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U.S. spying pays off for business

Forwarded from CAFCA - Campaign Against Foreign Control of Aotearoa

NBC News probe finds agencies helped ‘level the playing field’

By Robert Windrem
NBC news

April 14 - While the U.S. government has long maintained that its intelligence agencies don’t participate in industrial espionage, NBC News has learned that companies have benefited from Echelon, the long-rumored worldwide electronic spying network. Digging through mountains of testimony has revealed several references to U.S. intelligence gatherers 'specifically the Central Intelligence Agency' using information it’s collected to indirectly help U.S. firms in their bids for international projects.

Examples given by R. James Woolsey, the former CIA director, include interfering in the awarding of contracts if the U.S. learns one of the international parties is bribing local government officials. Such activity has earned U.S. companies 'billions of dollars.'

Evidence that the U.S. has used Echelon for economic advantage, however justified it might sound ' will 'set half of Europe aflame,' according to the Continent’s anti-Echelon group.

At the center of the controversy over the Echelon system is European, and to a lesser degree other nations, fears that the U.S. and its English-speaking allies are using the worldwide eavesdropping network to vacuum up economic intelligence, which in turn is provided to American companies. U.S. officials have repeatedly denied that. The rationale, officials say, is not to gather intelligence for the benefit of U.S. corporations, but to ferret out information on how foreign companies are bribing Third World government officials to obtain lucrative contracts, particularly in the growing East Asian markets. The information, officials say, is not turned over to U.S. companies.

But an NBC News analysis of testimony, speeches and government reports, buttressed with interviews done over the past several years, shows that U.S. companies have benefited when U.S. intelligence redirected its Cold War assets towards economic intelligence. And according to senior U.S. intelligence officials, the program is ongoing, but they were unable to estimate the value of the the contracts won by U.S. companies as a result of the intelligence since 1994. ‘The numbers - that U.S. companies have gotten billions of dollars of business - will astound, astonish and enrage not because European politicians would deny that some of their companies go over the line, but because the U.S. has no right to be judge, jury and executioner on this.’ - Duncan Campbell, author of European Parliament's report on Echelon

According to reports buried in congressional testimony and in speeches by intelligence officials, U.S. companies have reaped billions of dollars in contracts after the U.S. quietly went to foreign governments and presented intelligence showing that European and other companies were bribing their officials in hope of winning big contracts. The U.S. often threatened problems with U.S. relations unless the U.S. was cut in on the contract or the contract re-bid.

‘Leveling the Playing Field’

In the parlance of diplomatic and intelligence speak, this was dubbed 'leveling the playing field,' with U.S. officials noting how, unlike their competitors, U.S. companies are prohibited by law from bribing government officials responsible for approving contracts.

'This information will set half of Europe aflame,' said Duncan Campbell, the author of a European Parliament commission’s report on Echelon. The numbers that U.S. companies have gotten billions of dollars of business will astound, astonish and enrage not because European politicians would deny that some of their companies go over the line, but because the U.S. has no right to be judge, jury and executioner on this.

The Echelon report issued in February by the special commission said that the electronic intelligence-gathering network had the potential to violate the privacy of millions of European citizens, suggesting that it has been used to benefit U.S. corporations in economic and industrial espionage. The ground- and satellite-based intercept system was targeted primarily at nonmilitary concerns, including terrorists, drug traffickers and money launderers.

As recently as this past week, both CIA Director George Tenet and NSA Director LTG Michael Hayden reiterated the U.S. position in testimony before the House Permanent Subcommittee on Intelligence.

'With respect to allegations of industrial espionage, the notion that we collect intelligence to promote American business interests is simply wrong,' testified Tenet. 'We do not to target foreign companies to support American business interests. 'If we did this, where would we draw the line? Which companies would we help? Corporate giants? The little guy? All of them? I think we quickly would get into a mess and would raise questions of whether we are being unfair to one or more of our own businesses.'

