Electronic spies torture German firms

Mannheim physicists Steffen Noehte and Matthias Gerspach have access to some of the most sophisticated information technology in the world. But they never discuss anything important by phone, fax, telex or email.

"We deal with important matters in face-to-face conversations only," according to Dr Noehte.

The two researchers started taking precautions last year when they discovered that ordinary, adhesive tape could be used to store huge amounts of data. A single role of Sellotape is capable of storing as much information as 7,000 PC diskettes or 15 CDRoms.

As they worked to iron out a number of technical problems with their discovery, the scientists disconnected their computers from the Internet and built special fire-walls at their laboratory.

Despite these precautions, the two men discovered earlier this year that electronic spies had infiltrated their computer system and used a special snooping programme to rifle through their software. They traced the spying operation to the United States, but they have no idea who now has access to their research and they can only hope that they are granted a patent for their adhesive tape idea before a pirated version appears.

It is not only budding researchers who feel at risk from high-tech industrial espionage. Firms such as BMW, Siemens and Dasa have all been victims of the growing menace of spies within German industry.

"They are scooping up like never before. Industrial espionage is taking on ever tougher forms," according to BMW board member Mr Horst Teltschik.

A former security adviser to Chancellor Helmut Kohl, Mr Teltschik is leading an effort to organise resistance to foreign snoopers, whose activities cost German firms between €10 billion (£7.88 billion) and €20 billion each year.

After the end of the Cold War, many intelligence services shifted their focus from political to industrial espionage and Germany is once again a crucial field of operation for foreign spies.

According to intelligence chiefs in the state of Baden-Wuerttemberg, home of such industrial giants as DaimlerChrysler, two thirds of all foreign espionage in the state during 1997 was targeted at industry. Only 19 per cent focused on political activity and just 8 per cent had a military purpose.

Truth and wild rumour are often difficult to distinguish in the opaque world of international espionage, but German firms are convinced that their communications are routinely monitored by the United States National Security Agency (NSA).

Enercon, one of the world's leading manufacturers of wind energy equipment, was hoping for a major breakthrough when it developed a new, cheap method of harnessing wind power. But when the German firm applied for a patent in the US, it was horrified to discover that its rivals, Kenethech, had already submitted an almost identical application.

Some months later, a former NSA agent admitted that the organisation had secretly intercepted Enercon's data communications and monitored conference calls. The NSA passed all the information it gleaned on to Kenetech.

The US makes no secret of the fact that its intelligence agencies are engaged in industrial espionage with the aim of helping US firms to compete with foreign rivals. The French are equally candid about such activities and about their ambition to rival the US in industrial intelligence gathering.

Germany's intelligence agencies are expressly forbidden from engaging in any form of industrial or economic espionage and German firms complain that this leaves them defenceless in the face of the activities of agencies such as the NSA.

The NSA operation is based around an interlocking computer system known as Echelon, which monitors telephone calls, fax and telex messages, e-mails and satellite communications.

One monitoring station is based at Bad Aibling in Bavaria, but two massive stations in Britain, at Menwith Hill in Yorkshire and Morwenstow in Cornwall, oversee the whole of Europe and the Atlantic and Indian Oceans.

Instead of targeting individual companies or organisations, the NSA uses a searching system called Memex to sift through all electronic communications for particular key words. Many of these key words are chosen by US companies in search of know-how or research secrets from European rivals.

Russian spies are also turning to industrial espionage and Prime Minister Yevgeny Primakov, a former intelligence chief, has formally identified the economic sphere as his intelligence agents' most important field of endeavour. An employee of Dasa was recently convicted of passing secret Airbus plans to Russian intelligence and German security chiefs claim that Moscow has invested billions in creating phoney joint ventures expressly to spy on big firms.

Out of 120 Russian-backed firms in Bavaria, one fifth are camouflage operations for spying, according to German counterintelligence officers.

German firms feel abandoned by their government as they attempt to defend themselves against such external threats. Managers such as Mr Wolfgang Hoffmann from the pharmaceutical giant Bayer claims that Germany's intelligence services know which firms are being targeted by US intelligence but they refuse to inform the companies involved.

He believes that Bonn must wake up to the danger to industry posed by security services from friendly countries and take appropriate action.

"We too must get used to the fact that the economy is part of national security," he said.