FBI asks more power to fight business spying Director tells Congress economic espionage rising

February 29, 1996|By LOS ANGELES TIMES

WASHINGTON -- FBI Director Louis Freeh asked Congress yesterday to give the bureau greater legal authority to counter rampant and fast-growing economic espionage against the United States by both friendly nations and traditional adversaries.

Mr. Freeh said the FBI is now investigating 800 cases of economic espionage against the United States, double the number of just two years ago.

He warned that the intelligence services of at least 23 nations now make American industry a prime target of their espionage, and he said the steep rise "presents a new set of threats to our national security" in the post-Cold War world.

Economic and technological globalization, Mr. Freeh added, have combined "to increase both the opportunities and motives for conducting economic espionage."

As a result, the FBI has stepped up its counterintelligence efforts to thwart foreign spy operations in California's Silicon Valley and other high-tech hot spots.

The United States needs new laws specifically targeted against economic espionage to strengthen the government's hand in pursuing industrial spy cases, Mr. Freeh told a Senate hearing conducted jointly by the Senate Select Committee on Intelligence and the Senate Judiciary subcommittee on terrorism, technology and government information.

He said that no current federal statute directly deals with economic espionage or with the protection of economic information in a thorough way, forcing the FBI and Justice Department to rely on mail fraud or other laws that may not be suited to the prosecution of espionage.

"There are gaps and inadequacies in existing federal laws," Mr. Freeh said, which call for a "federal statute to specifically proscribe" economic espionage.

Several bills have been proposed in the Senate to close the legal loopholes and target economic espionage as a clear federal crime.

Mr. Freeh did not identify the countries now conducting economic spying against America. But other intelligence sources said yesterday that France, Israel, Japan, Russia and China are among those nations that have mounted major espionage against U.S. industry.

The Russian intelligence service, the SVR, has even upgraded the status of its so-called "Directorate T," its unit charged with obtaining foreign technology and countering attempts to steal Russian technology, U.S. sources said.

Sources say Japan has been quite successful in penetrating U.S. corporations, usually in an effort to obtain pricing data or the negotiating strategies of American companies, rather than technology.

U.S. officials say Japan has succeeded without the use of electronic eavesdropping -- relying instead on recruitment of agents within corporate America. "I've always been amazed at how well the Japanese do," said a U.S. source.

In contrast to the Japanese, Chinese spies try for basic technological secrets of American companies, sources say, while French spies have become notorious for brazenly targeting American executives while they travel in France.

Sources add that Iran is aggressively spying throughout Europe in an effort to obtain technology with defense applications.

Estimates of the costs to the U.S. economy from the damage done by foreign economic espionage vary widely, but are clearly rising.

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