Chinese Espionage on the Rise in US, Experts Warn
The growing trend of espionage
Despite the denials, there have been recent cases of Chinese economic spying.
In March, former DuPont employee, Tze Chao pleaded guilty to conspiracy to commit economic espionage. Chao, who worked at DuPont for 36 years, gave trade secrets on titanium dioxide manufacturing to Pangang Group, a Chinese government-controlled company that also produces the chemical compound.
According to Chao’s plea agreement, the Chinese government had made acquiring the technology a priority and wanted it from western companies.
Chao’s case occurred less than two years after another DuPont employee pleaded guilty to theft of trade secrets. DuPont did not respond to CNBC’s request for comment.
DuPont was not the only company targeted for theft of trade secrets.
Xiang Dong Yuworked for Ford Motors as product engineer and had access to Ford’s design documents. Before leaving the American auto maker, Yu downloaded 4,000 documents onto an external hard drive, including sensitive design specifications—designs Ford had spent millions of dollars over decades to research and develop.
Yu later went on to work for Ford’s competitor, the Beijing Automotive Company. The stolen documents were found on his work computer. He pleaded guilty to two counts of theft of trade secrets and in April, he was sentenced to 70 months in prison, fines, and deportation. Ford did not return CNBC’s request for comment.
The Growing Trend
But it’s not just China that’s adding to the FBI’s economic espionage caseload, according to Frank Figliuzzi, FBI Assistant Director for Counterintelligence.
“This fiscal year has already surpassed last year when it comes to economic espionage cases,” Figliuzzi said. “We’ve had double the arrests in this four year period from the previous four years.”
Despite the high costs and the increasing threat, U.S. companies are reluctant to publicly acknowledge what has been taken. Stolen trade secrets have “historically been a source of embarrassment to companies,” Figliuzzi said.
CNBC’s Investigations, Inc. contacted nine companies in a variety of industries that had former employees charged with theft of trade secrets and none would comment except for formal press releases that revealed little.
Yet, while companies fear that their admissions of theft will hurt their investors and open them up to further attacks, Shawn Henry, former Executive Assistant Director of the Criminal, Cyber, Response, and Service Branch of the FBI said that coming forward, at least to authorities, can help.
“I can tell you from the FBI's perspective in the cases where we've been most successful, it's been when a company has come forward,” he said. “Not publicly necessarily, but at least they've come forward to the FBI and said that they'd been breached.”
According to Figliuzzi, there are almost $14 billion in losses to American corporations in the current FBI caseload alone. But putting an exact dollar value on the trade secrets is difficult because many of the secrets stolen have not yet come to market and the effects go beyond financial losses.
“A lot of [economic espionage] cases are in the tens or hundreds of millions of dollars, which translate to job loss, especially in tough economic times,” FBI Deputy Director Robert Anderson said.
Much of the espionage goes unnoticed because it takes place in difficult-to-detect cyber space, say analysts. However, spies continue to employ age-old tactics of espionage on the ground, sometimes working as employees of the very companies they steal from, as corporate theft continues to grow.
“[Economic espionage] crosses all industries and all technologies from agriculture and farming up to nuclear science,” said Figliuzzi.