Spies Like Us: Industrial Espionage


From homing pigeons and invisible semen ink, we turn to business spies. Trade secrets are just that, secrets, and they've been the target of spying even before the industrial revolution. Take, for example, the silk industry. Until the 6th century, only the Chinese knew how to make it. Yes, I'm going to say it right here on mental_floss: It was a real "ancient Chinese secret." At least until Byzantine emperor Justinian I stole the secret recipe. How did he do it? Well, he got two monks to smuggle silkworms out of China in hollow canes.

These days, one of the most common forms of industrial espionage is for trusted employees to quit and join a competitor, taking the secrets with them.

GM suspected Jose Ignacio Lopez de Arriortua of doing this when he left to join Volkswagen. GM claimed that de Arriortua stole thousands of photographs with plans of the Opel Vectra, which was then secret. The case, which was finally settled in 1997, resulted in one of the largest settlements in the history of industrial espionage, with Volkswagen agreeing to pay General Motors $100 million and to buy at least $1 billion of car parts from the company over 7 years, although it did not explicitly apologize de Arriortua!

In another interesting and well-documented case, the FBI caught a computer engineer named Kenji Hayashi with secret IBM disk drive details. His employer, Hitachi, gave Hayashi more than $500,000 to bribe IBM employees. After Hayashi was nabbed, he had to pay IBM 60 times this sum in compensation. Booyah!

Here's another story I particularly like: An industrial spy at GE named Chien Ming Sung earned $1 million a year for passing secrets of synthetic diamond manufacturing to a South Korean company. By stealing the knowledge they needed to build a plant, the Koreans avoided paying license fees for the technology. GE discovered the espionage in 1992 and estimated the theft to be worth $500 million annually in future sales. Sung's career was brought to a halt as the result of an investigation of his activities to recruit a GE technician, who reported the suspicious contact to company security officials, giving new meaning to "It ain't over until Sung sings."