales manager in charge of air-cooled heat exchangers for the Young Radiator Company of Racine, Wisconsin. In 1956 he quit his job. Not long afterward, the Perfex Corporation of Milwaukee announced that it was setting up a new division. It would make and sell air-cooled heat exchangers, and it would be headed by guess whom? Hiram J. Kinkade.
The new products were to be directly competitive with Young's and, despite all this air cooling, Young Radiator became overheated when a photo of one of the Perfex products showed it to be a dead ringer for the counterpart Young model. Young sued Perfex and Kinkade, and quickly confirmed that the similarity was more than coincidental. It was revealed that upon leaving Young, Kinkade had taken with him several hundred sheets of Young design and lab data, price sheets, blueprints and drawings. Under a court consent order, Perfex agreed to return the papers and pay damages to Young. Similar cases, especially in the chemical and electronics industries, have clogged court calendars in recent years.
Such techniques of idea appropriation reveal the lamentable lack of imagination that is so often the hallmark of amateur effort. Sometimes they work, but more often they end in disaster. Chemical Engineering, a trade journal, recently recorded the case of the over-enthusiastic salesman who, determined to get information about a competitor's process, bribed a watchman to let him into the competitor's plant disguised as a plumber's helper. He had hardly got past the entrance when a supervisor came dashing over, rounding up hands to render first aid to a malfunctioning boiler. The salesman spent a full eight-hour shift inside the boiler and never got so much as a glimpse of the process he had come to observe.
To avoid such hit-or-miss methods, American industry has, in the past fifteen years, come to rely heavily on the more refined skills that the professional idea stealer brings to his work. During World War II thousands of men in the Government's police, espionage and counter-intelligence services were trained in the arcane crafts of scientific sleuthing. For these men, the end of the war was an occupational calamity. Many, finding themselves technologically unemployable, slipped back into selling shoes and clerking in supermarkets. Those who were insistent upon putting their war-time skills to use were demoted from their glamorous roles as cloak-and-dagger experts to being skip tracers, credit checkers and private gumheels peering over transoms in search of divorce court evidence.
Such was the postwar condition of the erstwhile espionage agent until American business, in its never-ending march of progress, discovered his talents. The professional has since then joyfully found that swiping secrets from corporations is not only more lucrative, but infinitely less risky than stealing them from enemy governments. In his gratitude, he has introduced to business such delicate arts as surveillance, bugging and wire tapping, and such exotic equipment as "sneak-thief powder" and parabolic mikes.
Take the career of a former naval intelligence officer named John Cye Cheasty. Best remembered as the prime Government witness in one of its perennially unsuccessful prosecutions of Jimmy Hoffa, Cye Cheasty makes his living these days as an investigator for business, operating from a tiny Wall Street office cluttered with the tape-recorded reports of his field agents. Typical of the kind of services Cheasty performs was his work on a recent case in which, Cheasty says, "one outfit was fabricating certain steel products and wanted to keep a check on the production and sales of a competing firm." Cheasty dispatched an agent to apply for a laborer's job in the target company. "We provided him with a routine cover (i.e., a fake résumé) appropriate for a guy looking for laborer's work. He was lucky enough to get hired as a materials man. He supplied the materials to the machine operators and picked up the finished products. Pretty soon he had the run of his department. He never asked any questions. He just listened and watched. We got a daily report from him. Through him, over a three-month period, we got the exact quantity of goods shipped. Sometimes he even phoned us from the plant during his lunch hour."
If this agent had not been hired, Cheasty would have simply sent another, and another, bombarding the personnel office with qualified applicants until one managed to penetrate the target company's defenses by getting on its payroll. This, in the professional spies' jargon, is called "drifting" a man into a plant. Another approach, Cheasty notes, is to find an employee of the competitor's company who may be willing to pass along desired data for a fee. Such a man, once hooked, may turn into a veritable fountain of information, pumping out the inside poop for many years.
Another professional is Ulmont O. Cumming, who calls himself a "patent investigator" and who travels 100,000 (continued on page 118)Secret Snatchers(continued from page 116) miles a year blithely burgling secrets for his clients. Once when Cumming's client wanted a sample of a sewing-machine spindle developed by a Midwestern competitor, Cumming lined up two compliant cops, drove with them to the competitor's factory and, amid a flashing of badges, explained to the night watchman that they had come to investigate strange lights that were blinking on the roof. As the two cops and the company man sprinted upstairs, Cumming poked around on the second floor. By the time they came back down, he had a spindle in his pocket.
