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Asia markets tentative ahead of Opec meeting

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

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Banks

Barclays: life in the old dog yet

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Categorized | Economy

NSA revelations boost corporate paranoia


Posted on October 31, 2013

The US embassy in Berlin: Washington denies trying to steal commercial secrets from foreign companies to help their US competitors©Getty

The US embassy in Berlin: Washington denies trying to steal commercial secrets from foreign companies to help their US competitors

On a mild day in late August a German police helicopter buzzed low over the US consulate in Frankfurt, the financial capital of Germany.

On the instruction of the Office for the Protection of the Constitution (BfV), Germany’s domestic intelligence agency, its mission was to photograph the rooftop of the US outpost, which is located less than 5km from the European Central Bank and Bundesbank.

German media say the BfV hoped to identify the presence of listening antennas and the action prompted an exchange between the US and the German foreign ministry in Berlin.

In depth

US Security State

US security state

Analysis of revelations about the extent of the surveillance state in the US

James Clapper, US Director of National Intelligence, insisted again in September that the US does not use foreign intelligence capabilities “to steal the trade secrets of foreign companies on behalf of . . . US companies to enhance their international competitiveness or increase their bottom line”.

But ever since Edward Snowden, the contractor turned whistleblower, began releasing his treasure trove of US surveillance secrets, European governments and business leaders are no longer sure whether to take the director at his word.

Reports that the US National Security Agency spied on Brazilian oil company Petrobras
and gained access to data held by US cloud providers including Google and Yahoo have ratcheted corporate paranoia about state surveillance to new highs.

The final straw came when it was revealed that Chancellor Angela Merkel’s phone had been bugged, possibly for about a decade. If Europe’s most powerful person can be targeted, then surely business leaders are also potential targets.

    “Snowden has made transparent the intensive collaboration between [US] intelligence services and companies. I think it’s conceivable that these data are used for mutual benefit. Germany must wake up,” says Oliver Grün, president of BITMi, which represents small and medium sized German IT companies.

    German companies believe the US now poses almost as big a risk as China when it comes to industrial espionage and data theft, according to a survey published in July by EY, the consultancy.

    In all the documentation leaked by Mr Snowden, there has, however, been no evidence to date that the US has passed on foreign companies’ trade secrets to its own companies.

    Politicians have expressed concern that the EU lacks certain IT and internet capabilities and should strive to reduce its dependence on the US. Business leaders are sceptical about this.

    “Someone in the German parliament says we should build a German Google. I can only shut my eyes and slowly open them again . . . That’s not the way,” Hasso Plattner, chairman of German business software company SAP, says. “[If one wanted a strong European IT industry] then one shouldn’t have let it die out 20 years ago. Everything is subsidised in Germany, from coal, to cars and farmers. [Everything] but the IT industry.”

    Still, the reach and technical sophistication of US spy agencies exposed by the Snowden revelations have come as a shock to some companies who previously thought the biggest surveillance risk was posed by China.

    A big shift is occurring in
    cloud computing where European executives have become more aware that data stored in the US is subject to that jurisdiction and therefore potentially vulnerable.

    According to a survey carried out by the Cloud Security Alliance, a trade body, some 10 per cent of non-US members cancelled plans to use a US-based cloud provider after revelations about the US Prism data mining programme.

    Jim Snabe, co-chief executive at SAP, says: “We see a new question from customers that didn’t come up a year ago – which is where is my data stored and can you guarantee that it stays physically in that jurisdiction.”

    Many German executives argue that the latest reports are simply confirmation of what they already knew: that powerful states want to steal their most prized secrets and these data must therefore be guarded at all costs.

    “That economic spying takes place is not a surprise . . . it has always taken place. This has been a topic for many years and hasn’t fundamentally changed through the current discussion,” says Kurt Bock, chief executive of chemical maker BASF.

    The Americans spy on us on the commercial and industrial level as we spy on them too, because it is in the national interest to defend our businesses

    – Bernard Squarcini, former head of the French internal intelligence agency DCRI

    Corporate leaders are not generally keen to boast about the countermeasures they have taken, in case this hands an advantage to an attacker.

    For large companies, the message has long since been drummed home that picking up a free USB stick at a trade fair, or leaving a laptop unguarded in a hotel room are unwise, to say the least.

    Ulrich Hackenberg, board member at carmaker Audi, says it has been standard practice for years for mobile phones to be collected before board meetings so they cannot be used as remote listening devices.

    Germany’s BfV advises executives to consider using simple prepaid mobiles when on foreign trips because of the risk that smart phones are compromised. The prepaid mobiles are then thrown away afterwards.

    However, there is concern that small and medium-sized companies remain vulnerable to hacking and surveillance. In Germany, many of these companies are global market leaders in their particular niche.

    “Small and medium sized companies often lack the experience, personnel and financial resources to protect corporate secrets effectively against unauthorised access,” the BfV warns in a report.

    The US warns its own companies about economic espionage by other countries. The US National Intelligence Estimate in February named France alongside Russia and Israel in a second tier of offenders who engage in hacking for economic intelligence, behind China, according to The Washington Post.

    A board member at a German blue-chip company concurred that when it comes to economic espionage, “the French are the worst”.

    Bernard Squarcini, former head of the French internal intelligence agency DCRI, was quoted in an interview this month as saying: “The services know perfectly well that all countries, even as they co-operate in the antiterrorist fight, spy on their allies. The Americans spy on us on the commercial and industrial level as we spy on them too, because it is in the national interest to defend our businesses. Nobody is fooled.”