History
of industrial secrets leaking out
By Andrew Ward
It
is the world's most famous secret. For most of the 120 years since Coca-Cola
was invented, the original recipe has been locked inside an Atlanta
bank vault.
According
to company policy, only two Coke executives are allowed to know the
"secret formula" at one time and they are barred from travelling
on the same aeroplane.
Written
permission from the board is required to open the vault and the president,
chairman or company secretary must be present during any viewing.
In
reality, anyone wanting to know the recipe could find out by hiring
a food scientist to analyse the drink.
But
the legend of the "secret formula" is an important part of
the mystique surrounding the Coke brand.
That
reputation for secrecy explains why Coke was so embarrassed by last
week's arrest of an employee for allegedly stealing confidential documents
and a sample of a new drink from the company's Atlanta headquarters.
Joya
Williams, assistant to a senior Coke brand manager, was captured on
surveillance video stuffing documents and a bottle of the prototype
drink into her bag, according to federal prosecutors.
Ms
Williams and two associates were snared by an FBI sting operation when
they allegedly then tried to sell the trade secrets to PepsiCo, Coke's
fierce soft drinks rival, for $1.5m.
"Everyone
talks about the secret formula," says Scott Berinato, senior editor
of CSO Magazine, aimed at chief security officers in large companies.
"But information about a new Coke drink is more valuable to competitors
than knowing the original recipe."
The
case is the latest entry in a long history of industrial espionage dating
back probably as long as humans have traded goods.
One
of the earliest recorded examples came in the 18th century, when a French
Jesuit missionary helped end China's 1,000-year monopoly of porcelain
manufacturing by smuggling details of the closely guarded production
process and a sample of china clay back to Europe.
More
recently, Lockheed Martin, Gillette and General Motors are among the
companies to have fallen victim to theft of trade secrets.
The
threat has been growing as information and ideas - intellectual property
- become increasingly important to business success.
"Half
a century ago, if you wanted to steal something critical from a company,
it would probably involve lugging something heavy out of a building,"
says Peter Strand, partner at Shook, Hardy & Bacon, a law firm.
"Today, all you need is a piece of paper or a computer file."
Mr
Strand says that the alleged theft from Coke was striking for its lack
of sophistication.
"Examples
of people rummaging through papers are becoming less common," he
says. "Today, most critical data is kept on computer databases
and that is where the criminals are focusing," he says.
But
whether trade secrets are stolen from a hard drive or filing cabinet,
the perpetrator is usually the same: a company employee.
"Sometimes
it is because they are disgruntled with the company, sometimes it is
plain greed but it is almost always an insider," says Mr Strand.
Tanya
DeGenova, a former FBI agent and president of TSD Security Consulting,
says the most important things companies can do to increase security
are take more care over who they hire and pay more attention to employee
behaviour.
"Too
often line managers fail to spot warning signs," she says.
The
FBI foiled the alleged plot against Coke but the company now faces a
battle to prevent the stolen information being exposed in court.
A
federal judge has signed an order barring the defendants from revealing
secrets they know about Coke to anyone other than their lawyers.
But
Wanda Jackson, lawyer for Ms Williams, has already cast doubt on whether
the items allegedly stolen were as secret as Coke claims - putting the
company under pressure to explain why they were sensitive.
"In
order to prove that something is a trade secret you have to define it,"
says Mr Strand. "Judges in civil cases sometimes agree to remove
the public from the courtroom when secrets are being discussed but that
is harder to do in criminal trials."
PepsiCo
won praise for refusing to buy the information it was offered and instead
alerting Coke to the plot. But the company may end up learning the secrets
in court for free.
--------------------------------------------------------------------------------
March/April 2006 issue of PI magazine (www.pimagazine.com)
Las Vegas SUN
February
09, 2006
Off
'The List'
You
would think that terrorists at war against American culture would have
Sin City squarely in their sights. The federal government doesn't see
it that way. Here's why.
By
Benjamin Grove <grove@lasvegassun.com>
Sun Washington Bureau
Washington
Here's
a trick question: Which warm-weather tourist towns does the U.S. government
believe are at risk of a terrorist strike?
Orlando,
Fla.? Honolulu? New Orleans?
Correct
on all three.
Las
Vegas?
"If
anything is a soft target, it's that," said Vincent Cannistraro,
former director of National Security Council intelligence, as well as
a former director of CIA counterterrorism, now a top consultant.
"It's
Sin City," Cannistraro said. "It's a popular (terrorist) perception
that no matter who you kill, you've probably killed the right people
- people who are engaged in things they shouldn't be.
Looking
at naked women. Drinking, gambling. It's how they rationalize these
things."
So
Las Vegas must be on any government list of the most likely terrorism
targets, right?
No,
it's not - and the government won't say why.
The
answer is classified, bottled up in files at the Homeland Security Department.
But interviews with more than two dozen security experts and federal
and state authorities found some likely answers, numerous suggestions
and a large dose of incredulity.
