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Last Updated: Tuesday, 5 September 2006, 08:32 GMT 09:32 UK
Bugging the boardroom
Industrial spying is estimated to cost global business more than $200 billion a year, according to US security experts.

Most trade secrets are stolen by people working on the inside, who then sell them on to a rival company or exploit the know-how themselves for personal gain.

A BBC Radio 4 investigation reveals that a new frontier is opening up in the corporate intelligence war, and the spy no longer needs to be on the inside - in fact, they can be thousands of miles away.

Mouse and keyboard
Computer infiltration is becoming increasingly common

Target Eye Limited styled itself as a software development company. It was registered in London, based in fashionable Kensington.

But all was not what it seemed at Target Eye. The registered address was simply a mailbox, and in reality the company was run from a house in a more down-at-heel neighbourhood of south London.

The company had developed a piece of sophisticated software - a so called trojan - which could infiltrate computers.

Once installed, the program would provide a discreet window through which it could remotely spy on the computer and steal its contents.

An Israeli couple, husband and wife Michael and Ruth Haephrati, were behind Target Eye.

Michael developed the software, which they then hoped to sell to global security services.

But there were no takers. So the Haephratis used their London base to spy on finance and communications companies around the world, from Latin America to Russia and Europe.

Sensitive information

The spies saw information they are not allowed to see
Rani Rahav Communications

One of their victims was Rani Rahav Communications, a public relations agency in Israel that deals with many of the country's top companies.

The communications agency dealt with a lot of commercially sensitive information passed to it from clients, including details of new products or plans to acquire new businesses.

Mr Rahav told the BBC: "The spies saw information they are not allowed to see.

"For example, if I have some information in my system that one company is going to buy another company and you saw it before everyone else, you take that information and buy shares on the stock market and you can make a lot of money."

The BBC has learnt of one mobile phone company in Israel that had its new product details passed onto a rival, undermining the planned launch.

The authorities in Israel eventually uncovered the espionage ring and the Haephratis were extradited from London to stand trial.

The investigation revealed they were involved in upwards of 100 projects of espionage or attempted espionage.

Telephone pitch

A senior prosecution source in Tel Aviv told the BBC that Ruth Haephrati was the expert at implanting the trojan into the unknowing victims office computer system.

He said she would contact a senior executive proposing a bogus business deal.

Disc being loaded into computer (BBC)
Ruth Haephrati would offer companies a trojan-ridden CD

She would start with a telephone pitch, before offering to send more detailed information on a CD.

She stressed that the offer was so commercially sensitive that only the executive should open it.

Once the CD was installed, the trojan was let loose, but the company and the executive were none the wiser.

The Haephratis were jailed earlier this year.

But the techniques the Haephratis used are being adapted by others.

Increasing risks

Trojan agents are now being sent to companies embedded in e-mail traffic.

MessageLabs, an international IT security firm, provides a global filtering service for companies and governments, scanning emails for spam and viruses.

According to Mark Sunner, the company's chief technology officer, the emails are highly targeted and aimed at people in research and development or the company patent office.

The capability to construct these trojans to infiltrate your organisation is all too readily available
Mark Sunner

Not only that, they are engineered to appeal to those they want to open the trojans, or buried in commonplace business material, such as word documents or financial spreadsheets.

Mr Sunner says: "For the last 14 months, we've been intercepting these kinds of threats at about two per week. Yet more recently, that number has ramped up to about one per day.

"The capability to construct these trojans to infiltrate your organisation is all too readily available, and the mechanism to prevent these threats getting in, if you are using traditional mechanisms, has not kept pace with the way the threat has evolved."

Bugging the Boardroom, a two-part investigation into industrial espionage, starts on Tuesday 5 September at 2000 BST on BBC Radio 4.

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