But while Tenet denied that foreign companies are 'targeted,' he did admit that when the U.S. found that foreign countries were trying 'to deny U.S. businesses a level playing field,' that information is passed on to 'other government agencies responsible for enforcing U.S. laws.' What Tenet did not discuss, as one of his predecessors, Admiral Woolsey, did in detail, was what those '“other government agencies' do with that information and how it ultimately benefits U.S. companies.

From serendipity to intention

Officials confirm that among other deals U.S. intelligence did help Boeing on a sale of 747s to Saudi Arabia, Raytheon on the sale of a sophisticated surveillance system to Brazil, and Hughes Network Systems on a sale of a telecommunications system to Indonesia during the Clinton administration, and that the effort actually began in the Bush administration. At first, during the Bush administration, the corporate intelligence gathering was serendipitous, say officials, with the U.S. intelligence apparatus picking up evidence of bribery while focusing on other issues. And those involved in both the Bush and Clinton administration efforts say that the companies often were unaware of the help ... but not always.

In articles and interviews, Randall Fort, former official of the State Department’s Intelligence and Research Bureau, has said that the intelligence community was first tasked to come up with economic counterintelligence during the Bush administration. He says the first case ' and apparently the case that made the White House realize the value of such information ' came when the U.S., 'using the normal net for gathering communications intelligence,' found that the Japanese were bribing the state out of Syria on a power plant contract. 'It came to our attention that a U.S. company was also trying to win this contract' worth nearly a half billion dollars. As a result, 'quiet approaches were made to the Syrian government' that if Syria wanted to improve its position with the U.S., it should not go along with the bribery. As a result, the U.S. company won the contract.

Prior to that, there was a lot of 'derivative information”' gathered from the intelligence community 'casting its net globally.' Using spy satellites, phone taps, and secret bases that downlinked communications satellites, the intelligence community created a vast net it could use to gather voice communications, faxes, e-mail, etc. In fact, 85 percent of U.S. intelligence comes from such 'communications intelligence' assets.

'Periodically, reports would come through that indicated activities were nefarious, not above-board.' The intelligence was usually sigint [electronic eavesdropping or signals intelligence] or humint [old-fashioned spying]. 'Sourcing was more frequently obtained if government was procuring. We would have penetrations of that government, hearing something from a deputy vice-premier or a cabinet minister.' 'Those sorts of things came up periodically, but they were dealt with on an ad hoc basis ... not ignored but handled ad hoc.' After Syria, if something was discovered watching the flow of intelligence, 'it became more pro-active. If we knew of something, an ‘intelligence requirement’ would be levied, meaning word would go out in an aggressive, pro-active manner, to gather what can be gathered.

Gathering the data

Things began to happen. The U.S. would go to a 'nominally clean guy' and essentially say that 'if a hand is caught in the cookie jar, then the U.S. company is to be cut into the program.' In some cases, part of the contract will be given to the U.S. company, and in others, the U.S. will be told how to counteract the bribery. And sometimes, the U.S. company would get the whole contract. On the opposite end of the spectrum, the U.S. would simply 'demarche' - send a letter of diplomatic protest to the offending nation. 'The level of success depends on U.S. relationship with the country ... It is part of the overall political dynamic, not something that governs it.'

In transition documents, the Bush administration advised the incoming Clintonites of the effort and the pro-trade forces within the new administration pushed it even harder. Economic intelligence gathering became policy. The CIA designed a new daily intelligence digest, called the Daily Economic Intelligence Briefing. Highly classified with a limited run of 100 copies, it’s distributed to officials at the White House and cabinet-level departments throughout the government’s economic bureaucracy. Of the agency ’ s four daily publications, only the President’s Daily Briefing, with a run of 32 copies, is more restricted. It regularly contained information on foreign bribery. And at the Commerce Department, the intelligence data was combined with other trade data at an office called the 'Advocacy Center,' set up by then-Commerce Secretary Ron Brown. Borrowing the CIA term, Brown talked about the Advocacy Center fighting to level the playing field and promote open competition in the international bidding arena.