Elsewhere Cumming has gained entry by posing as an inquisitive stockholder, an accountant, a teacher and a fireman. Occasionally, his wife helps. She once ruined an expensive dress going down into an Oklahoma zinc mine in the role of a reporter doing an article on a woman's view of mining. But she found out for Cumming's client what he wanted to know about the mine's method of disposing of certain diesel fumes. Cumming modestly murmurs: "There isn't a plant in the U.S. that I can't get into."
Other professional investigators have posed as meter readers, building inspectors and financial analysts to get information. They have followed American executives on trips abroad to check on their contacts. They have shadowed foreign businessmen in this country. Three Pinkertons masqueraded as college boys to get data from a Texas food processor; and a Negro investigator once moved into a shanty in a small Florida town and set up shop as a "voodoo doctor" to con some local workers out of samples of a competitor's special white clay that his client craved.
Professional investigators are not only hired to keep watch on the competition, they are also used to cock a questioning eye at the activities of supposed business allies. One of Cheasty's recent clients was a national corporation which suspected its New York distributor, a building-hardware supply firm, of violating its franchise agreement. Sales of its product in the franchise area had slumped drastically for no apparent reason, while sales of competing products were on the rise. Cheasty rented an apartment down the block from the distributor's supply yard, placed the yard under surveillance, and had the distributor's salesmen tailed by agents in radio-equipped cars. The distributor, it turned out, was not only violating his franchise agreement, but misrepresenting his goods to his customers. He was taking orders for the national brand he represented, then quietly buying up inferior quality goods and passing them off as the real article. The evidence Cheasty provided made it possible for the national company to take action against its distributor.
Harold Lipset, a leading West Coast investigator, tells of the owner of a chain of drug stores who gave one of his managers a part interest in a new store in order to increase his incentive. Not long afterward, Lipset says, the owner "noticed a phenomenal growth in business in the new store." But he also became aware of a sharp drop-off of business elsewhere in the chain. Lipset, called in to investigate, monitored the store's telephone. He found that the manager was secretly diverting business from the old stores to the new one in whose profits he shared, thus demonstrating once again that there is nothing like the incentive system for getting the best out of an employee.
The trained snoop turns up also in the corporate macht-politik. According to Dave Karr, youthful president of the Fairbanks Whitney Corporation and author of a book on proxy fighting, "when a proxy battle is in the offing, management and insurgents find themselves in need of the services of a whole army of retainers expert in digging up facts.... Private detectives are hired to track down the most minute details in the participants' private lives. Wire tappers search for that one hidden error which may hit the stockholder's nerve."
When Louis Wolfson fought to take over Montgomery Ward a few years ago, he complained bitterly that his enemies were "sending detectives around the country to follow me." The president of a $25,000,000 corporation, who forced a foe to resign a disputed directorship, confirms the effectiveness of such gumshoeing: "I had top private investigators find out everything there was to know about the sonofabitch, and I finally got him."
Whether he is engaged in inter- or intracorporate espionage, the scientific snoop relies heavily these days on what the profession likes to call "electronics." The revelations of the 1955 investigation and trial of one John G. (Steve) Broady, for example, were enough to make the nation's drug makers reach for their aspirins. Broady, it seemed, had charged Charles Pfizer & Company, the big pharmaceutical house, $60,000 to tap the telephones of some employees whom the company suspected of leaking information to competitors. While he was at it, Broady discovered that Bristol-Myers was interfering with Pfizer's efforts to land a patent on its drug, Tetracycline, and was, at the same time, selling Tetracycline to Squibb, a third big drug house. So Broady, acting apparently on his own irrepressible initiative, proceeded to tap the telephones of these two companies as well.
