by Eamon Javers
Even after meeting many of the top corporate spies in the world, exposing operations that many of them did not want exposed, and poring over the history of their industry, I’m still conflicted about whether all this is headed in a positive direction for society. As a journalist, I’m a strong believer in the importance of gathering information. And I’m a fundamentalist when it comes to the First Amendment. But what separates me, and reporters like me, from the corporate spies is that we believe in making sure the information we report reaches the widest possible audience. Spies do the opposite: they make sure the details they harvest reach only a very narrow—and very high-paying—audience.
I don’t think that’s always good for society. So I’ll offer one modest suggestion. The spy firms must be dragged farther into public view, where citizens can keep an eye on whether what they’re doing is constructive or destructive.
There’s one way this could be done. Today, American lobbyists must register with Congress, revealing to the public how much they’re getting paid, who their clients are, and what they’re trying to accomplish. When they were put into place in the mid-1990s, the regulations were hotly resisted by Washington’s lobbying community. But they have helped to clean up an industry, and made it easier for the media and the public to spot the problem firms before these firms can do too much damage.
A spy registry modeled on the lobbying disclosure rules could be coordinated by the SEC, which already processes millions of pages of public disclosure documents from public companies every year. Free markets do work best without friction, and a big source of friction in the economy is misinformation. The ability of investors and corporate leaders to stamp out confusion in the market by finding out the truth of a situation helps boost confidence, speed transactions, and prevent prices from spiraling too high or too low.
It’s time for the spy firms to come in from the cold.
Acknowledgments
I’ll start where everything begins for me: my wife, Maureen, who decided not to move back to Minnesota and gave me a chance instead. Thanks, babe. And to our children, Declan and Evelyn, whose curiosity and intelligence give me confidence that each generation is an improvement upon the last.
My parents, Ron and Eileen Javers, gave me license to ask impertinent questions of powerful people over dinners each night in the Philadelphia home of my childhood. My dad, who is still the best journalist I’ve ever known, diligently proofread early versions of this manuscript, policing them for clichés and redundancies—some of which, you may have noticed, I managed to slip past him. My kid brother, Quinn Javers, is a real historian, and I should probably apologize to him for imitating one in these pages.
Professionally, I have to thank the team at Politico, particularly Jim VandeHei, John Harris, Craig Gordon, and Jeanne Cummings, who gave me a home while I wrote this book. They are inventing a new kind of Internet journalism for an era in which the survival of even the greatest news institutions is in doubt. The journalism they’re creating is new and exciting, but the values they bring to the project are old and good.
At Business Week, where I did my early research into the nexus between intelligence and the economy, former editor in chief Steve Adler carved out an important space for investigative reporting, giving his reporters the time to dig deeper into the stories that captivated them. It’s a rare and important gift for a journalist. The magazine’s Paul Barrett is both brilliant and demanding, and taught me to continually challenge my material and myself. My former colleague Dawn Kopecki, who knows a good story when she sees one, also gave me an invaluable early boost on this project.
My old bosses at CNBC, Alan Murray of the Wall Street Journal and Gloria Borger, who is now with CNN, made heroic efforts to turn a print guy into a television correspondent. Give them credit for trying, anyway. Both have gone far beyond what’s required of a boss, and for long after they stopped signing my paychecks. I’m proud to call them both friends.
My agent, Rafe Sagalyn, is a true gentleman, and my editor at HarperCollins, Ben Loehnen, was a pleasure to work with.
In writing this book, I had the help of a huge number of sources, both on the record and off. I’m grateful to the people who gave me their time to explain an industry that’s largely shrouded in mystery.
Secret keepers don’t often talk candidly with secret tellers, but I’m glad so many did.
Thanks.
Notes
CHAPTER 1: CODE NAME: YUCCA
Project Yucca was first detailed by the author in “Spies, Lies, and KPMG,” Business Week, February 26, 2007. It can be found online at www. businessweek.com/magazine/content/07_09/b4023070.htm.
Burt’s bio can be found on the Web site of the International Institute for Strategic Studies, available online at www.iiss.org/about-us/regional-offices/washington/board-of-directors/ambassador-richard-burt.
Barbour Griffith and Rogers’ contract with Eritrea is on file with the U.S. Department of Justice’s Foreign Agents Registration Act Registration Unit Public Office. It is available online at www.fara.gov/docs/5430-Exhibit-AB-20060203-22.pdf.
