Corporate Spooks

Corporate espionage is the dirty little secret of big business in America today.

Corporations spy on other corporations. They spy on citizen groups. They spy on governments.

To protect their reputations, corporations don't admit to spying. But they do it.

Corporate spies call themselves "competitive intelligence professionals."

There is even a professional association of corporate spies -- the Society for Competitive Intelligence Professionals (SCIP).

SCIP denies that "competitive intelligence" is espionage and denies that "competitive intelligence professionals" are spies.

"Espionage is the use of illegal means to gather information," says the SCIP web site (www.scip.org).

And SCIP says its members do not practice espionage.

SCIP says that its members gather their information legally from public sources and are bound by a strict code of ethics, which requires compliance with all laws and disclosure of "all relevant information, including one's identity and organization, prior to all interviews."

Marc Barry is out to upend SCIP's apple cart.

Barry is a corporate spy. He's not a member of SCIP, because he says he's not a hypocrite.

Of course corporations spy, he says.

Of course SCIP's members spy, he says.

In fact, they hire him when they don't want to get caught doing a company's dirty work.

In the business, he's known as a kite.

"A kite is somebody who is essentially expendable, somebody who is flown out there, and if it hits the fan, the controller can cut the string, deny knowledge and let the kite fly off on its own," Barry told us last week.

"I provide my clients with actionable intelligence that they either don't know how to get themselves, or they don't want to get caught collecting themselves," Barry said. "I provide plausible deniability to my clients. In the event that an operation is blown and there is litigation or worse -- a criminal charge -- they can deny all responsibility by denying knowledge."

With plausible deniability, Barry's corporate clients "can claim ignorance by demonstrating in court that I am in fact a consultant, that I signed documents saying that I would abide by all ethical rules, and that they had no idea what I was doing," he says.

Barry runs about 40 capers a year.

"I do very well for myself," Barry said. "All of my clients are Fortune 500 companies. I deal at the executive level. I'm either dealing at the chief executive officer, or the chief operating officer level. The very lowest would be vice president of marketing."

Recently, a SCIP board member hired Barry to run an operation against Kraft Foods on behalf of Schwan's Sales Enterprises.

In the winter of 1997, Kraft had developed a new "rising crust" pizza under the brand name DiGiorno. Schwan's was moving a similar pizza under the name Tony's.

Kraft, a unit of Phillip Morris, was planning a massive advertising campaign to position DiGiorno's as the only frozen pizza to taste like pizza-parlor pizza.

The SCIP member phoned Barry.

He knew Barry could quickly get information on the Kraft operation.

Posing as a reporter for the Wall Street Journal, as an environmentalist, and as a graduate student, Barry collected the information Schwan's wanted in less than two days. Job completed. Barry wrote about the operation in a Spooked: Corporate Espionage in America (Perseus, 2000, co-authored by Adam Penenberg).

Someone at Kraft read the book, ordered an internal investigation, and tripped across a second espionage operation. Last month, Kraft sued Schwan's for theft of trade secrets.

Isn't Barry concerned about the ethics of lying?

"To my knowledge, in all 50 states, it is not illegal to lie," he says. "The only people I listen to are the United States Department of Justice and state and local law enforcement officials."

What about dumpster diving -- going through someone's garbage?

"Dumpster diving is perfectly legal, providing there is not a sign posted," Barry says. "The courts have held that if it is left to be accessed by commercial carters, then it is no longer private property. It is only private property if there is a 'no trespassing' sign and you had to trespass to get into the dumpster."

What about using an answering machine pick -- a device used to remotely grab someone else's message off the target's answering machine?

"That's probably a gray area," Barry says.

"Do you use picks?" we ask.

"Fine, and you?" Barry answers.

Barry wonders whether SCIP members are adhering to the organization's "code of ethics."

"If you go to one of their functions, it looks like a sixth grade dance -- where you had all the boys on one side and all the girls on the other side and no one would talk to each other," he says.

"At a SCIP function, on one side you have all the spooks who came out of Defense Intelligence Agency, the Central Intelligence Agency and the National Security Agency. And they are all backslapping and hanging with each other."

"And on the other side you have the librarians, the Lexis-Nexis types, the software people. So, the white hats are on one side, and the black hats are on the other."

Barry sees a big business in corporate espionage. His Manhattan-based company -- C3I Analytics -- is in a joint venture with Raytheon that is dumping $12 million to build a state-of-the art corporate espionage war room in New York City.

The new company, to be called Intelogix, will sell services to other corporations "intent on studying the enemy's every move."

Could it be that, as you are reading this, some Fortune 500 company is picking the telephone messages off your answering machine?

Fine, and you?