At the same time, the cosmetics industry had cause to look to its make-up. Revlon, Incorporated, makers of a multitude of lipsticks, hair dyes, potions and creams, and the sponsor during those years of that bastion of television integrity, The $64,000 Question, was busy keeping its employees honest by tapping their telephones, a procedure which, a company official straight-facedly testified, resulted in "higher morale." Meanwhile, Raymond Spector, head of the rival Hazel Bishop, Incorporated, was growing concerned over the loss of research data on such vital matters as whether lipstick cases should come in pink and white or tortoise-shell and gold. So Spector called in a detective named Charles Gris to examine his telephone lines and see whether they were being tapped. Gris brought with him a professional tapper named Carl Ruh, who proceeded to make the check. Ruh came back to report that Spector's line had, indeed, been tapped, but that the tap had been disconnected. What Ruh neglected to tell Spector was that he himself had connected the tap in the first place at the behest of the ubiquitous Mr. Broady, and that he himself had just disconnected it. The hard-working Mr. Ruh was paid twice for tampering with the same line. Things were so tap-happy at the time of the Broady imbroglio that ex-stripper Ann Corio, whose telephone lines were also honored with Broady's attentions, commented: "I feel like I've been bathing in a glass bathtub."
Broady eventually landed in Sing Sing for his efforts on behalf of freedom of communication, and the national furor his activities aroused led to a crackdown on tapping and tappers in many states. But bugging and the use of tape recorders remain largely unregulated. "Bugs," or tiny hidden mikes, have turned up in the pen sets of New York Telephone Company employees, in the office of a famous dress designer and in California auto showrooms, where they are used by salesmen to eavesdrop on the seemingly private conversations of customers. The late Serge Rubenstein once attached a listening device to a girlfriend's bedsprings, impelling the girl, Pat Wray, to utter her famous plaint: "I guess everyone now knows my bed squeaks." Rubenstein boasted that much of his dazzling financial success could be traced to a few judiciously placed bugs.
Resourceful idea stealers have occasionally managed to combine the business of bugging with the business of sex, by baiting their traps with the subtle scent of the female. The recent German movie Rosemary was based on the life of a Frankfurt prostitute named Rosemarie Nittribitt, who made the discovery that the big businessmen who visited her sometimes, in the intimacy of embrace, (continued on page 156)Secret Snatchers(continued from page 118) felt the need to talk shop. One top industrialist planted a tape recorder in Rosemarie's cupboard to collect the secrets that spilled from his competitors' passionate lips. Pretty soon her apartment had more hidden microphones in it than a Gestapo interrogation cell, and Rosemarie, while performing her basic services, kept up a running stream of questions aimed at filling up the silently spinning tapes. Apparently, the information thus collected was quite useful. In the fall of 1957, an unknown person or persons put Rosemarie permanently out of the espionage business by knotting a nylon around her pretty neck.
In this country matters rarely end on so Gothic a note. One investigator's favorite story is about the Los Angeles structural engineering firm that engaged him to find out how a rival firm was managing to underbid it by a slim margin on job after major job. The investigator did all the things investigators do in such cases: he ran a check on all employees for traces of sudden wealth, marital problems, sex deviation, narcotics addiction and so forth. When nothing turned up to point suspicion at an employee, it occurred to the investigator that the client himself, for some obscure reason, perhaps related to insurance, might be trying to sabotage his own business. On this wild hunch, he bugged the client's home. The eaves dropping revealed that the owner of the firm was discussing all his business with his wife, who was displaying more than a wifely curiosity about his bidding.
Place under surveillance, the wife was soon discovered to be carrying on a torrid romance with, of all people, the head of the rival firm. Before long the investigator had the delicate duty of placing before his client not only still photos and motion pictures of his spouse entering a Sunset Strip motel with the other man, but tapes of their conversations in which she tipped the rival off to her husband's planned bids. "That woman must have had something," the investigator marvels. "Her husband paid his bill. Gave us a handsome bonus. Told us to go away. and went right on living with her. They are still together in the same house. There has been no move toward divorce or even separation."
Sometimes industrial espionage pops up as a more or less temporary phenomenon in an industry where existing business relationships are being upset by some important new technological development. In electronics, for example, the development of the semiconductor triggered a wave of idea stealing in 1958 and 1959, as engineers and scientists, suddenly afflicted with entrepreneurial aspirations, left their jobs with the nation's top electronics companies, carried off technical secrets in their attaché cases, and set up their own small semiconductor companies in direct competition with their former employers. Thus, business espionage in America is, for the most part, a sporadic and unorganized activity.