No one was more enthusiastic than Woolsey, who described the effort in a speech at the Center for Strategic and International Studies in July 1994: 'In the commercial area, what we do is very specific. American corporations have to operate under a statute called the Foreign Corrupt Practices Act. It’s a very tough statute. As a private counsel, I’ve done investigations under it for boards of directors. It keeps American corporations playing honest 99-plus percent of the time in their bidding on contracts overseas. We’re the only country with anything even remotely approaching a foreign corrupt practices act. A number of countries in other parts of the world, including some of our oldest friends, are very much into the business of bribing their way to contracts that they cannot win on the merits.

'We collect intelligence on those efforts to bribe foreign companies and foreign governments into, for example, awarding an airport contract to a European firm rather than an American firm. And when we find out about those, and we do a fair amount of the time, we go not to the American corporation that’s competing, but the secretary of state, and he sends an American ambassador to see a president or a king, and that ambassador says, ‘Mr. President,’ or ‘Your Majesty, you’re minister in charge of construction is on the take, and you have a lot going with the United States, and we don’t really take kindly to your operating that way.’

'And so rather frequently what happens, not always, is that the contract is re-bid, sometimes the American corporation gets a share of it, sometimes the whole thing is done right, sometimes not. But we calculate, really very conservatively, that several billion dollars a year in contracts are saved for American business by our conducting that type of intelligence collection. We intend to continue to do it. It is relatively new. We are very frankly very good at it, and we have had some very positive effects on contracts for American businesses.

'I sometimes smile as I read the newspaper because some of the same corporations for whom we have saved very, very large contracts by operating this way will have officials or executives go public and say, ‘We don’t need any help from the American intelligence community.’ That’s fine, that’s the way the intelligence business goes.'

More to the point, the CIA wrote the Senate Intelligence Committee that same year in a letter obtained by NBC News:

'As we have looked at government-to-government lobbying cases where foreign leaders use pressure tactics to help their firms win international contracts and questionable business practices, we have detected an array of tools that are used ' often in combination ' including bribes, insider information, and disinformation to limit the ability of U.S. firms to compete for international contracts.

'Specifically, in 1993, we alerted the policymakers to 51 cases involving some $28 billion in total sales where these tactics among others were being used to disadvantage U.S. firms seeking business overseas.

'In the cases where policymakers were able to take action, U.S. firms obtained contracts worth some $6.5 billion.'

By the next year, Woolsey told a Detroit press conference that U.S. firms obtained contracts worth another $10 billion in 1994. Woolsey was in Detroit to meet with the heads of the Big Three automakers on how to protect the U.S. competitive position in overseas bidding. Neither the CIA nor the automakers would reveal what Woolsey talked about.

‘It was very helpful’

A high-ranking official at the CIA says that examples of intelligence community success in this area included awards for telecommunications systems in Indonesia and infrastructure improvements in Saudi Arabia, the case hinted at by Woolsey in his example about approaching a king about corruption. Other sources report that the $6 billion Saudi airliner contract and the $1.4 billion Amazon surveillance system in Brazil were also helped by the CIA’s efforts.

'It was very helpful,' said an official of Raytheon at the time. The Commerce Department hinted at the role of the intelligence community in the Raytheon contract when it laid out its efforts in an unclassified 'Success story' memo: 'Faced with stiff competition from a European group of companies, the U.S. government was able to assist the Raytheon consortium helping to level the competitive playing field in Brazil.'

CIA officials often sat in on Commerce Department briefings. In one, on pushing contracts in Indonesia, five of the 16 people at a key meeting were CIA representatives. At the meeting, the highest ranking of the CIA officers asked for a list of any primary competitors known to the group for these projects.

Overall, said a former intelligence official, 'These things are on the margin, they are not a cash cow for the agency.' The numbers may or may not be real, since it’s the tendency of a government agency to 'aggregate every conceivable thing.'

'In the scheme of things in the scale of things, it’s small potatoes,' the former official said. 'We have to keep a perspective on all this. Among the big drivers of the intel community ... econ intel is really pretty small.'

