Social Media and Corporate Espionage

October 28, 2011 by David Albrecht

I’m a social media guy–blogging, tweeting, connecting via LinkedIn, and updating through a Facebook page.  Social media usage has helped transform me into a better listener and a kinder, gentler speaker.  That’s enough proof for me to believe that social media makes a person more social (although reliable research findings collaborate this conclusion).

I’m not the only one hooked on social media.  Hundreds of millions are active on Facebook, and someday the number might reach one billion.  And why do so many people use various social media?  It’s because human beings are social creatures.  We tend to do things in families and groups.  We like interacting.

There are benefits to being social, such as companionship, friendship, love, respect, and sharing information.  There are costs, too.  Some are unskilled at being social and alienate instead of befriend.  And others reveal too much, too often.  Although loose lips get kissed, they also sink ships.

Businesses are flocking to social media, and using it for marketing, communication, employee education and image branding.  The primary reason is increased profit.  However, a downside is starting to emerge.

Enter corporate espionage, a thriving industry.  Have you seen the movie Duplicity?  Clive Owen plays Ray Koval, formerly of MI6, and Julia Roberts plays Claire Stenwick, formerly of the CIA.  They now work for corporate rivals who employ their own spy networks.

Far less interesting than Duplicity is Broker, Trader, Lawyer, Spy: The Secret World, by Eamon Javers.  Javers’ book is a history of the corporate espionage business, which really does exist.  From page one of BTLS:

There was no way for [KPMG accountant] Enright to know that Hamilton was not at all who he suggested he was.  He couldn’t know that several clandestine operatives were right now following him from his office at KPMG Financial Advisory Services to the restaurant, working in an efficient tag-team relay to ensure that Enright wouldn’t spot anything unusual. And Enright certainly didn’t notice that, among the crowd of well-dressed international business people and tourists dining at Little Venice, one woman watched as he took his seat.  She, too, was working for Hamilton, and she was there to make sure Enright didn’t have backup of his own.

Enright did not.  He was way out of his league.  The British-born was just like millions of mid-level white collar workers around the world.  What did he know about espionage? But his position as a senior manager in corporate recovery gave him access to documents for which a wealthy client might pay millions of dollars.  Might lie for.  Might steal, if necessary.  And that client hired the man who called himself Nick Hamilton.  Hamilton’s team was a mix of American CIA veterans, former officers of the British MI5 security service, and young, adventure-seeking American college graduates.

They were corporate spies.

Oh, to be young, athletic and good looking again.  I might enjoy a spate of adventure.

Corporate espionage represents a serious threat to business, in general, and accounting/auditing firms in particular.  Although economic espionage is illegal, it has spawned a thriving industry.  Moreover, it is just a step removed from outsider fraud aimed at small to medium sized business.  Linda Kotze, in “Corporate Espionage Highlighted in the Movie Duplicity,”  describes the scope of the problem,

Research from consulting firm PricewaterhouseCoopers, estimates that Corporate Espionage costs the world’s 1,000 largest companies in excess of US$45 billion  every year. Unfortunately, these surveys and estimates do not include the over 600,000 businesses in the US with more than 20 employees or the 98,000 companies with more than 100 employees.

Daniel J. Benny, a private investigator and security consultant has placed his PowerPoint presentation, “Corporate Espionage Countermeasures,” on-line.

Corporate espionage and corporate fraud from outsiders are serious threats.  Accounting/auditing firms are frequently targets of such espionage activities because of their access to inside corporate information.  That so  many businesses and employees are using social media just makes the job of spies that much easier.

Unpublished research reveals that both SMBEs and their accountants/auditors know next to nothing about combatting it.  Perhaps it is time they learned.

Debit and credit – - David Albrecht

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