In certain industries, however, espionage has come to play so important and continuous a role that it has become fully institutionalized. The best example of this is to be found in Detroit, often described -- accurately -- as the mecca of the professional business spy. In an industry where even a minor design change requires astronomical amounts of money and months or years of lead time for tooling up, to modify an ash tray is to move a mountain. Moreover, in today's volatile market the stakes are incredibly high. The propitiously timed introduction of a new style or a new mechanical feature can have a rocketlike effect on the company's share of the market. Understandably, then, all auto companies have developed highly trained espionage arms which they keep tucked away in their tables of organization under innocent-sounding designations like "competitive analysis" and "competitive data" staffs. These outfits work full time to lay their hands on competitive blueprints, photos and statistics. Their methods, like those of the CIA until recently, are both hush-hush and freewheeling.
The engineers and analysts assigned to these espionage staffs know their counterparts in other companies and may, indeed, fraternize with them. Company intelligence agents frequently trade information with rival agents -- about third parties. Thus, a Ford agent may supply a Chrysler agent with a tidbit about a particular GM model, in return for a dribble of data about another GM model. Supplementing the work of the company staffs are a group of high-priced professionals who are called in for spot assignments, and an even larger group of ambitious amateurs -- free lancers always eager to pick up a bill for a bit of stolen information.
The Detroit grapevine is particularly sensitive, too, because the industry is so heavily concentrated in a single city. The thousands of small tool-and-die shops and parts factories are rich sources of gossip and fact. Moreover, manufacturers' representatives, company officials, salesmen, management consultants, engineers and others all move in the same social circles. They golf together at the Bloomfield Hills Country Club; they dine at the Fox and Hounds or Topinka's; they live next door to one another in Bloomfield Hills, Birmingham and Grosse Pointe. In addition, personnel move constantly from one auto company to another carrying with them sheaves of valuable information.
It is a wonder, considering these facts, that there are any secrets left in Detroit at all. But what companies jockey for is not merely information; it is time. According to William H. Corrigan, the former FBI agent whose job it is to keep Ford's styling secrets under lock and key, "You concede that the competition is aware of your plans a year in advance." In Detroit, where the lead time on a new model runs about three years, the trick is to find out what the other guy is doing at least eighteen to 24 months before he does it, so that you can have time to counter it. The value of any piece of information is thus directly related to the calendar. This principle is illustrated in two cases of espionage involving photographs of forthcoming models. One of these occurred in the summer of 1958, when a man stole five photos of the soon-to-be-introduced 1959 Dodge from a studio engaged to photograph the new model. The owner of the studio received a phone call from a stranger who threatened to turn the pictures over to GM unless he was paid $2000 to return them, thereby revealing his lack of understanding of the calendar principle. By this time, only a few months before the public introduction of the car, the chances were that GM had its own set of pictures plus plenty of additional information about it. In any event, it would have been too late for GM to act on any information it might glean from the photos. In the other case, in 1954, another amateur, who happened to be a Michigan policeman, managed to snap some shots of the 1956 models of the Buick, Olds and Chevrolet. This was about two years before their actual introduction, and the pictures might conceivably have been of significance to Ford or Chrysler. Word of the photos, however, seeped back to GM, which deftly arranged to have a friendly independent designer buy and return them. The spy was never prosecuted because a court trial would probably have made it necessary to make the pictures public.
Taking pictures of advance models, or even just getting a good look at them, is a fine art in the Motor City. Spies try every possible means to get close to the design centers of the big companies and to their test tracks and other facilities where a peek at a forthcoming model might be had. The Dearborn Inn, for instance, has no trouble renting its topfloor rooms which happen to overlook the Ford test track. And elsewhere, spies photograph anything that could be a "cobbled" (disguised) prototype of a future model. Sometimes espionage agents adopt commando tactics to get what they want. Pontiac stylists once brazened their way into a Lincoln plant and marched down the aisle with blueprints under their arms as if they belonged there, in an effort to sneak a glimpse of the styling of an upcoming Lincoln. Their reconnaissance foray ended in strategic retreat when a foreman spotted them.
