Spying for Profit

Every U.S. businessman knows that espionage is as much a part of corporate competition as it is of international intrigue--but few have ever been willing to admit it. Now the businessmen, soothed by a promise of anonymity, have confessed all. To nine Harvard Business School graduate students, who polled 200 key U.S. companies and personally grilled 100 top corporate executives, they gave enough eye-opening information on industrial spying to fill a 77-page report.

The vast majority of U.S. businessmen, says the report, feel that information gathering should cease "when it conflicts with legality or common morality," confined themselves to such above-board methods as sending a shopper to a competitor or analyzing published sources of information. But 27% reported that espionage had recently been discovered in their industry in forms that would do justice to any government's spy network. Concluded the Harvard men: "Business spying has resulted in the loss of many millions of dollars' worth of valuable corporate information."

Bribes & Calls. Richest ground for spying is the U.S. oil industry, where geological maps command a king's ransom. The Harvard surveyors found that one oilman was paying geologists from five competing companies $500 each a month to feed him undercover information. At another company, a switchboard operator intercepted long-distance calls between executives, heard when and where the company planned to buy leases, sold the tips to an outside broker, who grabbed up the leases. In Casper, Wyo., an oil executive quit without turning in his office keys, later was caught fingering through secret maps in another executive's office. The company did not prosecute, but passed around word that made the erring executive as welcome in the industry as Klaus Fuchs at Los Alamos.

Close behind in the gumshoe race runs the auto industry. Said the report: "There are probably more than 10,000 people who know what is going to happen to forward model cars. The opportunities to pick up valuable trade secrets are enormous." The Dearborn (Mich.) Inn has received an unusually large amount of income for its top-floor rooms; the inn just happens to overlook the Ford test track in Dearborn. One automan, who confessed to the Harvard men that he had gone "too far," telephoned the top office of a competitor, got information on a new model by realistically presenting himself as a fellow employee.

Spooks & Bugs. Many businessmen shy away from doing the dirty work, hire private eyes to do it for them. The pros easily ease through plant security by using the most hackneyed ruses: posing as rubbernecking stockholders or newsmen, bribing disloyal employees, even hiring on as employees themselves. When a ranking executive journeys overseas on business, the private eyes often follow to check on what he is looking for. (A cheaper source of supply? New machines? New customers?) And when a top foreign manufacturer comes to the U.S., his U.S. distributor often puts a tail on him to see whether he dickers with a rival distributor for a better deal.

Some companies have even descended to wiretapping. After a major company lost an $80 million contract because it was underbid by only $200,000, it ran a phone check, found that its lines were bugged throughout the country. It took the winning bidder to court, wrested the contract away from him. Where wiretapping is illegal, confided one company agent, "there are other ways of getting information. The waiter serving lunch in the man's suite, the telegrams the bell captain might see, the maid who cleans the room, the switchboard operator. These people are paid to keep their eyes and ears open."

The Harvard students' report finds that both small and big businesses need "effective competitive intelligence systems" to hold their own in today's competitive business world--and that setting them up on a formal, ethical basis may do away with a lot of hanky-panky. It also sounds a warning through the words of one executive: "If you spend too much time finding out what your competitor is doing, you may be spending too little time developing newer products and processes of your own. You become less imaginative, less dynamic, less resourceful."

This file is automatically generated by a robot program, so reader's discretion is required.