Campbell says that is not the point. The CIA’s efforts, he says, are extralegal. 'If you find evidence of wrongdoing, bribery, your duty is to go through the legal process, not use it for the benefit of U.S. companies. There are mechanisms for legal cooperation between countries.'

A growth industry

Beyond 'leveling the playing field,' as Woolsey liked to call it, the CIA began doing other things in the area of economic intelligence. Economic intelligence is in fact one of the few growth industries at the CIA. With the Cold War over, the vast intelligence infrastructure of spy satellites, remote eavesdropping stations, and human agents was being, to some extent, redirected toward gathering economic intelligence.

Woolsey again: 'What we do in the area of economic intelligence is follow such things as wheat crops and oil reserves and currency flows that are available for macroeconomic decisions by the U.S. government. We follow such developments in technology around the world, particularly where that can be dual-use technology that might be used for military applications ... We watch the economies of Russia and China very closely now, because the future of the inflation rates and the stability of those economies both are going to have a huge impact on the future stability of those two, to put it mildly, very important states.'

That, of course, is a very narrow view of what the CIA does. The intelligence community has always done economic intelligence. But now, whether because the CIA needs a new justification for its budget or because economic intelligence is a higher priority, the agency has put a new priority on economic matters. More importantly, the CIA has been charged with determining which nations’ intelligence services are targeting which U.S. industries and how U.S. companies can protect themselves against foreign intelligence services.

'Our intelligence helps policymakers understand the way other countries sometimes violate the norms of international trade, so that we can protect our economy from the unscrupulous practices of others,' Woolsey testified March 9, 1993, before the House Select Committee on Intelligence,

'For example, we have uncovered cases of illegal and unethical behavior by foreign firms and governments ' behavior which directly affects our national interest in fair trade, and have thus helped protect American economic and technological secrets. In just one example, we discovered how the overseas office of a major U.S. computer company and visiting company executives were the target of sophisticated industrial espionage by a foreign intelligence agency.

'During the Cold War, although we watched this sort of thing happen, I think it is fair to say that sometimes our interest and the greater objective of dealing with the Soviet Union in the Cold War' and some of these countries that were involved in these activities were and are friends and allies of the United States - we saw these things happen and sometimes we would, the intelligence community, would report to the executive branch of the government, the rest of the executive branch, and it would bring these matters to the foreign government’s attention or otherwise take action. But it is fair to say that during the Cold War, from time to time, we were fairly gentle about this.'

That change had congressional backing. In fact, the Intelligence Authorization Act for FY 1995 requires the White House to report on foreign industrial espionage 'to improve the awareness of United States industry of foreign industrial espionage and the ability of such industry to protect against such espionage.' The report, due every March, requires the President to inform Congress of the various efforts directed against U.S. industry in terms of both targeted industries and the nations involved in such espionage.

The shadowy side

But there are problems with all this corporate espionage and counterintelligence. One is the temptation to delve deeper into corporate espionage, which the CIA says it will not do. It will not provide covertly procured documents or technology to U.S. companies.

There is another problem as well: it may lead to an intelligence war with our allies, a war that could effect intelligence cooperation on more important matters when they arise.

Still, the CIA and other parts of the U.S. intelligence community are enthusiastic about the program. One reason, critics contend, is that the intelligence community needs to justify huge expenditures for espionage in some way that is easily quantified. This is a very politically savvy way to do so.

In particular, the intelligence community must justify the enormous expense required for electronic eavesdropping, or signals intelligence, the most lucrative and most expensive intelligence source. Intelligence experts note that the best way of gathering any kind of corporate data - for counterintelligence or corporate espionage - is through electronic eavesdropping on corporate and foreign government telecommunications. There is no better way to get the hard facts, the documentary proof needed for meeting with the prime minister or king. This is not to say other intelligence means, like human spies, can be utilized. The judgment among intelligence experts is that eavesdropping is the most useful and also the means most in need of justification.

*** NOTICE: In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. ***

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