"If
they are going to include Fort Lauderdale (Fla.), they should have included
Las Vegas," said Tanya DeGenova, a former FBI counterterrorism
agent, now a security consultant. "It definitely should be ranked
higher than Cleveland. And Las Vegas is going to make a much bigger
statement than Cincinnati."
•••
The story of The List begins with good intentions. Homeland Security
worked diligently in 2005 to create a list of 35 urban areas most likely
to draw a terrorist strike. That list is important because the cities
on it receive a total of $765 million to beef up security under the
Urban Area Security Initiative program.
With
so much money at stake, the government wanted to apply objective criteria
to its decisions - to try to curtail the politicking. Toward that end,
federal computer programmers attempted to devise a scientific method.
Homeland
Security Secretary Michael Chertoff explained last month that the list
was the result of a complex new formula that factored in endless columns
of data, including intelligence data, and made 3.2 billion computer
calculations. The department crunched data to assess three categories:
A city's vulnerabilities to attack.
The
consequences of an attack, both in human and financial terms.
An
assessment of the real threat - that is, what is known about the likelihood
of an attack on its vital elements, such as chemical plants, skyscrapers,
Strip casinos. Each element was assigned a risk weight for the computation.
The result is a list unveiled Jan. 3 that is "risk-based,"
not politically driven, Chertoff said. The federal anti-terrorism money
would no longer be widely distributed as a "party favor,"
he said.
Chertoff
had predicted the political fallout – and got it.
Nevada law enforcement officials were dumbstruck. Elected officials
howled. Senate Minority Leader Harry Reid, D-Nev., called for Chertoff's
resignation.
Chertoff
said he didn't care. It wasn't a popularity contest, he said.
Homeland
Security officials will not say why Las Vegas got the ax. Asked whether
the opinions of security experts such as Cannistraro, DeGenova and others
were ever taken into account - that Las Vegas seems like a common-sense
target - department spokesman Marc Short said, "The analysis here
is a very objective one. To introduce subjectivity into this would make
it a very political process."
As
it turns out, Homeland Security's formula may not be a total mystery.
Similar calculations have been made by terrorism experts outside the
agency, including those at the Rand Corp., a think tank with a long
record of analyzing U.S. government policies and programs.
In
preparing a report published late last year, "Estimating Terrorism
Risk," Rand researchers focused on data that assessed the same
factors used by the department - threat, vulnerabilities and consequence.
Henry
Willis, lead author of the report, said he has no inside knowledge of
the Homeland Security report, and wouldn't speculate on its formula.
But
it's likely a safe assumption that Rand drew from some of the same data
and formulas as Homeland Security researchers. In some cases, information
was provided to Rand by the insurance industry, which calculates terrorism
insurance rates in various cities, and is widely considered a reliable
source.
Rand's
study looked at 47 cities and ranked them in a number of ways. Any terrorism
risk predictions should rely on various kinds of analyses, Willis said.
Three important assessments from Rand offer clues to the omission of
Las Vegas:
It ranked last among the 47 cities in a factor called "density
weighted population," essentially a combined measure of both total
population and population density.
Under this analysis, Las Vegas' vast suburbanlike sprawl would make
a terrorist strike on a single location here less damaging than in a
city of high rises. "If you don't have density, then you don't
really have threat," Willis said.
Asked
if that calculation included the 300,000 people found in the Strip corridor
on any given weekend, Willis said it didn't. It's based on U.S. Census
data of the permanent population.
"That's
a very good point," he said. Using the visitor factor, the calculation
for Las Vegas would change, as it would for any tourist-destination
city.
Las Vegas ranked 34th in "aggregated estimate" risk of fatalities
from terrorism, which is essentially a measure of a city's proportion
of risk when the total risk is shared by the 46 other cities.
Las
Vegas tied for 17th on another kind of list that ranked cities by expected
terrorism fatalities on average over time. That calculation was made
with all three of the risk indicators - vulnerabilities, consequence,
real threat - included in the equation.
The result makes little sense other than as a comparison of risk among
cities. The estimate for Las Vegas: one death. By comparison, the estimate
for New York was 304; for Chicago, 54; and Washington, 29. It also compares
to .05 in Columbus, Ohio; .01 in New Orleans and .0004 in Memphis, Tenn.
•••
Other clues to Homeland Security's rationale can be found by analyzing
The List by looking for common traits among cities on The List, security
experts say.
Some
leading ones:
Stadiums. Comparatively sedate cities Baltimore, Cincinnati, Cleveland,
Denver, Detroit, San Antonio and Pittsburgh all have something Las Vegas
does not - professional sports teams with elaborate palaces where celebrity
athletes and their fans gather by the tens of thousands.
In Las Vegas, however, the Las Vegas Motor Speedway draws more than
150,000 fans. The Thomas & Mack Center and the two largest casino
venues can seat more than 15,000 for some events.
