Economic Espionage: A Foreign Intelligence Threat to American Jobs and Homeland Security

Congress held a hearing today about the threat from economic espionage. The FBI said economic espionage losses to the American economy total more than $13 billion—in this fiscal year. “Our economy is a matter of national security,” said FBI Assistant Director/CI Division Frank Figliuzzi.

Committee on Homeland Security

“Foreign economic and industrial espionage against the U.S. represents a significant and growing threat.  Today the Homeland Security Counterterrorism and Intelligence Subcommittee held a hearing examining the severity of economic espionage perpetrated by foreign actors, and the economic cost to both the public and private sectors in terms of American competitiveness and jobs.  In addition, Members heard what the Department of Commerce, Federal Bureau of Investigation (FBI) and Immigration and Customs Enforcement (ICE) are doing to confront the issue, and the solutions needed for U.S. businesses to better understand and mitigate the threat.

“Just this week, the head of the U.K.’s internal counter intelligence agency, MI5, told a London audience that business and government in the U.K are under assault from criminal and state-sponsored cyber attacks and economic espionage on an “industrial scale,” with one London company incurring revenue losses of more than $1.2 billion as a result of a hostile state-sponsored attack.

“Committee chair Rep. Patrick Meehan Meehan said:

“This hearing will examine the threat posed to the U.S. government and private businesses from economic espionage conducted by foreign intelligence services and corporations with ties to foreign governments, including China and Iran, among others.  According to the Department of Justice, this has become a national security issue that threatens the homeland by diminishing American competitiveness and costs jobs.  The Director General of Britain’s MI5 has described the level of economic espionage today as “astonishing.”

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Statement by the FBI’s Assistant Director, Counterintelligence Divison:

….In the FBI’s pending case load for the current fiscal year, economic espionage losses to the American economy total more than $13 billion. The health of America’s companies is vital to our economy, and our economy is a matter of national security…..

….As the FBI’s economic espionage caseload is growing, so is the percentage of cases attributed to an Insider Threat, meaning that, individuals currently (or formerly) trusted as employees and contractors are a growing part of the problem.

…..The Insider Threat, of course, is not new, but it’s becoming more prevalent for a host of reasons, including

  • The pervasiveness of employee financial hardships during economic difficulties;
  • The global economic crisis facing foreign nations, making it even more attractive, cost-effective, and worth the risk to steal technology rather than invest in research and development;
  • The ease of stealing anything stored electronically, especially when one has legitimate access to it; and
  • The increasing exposure to foreign intelligence services presented by the reality of global business, joint ventures, and the growing international footprint of American firms.

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Witnesses

Dr. Stuart Graham, Chief Economist, U.S. Patent and Trademark Office, U.S. Department of Commerce [full text of testimony]

Mr. John P. Woods, Assistant Director, Homeland Security Investigations, Immigration and Customs Enforcement, U.S. Department of Homeland Security [full text of testimony]

Mr. Frank Figliuzzi, Assistant Director, Counterintelligence Division, Federal Bureau of Investigation, U.S. Department of Justice [full text of testimony]

Mr. Gregory C. Wilshusen, Director Information Security Issues, Government Accountability Office [full text of testimony]