Style plays an even more critical role in another industry in which espionage is highly organized. The design of women's apparel demands great originality and, naturally, nobody displays more of it than the men who have made fashion filching into a multimillion-dollar international racket. Commissioner Jacques Besson of the French Surêté Nationale has estimated that the theft of original designs costs Paris couturiers between $12,000,000 and $14,000,000 a year. Maison Dior complains that it loses about 25 percent of its possible annual income to thieves.
Not long ago gendarmes picked up a chic young mademoiselle as she boarded a plane bound for Cairo. From her purse they recovered a collection of original sketches stolen from a top fashion designer. In another case, a young society widow, invited to the fashion salons because she seemed to be a legitimate customer, was found to be sketching the designs from memory after the shows, and then hawking her drawings to German and Dutch dress manufacturers. But such admirable individual initiative is largely démodé, and fashion piracy, like war and charity, has yielded to the organization way of doing things, leading Monsieur Besson to charge that design theft is conducted today by a conspiracy that could be said to girdle the globe, with headquarters in New York and branch offices in Belgium, Italy, Germany and Austria, not to speak of Paris. He has appealed to Interpol, the international police agency, for help in ironing out this unsightly and expensive wrinkle.
The racket operates this way: the syndicate infiltrates the audience with its agents at a Dior or Givenchy opening. If it can get more than one spy into the salon, its men (or women) specialize. One studies and memorizes details of sleeves. Another commits to memory waistlines or skirts. Another has the not altogether unpleasant duty of studying necklines. As soon as the show is over the agents rush back to their offices or hotel rooms to sketch what they have seen. Microfilm copies of these sketches are then airmailed to the United States for sale or trade. But even if the desingn pirates are screened out of the audience, they manage to get what they want. A syndicate-linked exclusive dress shop in St. Tropez, for example, may buy a Dior original for 100,000 francs. Within a few hours of its arrival the shop makes up an almost indistinguishable copy, which is passed off on a client as the original. The original original is then shipped by jet to a "model renting" syndicate in New York, which loans it out to dress manufacturers for several hundred dollars per day. The result is that almost as soon as the legitimate manufacturers and retailers get their product on the market, copies are being peddled all over the United States for $10.95 apiece.
American designers, victimized in much the same way, have on occasion had to shout for help. Not long ago one big fashion house called in an investigator to find out how a competitor was able to get advance information about its plans. When a mail-order clerk was observed pocketing certain outgoing letters, he was placed under surveillance. A phony letter was then written to another company, one of whose executives happened to be related to one of the top men in the fashion house; the relative was asked to return the envelope unopened. Sneak-thief powder was sprinkled inside the envelope before it was dropped into the company mailbag, and word was leaked that this was an important piece of correspondence. The next morning the mail clerk turned up with his hands dyed a deep red from the powder. When the firm accused him of stealing information, he readily admitted that he was being paid by a rival firm to supply it with copies of his employer's significant correspondence. He had been pocketing key outgoing letters, taking them home at night, photographing their contents, then resealing and mailing them.
Idea abduction will no doubt remain in vogue in the rarified realms of haute couture as long as the fashion industry exists. According to Women's Wear Daily, "Ninety-eight percent of the trade lives by swiping styles," and many designers take things philosophically. Says Adele Simpson, a leading American costume designer, "You might just as well go out of business if they stop copying you. It really means that you aren't making clothes that are good enough to steal."
The nation's oilmen feel much the same way. Nobody was noticeably shocked when two men were convicted in 1958 of stealing thousands of exploration maps from Gulf Oil, or when a singularly oleaginous oil executive in Casper, Wyoming, was caught rifling through the maps of a former employer, or when a switchboard operator in the office of a major oil company was found tape recording the conversations of its executives for the benefit of a competitor. Information pilferage is as precisely planned in the petroleum business as the pipes and towers of a giant refinery, and is almost as conspicuous. Last year, Texas police broke up three well-organized rings which had managed to make copies of 4000 valuable oil maps stolen from the industry's biggest producers.
