Pinkerton 2.0

The government runs a publicly funded spy training program for corporate America. It’s called the CIA.

Travis Kalanick, ex-CEO of Uber, speaks at the LeWeb conference in Paris, France, on December 10, 2013. Dan Taylor / Heisenberg Media

In what’s being described as an “explosive letter,” a lawyer who worked for Uber alleges that the company employed ex-CIA agents to collect intelligence on its competitors. The letter claims that Uber’s intelligence team bugged hotels, infiltrated private chats, and impersonated actual people to gain access to trade secrets. Like many of Uber’s business tactics, the practices outlined in the accusation are ethically shaky at best.

But perhaps the most astonishing thing about the revelation is the outsize reaction it has received. Corporations employ former government intelligence workers all the time. Ex-CIA and FBI operatives have been conducting espionage in the private sector since at least the 1980s, using the training they received on the public dime to enrich big businesses — sometimes at the public’s expense.

Spy vs. Spy

The first major company to openly court government spooks was Motorola. The company’s chair Bob Galvin assembled a unit of former spies in 1983 to conduct “competitive intelligence” operations against corporate adversaries. Galvin began preaching the gospel of corporate espionage, forming the Society of Competitive Intelligence Professionals (SCIP) in 1986 to promote the practice. This was good news for employees at the nation’s intelligence agencies, promising lucrative careers in the private sector once government work had ended. A cottage industry was born — call it Pinkerton 2.0.

Prior to becoming Motorola’s head intelligence operative, Jan Herring worked for the CIA collecting information on foreign business developments that threatened to undermine the American economy. Herring was a founding member of SCIP and soon became a leading advocate for corporate spying; his consultancy firm went on to design intelligence programs for the automotive, health insurance, pharmaceutical, and petroleum industries. “I believed that, much like governments, multinational companies were going to need their own intelligence departments to be able to make the right decisions,” Herring said.

The proliferation of spying in the business world was self-reinforcing. If you’re being spied on, it stands to reason that you need spies of your own; to resist the trend was to accept defeat. Meanwhile, potential personnel were lining up to submit resumes. “For professional spooks, the 1990s were no fun at all,” remarks Stephen Armstrong in the New Statesman. “The Cold War was over, defense spending was down and a detailed knowledge of cold-drop techniques in central Berlin was useless to governments.” The emergence of a new niche espionage market for Cold War veterans was a major windfall.

Corporate intelligence units quickly multiplied, and by 1998 Forbes reported that the company Intel had employed ex-CIA members who had specialty training in disseminating misinformation, and IBM was using agents to extract information from Compaq employees by pretending to recruit them. Former intelligence officers ran a school in Orlando where they taught classes in business intelligence tactics, which included identifying and empathizing with disgruntled employees, and lying about figures to trigger unwitting employees’ tendency to correct others’ mistakes.

“Sales people love to talk, they love to correct you,” explained Michel Bernaiche, the former chairman of SCIP. “Sometimes they’ll slip up and reveal information, but just because they give you information you’re not supposed to have, doesn’t mean you can’t use it.”

The pharmaceutical industry invests the most in competitive intelligence by a long shot, making up 27 percent of all intelligence spending over $2 million annually. The entire market is now worth an estimated $50 billion per year.

Targeting Movements

It’s not easy to muster sympathy for corporations caught in a byzantine game of spy versus spy. But competitive intelligence targets aren’t limited to business adversaries. Since ex-CIA and FBI agents started working in the private sector, their private intelligence units have increasingly begun to target activists, unions, and nonprofits whose work threatens the corporate bottom line.

In 2013, the Center for Corporate Policy released a report on corporate spying against nonprofits and activists, noting that the practice has escalated in recent years. The report cited the ubiquity of former government intelligence agents in the competitive intelligence field. “Especially prevalent is the use of former Central Intelligence Agency, National Security Agency and Secret Service agents, as well as current or former police officers, and other former military, intelligence and law enforcement officials. These current and former government employees, and current government contractors, do their spying against nonprofits with little regulation or oversight, and apparently with near impunity.”

The list of corporations spying on activists and nonprofits includes Bank of America, Chevron, Coca-Cola, Kraft, McDonald’s, and Wal-Mart. Dow Chemical hired a firm called Beckett Brown International (BBI), staffed heavily by ex-CIA spies, to rummage through Greenpeace’s recycling and wiretap its employee’s cell phones. BBI also sent a prolific corporate spy named Mary Lou Sapone to infiltrate a number of activist groups and nonprofits. Over the course of many years, she infiltrated animal rights groups on behalf of the US Surgical Corporation, environmental groups on behalf of a Louisiana chemical company, and the Brady Campaign to Prevent Gun Violence on behalf of the National Rifle Association.

In 2009, Chevron attempted to retain the services of journalist Mary Cuddehe. They contacted her through a major competitive intelligence firm called Kroll, staffed with numerous ex-government intelligence agents, to conduct interviews in a town in Ecuador where people were seeing deleterious health effects after an oil spill. They told her they needed a real journalist so that if citizen groups did an internet search they could rest assured she was who she claimed to be. She turned the money down and wrote about her experience for The Atlantic. Cuddehe said no, but many say yes — and keep their experiences under wraps.

Wal-Mart alone employs four hundred people in its intelligence unit. The department is led and heavily staffed by former government intelligence agents. In 2006, the unit infiltrated the community organizing group ACORN and a small Arkansas activist group called Up Against the Wal. Agents attended meetings wearing hot mics and followed activists in a surveillance van. We only know about this because a former employee leaked the information; with an intelligence unit that big, it’s probably safe to assume the incident is far from isolated.

Companies engaged in espionage against nonprofits and activists include BAE Systems, Burger King, Monsanto, and Rupert Murdoch’s News Corp. Targets include anti-war activists, tobacco industry whistle-blowers, PETA, and pharmaceutical watchdog groups. The practices adopted by private spies are often illegal — but hardly anyone is keeping tabs. “In effect,” concludes the Center for Corporate Policy report, “corporations are now able to replicate in miniature the services of a private CIA… Lawlessness committed by this private intelligence and law enforcement capacity, which appears to enjoy near impunity, is a threat to democracy and the rule of law.”

Spying for Profit

The tactics used by corporate intelligence firms against nonprofits and activists are troubling. Equally distressing is the financial nature of the arrangement: these corporate spooks are trained in public agencies, their skill development bankrolled by public money, theoretically to serve the public interest. Corporate espionage can be very lucrative, which means that agents who develop even modest intelligence expertise are being lured away into the private sector — sometimes to wage war against the nation’s own citizens.

In the big picture, the revolving door between public and private espionage agencies amounts to a public subsidy for private corporations. We pay to train people who then use that training to maximize corporate profits at our expense. The CEOs of Fortune 500 companies enjoy the benefits of publicly funded intelligence education, while citizens’ groups increasingly feel the power of industry breathing down their necks.

There’s nothing unprecedented about the allegations that Uber used ex-CIA operatives to obtain information about its competitors. The media attention the story is receiving may owe to the fact that Uber is a public relations train wreck and it’s hard to look away. But there are scandals far more outrageous unfolding right now, hidden from view. As long as we turn a blind eye to the growing private espionage industry, companies collecting intelligence on their corporate adversaries will be the least of our concerns.