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Last Updated: Friday, 1 February 2008, 08:07 GMT
Dirty Little Secrets: Corporate Espionage
By Rob Lemkin
The Money Programme

Lewis Hamilton's McLaren leading Kimi Raikkonen's Ferrari at the French Grand Prix
McLaren were fined 50m for spying on Ferrari
Corporate espionage is as old as business itself. But today as technology develops, there has been an expansion of murky practices like phone bugging, computer hacking and secret filming.

The range of businesses that have relied on corporate espionage is breathtakingly wide.

  • In the glamorous world of Formula One, McLaren was fined 50 million for spying on rival Ferrari.
  • A waste tycoon who bugged the phones and hacked the computers of local residents and government officials investigating his company ended up going to prison.
  • A builder and conservatory designer who was spied on by a larger rival lost his business and moved to Spain.

Secret meeting

They crushed me. There's no question about that
Howard Davies, former builder

Last season at a secret meeting in Barcelona, the McLaren Formula One team obtained a copy of the operating manual of their arch-rival Ferrari.

It was just a small part of a lengthy spying operation involving a senior engineer at each team.

Italian police found the two men had exchanged nearly 400 phone calls, text messages and emails in 3 months.

According to Italian prosecutor Guiseppe Tibis the timing of these contacts was damning:.

"The frequency of the emails more or less always coincided with the Grand Prix races," he said.

Exposed in Cranleigh

The plot was finally exposed in the Surrey village of Cranleigh near the McLaren HQ when the wife of a McLaren engineer brought the 780-page Ferrari manual to a document scanning company.

The manager was suspicious and immediately phoned Ferrari.

Three months later the FIA, Formula One's governing body decided McLaren was guilty of espionage and imposed a record 50m fine.

McLaren told the BBC that although it did not accept all the FIA's conclusions, it apologised wholeheartedly for its conduct and said it would do everything in its power to avoid a repetition.

However, Eddie Jordan, founder of Jordan Grand Prix, is just one of many insiders who claim that spying and Formula One go hand in hand.

"I think espionage has been there from day one, certainly is there now and will continue to be there. It's part of Formula One," he said.

Conservatory design

Another spy story has emerged from the unlikely world of conservatory design and manufacture.

Ten years ago a David-and-Goliath struggle started between two Lancashire firms.

Builder and designer Howard Davies was in competition with a large company called Ultraframe, then on the verge of stock market floatation.

Suspecting that Mr Davies was infringing its patents, Ultraframe sent in a private investigator who posed as a potential investor.

The BBC has obtained the transcripts of the spy's meeting with Howard Davies, which reveals how Mr Davies inadvertently disclosed confidential financial and copyright information.

In the end Ultraframe's patent infringement claim against Mr Davies came to nothing, but by then he was out of the business and has spent the last decade in Spain. The Money Programme asked Ultraframe about the espionage.

It told us it took place 'over ten years ago' and that 'the directors involved are no longer employed by the business'.

But for Howard Davies the effect has been devastating: "They crushed me. There's no question about that."

Corporate espionage isn't just about business to business. It can affect ordinary people too.

Blaggers

Mick Gorrill of the Information Commissioner's Office, the body charged with protecting all our personal data, has focussed on a group of spies who make bogus phone calls to obtain confidential records.

They often work for law firms deciding whether to sue someone or insurance companies assessing a claim.

Mr Gorrill calls them Blaggers.

It's a bit like someone burglaring your house or stealing something from your car. It's exactly the same. It's your information. And they're not entitled to it but they take it," he says. Sharon Anderson could be described as Britain's 'Queen of the Blaggers'.

In a quiet Cambridgeshire town, Mrs Anderson and her husband ran an extraordinary blagging operation turning over 140,000 a year.

In her time Sharon Anderson conned confidential details out of Lloyds Bank, HSBC, NatWest, Barclays, Coutts, British Gas, BSkyB and Legal & General simply by phoning up and convincing someone she was entitled to the information.

In 2006, Mrs Anderson and her husband were fined 7,500 for their Data Protection Act crimes, offences which will soon carry punishments of up to 2 years in prison.

But according to Mr Gorrill, the demand is coming from major companies.

"It's coming from companies that should know better. We're trying to change the attitude but it's difficult," he says.

Espionage in the Fens

The programme's final case is one where both investigators and their businessmen clients went to jail for their espionage. It centred on the Fenland village of Thornhaugh where resident Martin Witherington found a stranger opening up an underground phone junction box.

Mr Witherington phoned BT but it had no record of an engineer going to the village. The programme charts an extraordinary sequence of events in which local people started getting unusually high phone bills.

BT investigated and discovered a series of phone bugs had been installed. At this stage it called in the police.

Detective Inspector Kevin Hyland of the Metropolitan Police explains how they set a trap to force the phone tapper to return to the scene of his crime.

"We deliberately damaged the devices and [hoped] that would cause this man to come back and repair the device," he explained.

The trap paid off when known criminal Michael Hall returned to the area.

Police were able to trace him to a London-based firm of private investigators called Active Investigation Services.

When they raided its offices they discovered the Thornhaugh connection.

Detective Inspector Hyland says: "it soon was clear that their largest customer was a company called Atlantic Waste Services Ltd." Atlantic Waste ran a landfill site adjacent to the village of Thornhaugh.

Market value

The company was run by Adrian Kirby.

At the time he hired the spies, Mr Kirby faced considerable opposition from a local residents' campaign and from regulatory bodies like the Environment Agency.

Mr Kirby wanted to sell his waste company for millions of pounds.

Based on court documents and police evidence, it has emerged that Adrian Kirby ordered the bugging of phones belonging to campaigners and government officials; and the hacking of their computers.

Steve Hunt, one of the most vocal of the protestors to be bugged and hacked, says "that's a real violation of your own space and it's like someone's violated your home. It really feels like someone's violated your home."

After some months of painstaking investigation, police were able to gather enough evidence to charge Adrian Kirby.

Mr Kirby pleaded guilty to an espionage conspiracy and was sentenced to six months in prison.

But he kept his multi-million pound share when the company was sold.

The investigators he hired got terms ranging up to 2 years.

But it seems clear that for many companies spying is - quite simply - business by other means.

The Money Programme: Dirty Little Secrets, BBC Two at 1900 GMT on Friday 1 February.

SEE ALSO
McLaren hit by constructors' ban
13 Sep 07 |  Formula One
F1's face-saving ruling
13 Sep 07 |  Formula One

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