The most important data diversion in the industry is carried out by oil scouts who, to quote Fortune, are "really spies." These experts, reports the magazine, have been known to pose as equipment salesmen, college boys and itinerant preachers in order to get their hands on core samples. Often they simply watch through field glasses until oil is struck, then hurriedly phone in options on the surrounding land. It is not surprising, then, that the petroleum people have also had occasion to call on the professional counterspy. One of these is a former Army intelligence officer named Harvey G. Wolfe, probably the only man in the world whose business card proclaims him to be a "Consultant on Espionage" and whose letterhead is adorned with a big black fingerprint and the words: "espionage ... counter intelligence ... information." Wolfe owns a 3000-volume library on espionage and has provided technical advice to Hollywood studios engaged in filming spy thrillers. He has also lectured business groups on such subjects as "Science Checkmates the Criminal." But his chief occupation, he says, is chasing business spies, and one of his prime sources of income is the oil industry.
Wolfe tells of the chivalrous young geologist who left his West Los Angeles apartment one spring morning in 1959 and came upon a gorgeous girl struggling to fix a flat on her Jaguar. Moved by the motionless vehicle, the young man naturally came to the girl's aid. Before long he was accompanying her on long drives in her Jag and, incidentally, gushing out a river of confidential information about his company's drilling and leasing sites. The company he worked for soon began to suspect it had sprung an information leak, and hired Wolfe to plug it. After a preliminary investigation, Wolfe put the geologist under surveillance and quickly learned of his after-hours romance. Such a finding would not have aroused undue suspicion had not the girl had the disconcertingly unromantic habit of sprouting a pencil and notebook during their tête-à-têtes. Wolfe's operatives mounted a long-distance parabolic microphone in the back of what looked like a dry cleaner's delivery truck. The private conversations of the pair, picked up by the mike and recorded on tape, turned out to have as much to do with petroleum as with passion. The girl turned out to be a veritable Mata Hari in the employ of a rival oil company. It took only a few dates for the geologist to realize what she was up to -- and, like any red-blooded young American, he was delighted to find he could underwrite his sex life by so simple an expedient as passing along a few of his boss' secrets.
Of course, a company is already in a bad way if it has to go out and hire a professional counterspy. To forestall such a distressing necessity, many companies today have developed elaborate countermeasures ranging from signs exhorting their employees to button their lips to the use of "scramblers" which make telephone conversations unintelligible to tappers. Many companies go in for codes to keep information secret. Thus, when New York builder Erwin Wolfson was negotiating his record breaking $117,000,000 office-space lease with Pan American World Airways in 1960, he took great pains to prevent the news of the dickering from leaking to the New York real estate community. His files on the subject were labeled "Project X"; Pan American was referred to as "Prince Albert"; and Juan Trippe, Pan Am's boss, was designated "The Traveler." To confuse its competitors, Wallace Laboratories names many of its experimental pharmaceuticals after New Jersey towns. The code name of one tranquilizer remained unchanged after the product was marketed, thus making a New Jersey community's name (minus an "1") a household term -- Miltown.
Just as espionage has reached its greatest elaboration in the auto industry, so, too, are countermeasures most highly developed in Detroit. Design studies and styling centers are segregated from other less "sensitive" facilities. Inside, the various production areas are blocked off from one another, and a complicated system of color badges restricts the movements of employees among them. Visitors are screened carefully and escorted as long as they remain in "secret" areas. The Ford styling center uses locks with removable cores which can all be changed within an hour if need be. When GM was building its $175,000,000 technical center, it had its own men fly over and snap aerial photographs of it to see what, if anything, a competitor could see from the sky. The center is now equipped with electronic devices which draw the curtains over the studio windows at the approach of a plane or helicopter. Stude-baker once shifted a road and planted a row of trees to help conceal its test track. All the auto companies, taking a charred leaf out of the Pentagon's book, burn or shred their confidential papers after use. Prototype models are bulldozed into unrecognizable scrap after being tested. Guards with telescopes patrol the roofs of design facilities, scanning the surrounding lawns and approaches for intruders.
Sometimes the pressure for secrecy in business crops up in ludicrous surroundings, as, for example, in a nine-room office on Chicago's North Side where employees work behind locked doors. They are sworn to secrecy, prohibited from discussing their work even with their wives. Visitors are strictly verboten. Only one man, a harried hypochondriac named Marvin Glass, has all the keys to this suite in which, under his inspired direction, a team of designers, artists and sculptors create new ideas for toys like Robot Commando and Busy Bidee Hen. Then there is the Borden Company whose fragrant Ohio Liederkranz factory is positively redolent with secrecy. To keep its processing methods confidential, Borden won't even let its own top executives into the plant unless they can prove a "need to know" -- something most of them have successfully managed to avoid doing for years.