Transportation hubs. St. Louis, Chicago, Indianapolis, Dallas, Atlanta,
Memphis (FedEx headquarters). The nation's rail lines, highways and
air traffic - not to mention its populace and commerce - flow through
these cities every day. Chicago and Atlanta are home to the nation's
No. 1 and No. 2 busiest airports.
McCarran International Airport is No. 6.
Symbols. New York and Washington are full of economic, historic and
politically significant targets - world banking centers, the Capitol,
the Statue of Liberty. Philadelphia has its share of historically significant
sites.
The Strip is unquestionably the nation's leading symbol of hedonism.
Tourists. Honolulu, San Francisco, Orlando.
These vacation hot spots lure tourists year-round. Las Vegas caters
to 38 million tourists a year.
Which
brings us full circle - what about Las Vegas?
It
was "foolish" to leave Las Vegas off the list, given al-Qaida's
interest in it as a symbol of America - and sin, Cannistraro said.
Las
Vegas may even be a more likely target than New York because of that
city's heightened daily sensitivity to intelligence reports, and a more
sophisticated security infrastructure dedicated to identifying terrorists,
Cannistraro said.
"Las
Vegas is a hell of a lot bigger target than the Jefferson Memorial that
they put all these big barricades around," said Randy Larsen, one
of the nation's top terrorism consultants. "What is more of a symbol
of American decadence than Las Vegas?"
•••
In spite of the Homeland Security Department's well-publicized effort
to determine The List by scientific analysis, some terrorism experts
are skeptical. They believe the simple explanation for the Las Vegas
omission is politics.
"I
don't know anyone who believes it wasn't political," said Neil
Livingstone, chief executive of GlobalOptions Inc. and a widely quoted
terrorism expert and author. "The failure to include Las Vegas
is mind-boggling. They're either using the wrong data or the wrong system
if they think Las Vegas is not a target."
Experts
note that since Sept. 11, 2001, other branches of the federal government
have treated Las Vegas as if it sported a bull's eye.
Consider:
Federal authorities poured resources into an investigation of the five
9/11 hijackers who had visited Las Vegas, combing for credible clues
about whether the city was next.
After
9/11, government officials considered Las Vegas perhaps a top 5 target,
based in part on intelligence gathered from captured al-Qaida operatives,
Livingstone said.
Fearing
an attack on the night of New Year's Eve 2003, the Homeland Security
and Transportation departments restricted airspace over just a handful
of U.S. urban areas, including the Strip.
And
the FBI was highly concerned about videotapes unearthed in 2002 - footage
shot in Las Vegas casinos by suspects in an alleged terrorist cell in
Detroit.
Here's
one more theory: If politics played a role in dropping Las Vegas from
the list, Reid might be to blame. Reid has been a thorn in the side
of the Bush administration for years, Nevada State Archivist Guy Rocha
noted.
"You'd
be surprised by partisan politics?" Rocha said.
"It's
possible this administration thinks Nevada is not red enough,"
Reid said, "but I certainly hope they wouldn't be so petty as to
play politics with the safety and security of more than a million people."
•••
In the weeks since Homeland Security computers spit out The List, the
Las Vegas question has taken root among officials in Washington intimately
involved with terrorism.
Even
members of the 9/11 Commission, which last year recommended that Homeland
Security devise a better formula for distributing urban security money,
said they were perplexed by the omission of Las Vegas.
Former
Sen. Bob Kerrey, D-Neb., was careful not to criticize Homeland Security,
but he said Las Vegas was hard for al-Qaida to ignore as a powerful
symbol of the West.
"If
you asked me - without any data - I'd put Las Vegas on the list,"
Kerrey said.
The
commission's investigators had attempted to find more information about
why the five 9/11 hijackers met in Las Vegas, but the panel reached
no conclusions. Former Indiana Democratic Rep. Tim Roemer, also a commissioner,
said he could offer no more insight than what was in the report.
"That
continues to be a source of frustration to me," Roemer said. "But
the bigger question is: What were they planning to do in Las Vegas in
the future? And what sleeper cells remain in the United States?"
Even
the federal government's top prosecutor in Nevada, U.S. Attorney Daniel
Bodgen, questioned The List. "I am mystified by the process used
by (Homeland Security) to determine the rating and the amount of terrorism
funding for Las Vegas," Bodgen said, noting that 38 million tourists
pass through Las Vegas each year and that terrorists have targeted tourist
sites in other countries.
When
a Sun reporter asked FBI Director Robert Mueller last month about the
subtraction of Las Vegas from The List, he smiled. He wouldn't publicly
question Homeland Security's results. Then he said with a nod: "I
really can't answer that. Talk to Mike Chertoff."
Terrorism
consultant Larsen said Chertoff could rectify his agency's error by
giving himself the discretion to add a few cities to The List that aren't
on the computer list.
Data-driven
formulas can create highly reliable lists, Larsen said. "But at
times you miss the obvious. Las Vegas just seems like the Sin City target."
Benjamin
Grove can be reached at (202) 622-7436 or at grove@lasvegassun.com. |