There are times, too, when secrecy becomes a game played for its public relations relations value. Thus, Coca-Cola and Pepsi-Cola both stamp their formulas top secret. Coke, in its main plant in Atlanta, has a multistoried brick building-within-a-building in which its critical flavor ingredients are mixed, and into which only those employees with Coke's equivalent of Q-clearance are permitted to enter. Both companies vociferously insist that their precise formulas are known to only one or two men. These keepers of the sacred secret allegedly travel all over the world to syrup and concentrate plants where they personally concoct the vital essences, a notion that conjures up the image of them scraping fruit rinds into bubbly cauldrons while muttering occult incantations. It is believed that this sort of mumbo jumbo, when publicized, helps build a kind of charisma around one's product.
Finally, there is the kind of secrecy that is merely stupid, a panicky reaction to the rise of the idea stealer. Some Canute-like companies, in a frenzy of secretiveness, try to bury information that is already out in the open. Coke, for example, for years steadfastly refused to publish its annual sales volume, although the figure was on file with the Securities and Exchange Commission, available to anybody who took the trouble to look it up.
The epidemic of industrial espionage is not only feeding a kind of foolish security mania on the part of many companies, it has, belatedly, begun to arouse concern over the ethics of idea stealing. The business community is currently both disturbed and fascinated by the activities of the labor racketeer, the television rigger, the corporation price fixer, the advertising faker and the payola operator. In this new atmosphere of moral introspection many businessmen are beginning to ask themselves where free enterprise ends and freebooting begins. Is it right, for example, to hire away a competitor's key man? Is it right to "drift" a "plant" into his organization? The Harvard Business Review's 1959 poll of its readers to find out what businessmen consider to be ethical conduct in the collection of competitive data throws a bright light on our changing standards of business morality.
Seventy-seven percent of the more than 1500 respondents to the survey said that business espionage reflected a "decline in ethical standards." But most of them saw nothing improper in sending a comparison shopper to buy products in a competing store in order to check out prices, or in the setting up by oil companies of "scout" departments to watch the drilling operations of competitors, or in hiring away a key employee from a competitor.
There was a sharp split along industry lines when it came to whether it is proper for an executive to "wine and dine" his counterpart in a competing firm for the purpose of picking his brain. Most executives in manufacturing, transportation and engineering approved of the practice. Those in other industries frowned on it. The majority in all industries disapproved, however, of posing as a consumer to get information from a competitor; of hiring a private investigator to watch a competitor's proving ground; of stealing the plans for a competitor's new model; of secretly recording conversations in a competitor's office; of wire tapping the competition; of bribing a competitor's employee for information; and of planting a confederate in a competing organization.
But the most interesting finding of the survey was the contrast revealed between the attitudes of older as against younger executives. "In nearly every case," the study found, "the younger executive is more likely to approve of a situation than an older executive." The most radical contrast turned up on the matter of hiring a man away from a rival firm. By and large, executives over 50 disapproved, while those under 50 approved. This may simply reflect the fact that the younger men consider themselves "available" and are happy to have the opportunity to move up by moving out, whereas older men are more likely to be frozen in their jobs. But the difference in moral stance on most other questions cannot be so simply explained. Take the example of wining and dining. Of executives up to the age of 39, only 40 percent disapproved of this practice. But among respondents 50 or older, nearly 70 percent disapproved. Nearly 30 percent of those under 39 saw nothing unethical about hiring an investigator to spy on a competitor's proving ground. Among those over 50, fewer than ten percent approved. About eight percent of the younger group found nothing immoral about a design engineer's stealing a competitor's new model plans. Almost no one in the older group condoned this practice. Such differences, concluded the Harvard Business Review, "might very well represent quite separate ethical standards on the part of younger and older executives."
Does this mean that as executives grow older they become more "ethical" in their behavior? Or does it mean that, as our young executives move into higher echelons, they will carry with them their present set of ethical values, a much looser set than that held by the older generation? If this turns out to be the case, business may be in for a tidal wave of idea stealing, in all its forms, that will make present-day pilfering seem Puritan by comparison.
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