The case was filed in United States District Court for the District of Columbia, number 1:05-cv-02204-PLF-AK. It was unsealed and made available for public view on January 26, 2006.
CHAPTER 2: A HIGH AND HONORABLE CALLING
“Tapping the Wires for Stock Operations,” Sacramento Daily Union, August 12, 1864.
The Pinkertons’ entire statement on Homestead can be found online at www.explorepahistory.com/~expa/cms/pbfiles/Project1/Scheme40/ExplorePAHistory-a0j7g3-a_707.doc.
CHAPTER 3: FOR THE MONEY
John F. Fox, “The Birth of the Federal Bureau of Investigation,” Federal Bureau of Investigation Office of Public/Congressional Affairs, July 2003. This official history of the FBI is available online at www.fbi.gov/libref/historic/history/artspies/artspies.htm#_ftn8.
Sam Dash, The Eavesdroppers (New York: Da Capo, 1959), p. 86.
Edward V. Long, The Intruders: The Invasion of Privacy by Government and Industry (New York: Praeger, 1967), p. 193.
“Two Men Are Seized in Wiretap Case, a Third Gives Up,” New York Times, February 20, 1955, p. 1.
Long, The Intruders, p. 195.
Patent no. 2,699,054. Documents available online at: www.pat2pdf.org/patents/patz699054.pdf.
“Anticipating the 21st Century: Competition Policy in the New High Tech Global Marketplace,” Report by Federal Trade Commission Staff, May 1996. Available online at www.ftc.gov/opp/global/report/gc_v1.pdf.
“Broady Outburst Marks Testimony,” New York Times, December 7, 1955, p. 23.
“Broady Sentenced to 2–4 Years; Judge Hits ‘Dirty’ Wiretapping,” New York Times, January 14, 1956, p. 38.
Patricia Holt, The Bug in the Martini Olive: And Other True Cases from the Files of Hal Lipset, Private Eye (Boston: Little, Brown, 1991), p. 11.
Transcript of Hearings before the Subcommittee on Administrative Practice and Procedure of the Committee on the Judiciary, United States Senate, Eighty-Ninth Congress, First Session, February 18, 1965, p. 14.
Holt, The Bug in the Martini Olive, p. 69.
Ibid., p. 79.
Ibid., p. 154.
“Disappearing Witnesses,” Time, September 12, 1977.
Edith Evans Asbury, “DeCarlo Witness Describes Fears: Zelmanowitz Tells of Talks with Defense Lawyer,” New York Times, January 22, 1970.
CHAPTER 4: THE MAN IS GONE
George O’Toole, The Private Sector: Rent-a-Cops, Private Spies, and the Police-Industrial Complex (New York: Norton, 1978), p. 40.
Jim Hougan, Spooks: The Haunting of America—The Private Use of Secret Agents (New York: Morrow, 1978), p. 332.
Robert Maheu and Richard Hack, Next to Hughes: Behind the Power and Tragic Downfall of Howard Hughes by His Closest Advisor (New York: HarperCollins, 1992), p. 115.
Ibid., p. 122.
History of the OH-6A Cayuse available online at http://www.boeing.com/history/mdc/cayuse.htm.
Unclassified transcript of testimony of Robert A. Maheu before the United States Senate Select Committee to Study Governmental Operations with Respect to Intelligence Activities, Tuesday, July 29, 1975, 10:50 A.M., p. 28.
Maheu and Hack, Next To Hughes, p. 2.
“Statements by Hughes and Two Publishers in Autobiography Controversy,” New York Times, January 10, 1972, p. 23.
“The ITT Affair,” Time, March, 1972. This thorough summary of the Dita Beard scandal is available online at www.time.com/time/magazine/article/0,9171,903331-2,00.html. A more in-depth account can be found in the Senate Watergate Report, p. 206. It is available online at http://books.google.com/books?id=x7nMs-JwAikC&pg=PA206&lpg=PA206&dq=dita+beard+affair&source=web&ots=-leJC8aX3C&sig=06FakbStYMUIUT-fNsY01LnPTOE&hl=en&sa=X&oi=book_result&resnum=1&ct=result#PPA208,M1.
Jack Anderson, Peace, War, and Politics: An Eyewitness Account (New York: Macmillan, 2000), p. 230.
J. Anthony Lukas, “The Hughes Connection: What Were the Watergate Burglars Looking For?” New York Times, January 4, 1976.
CHAPTER 5: THUG BUSTERS
Arthur Meier Schlesinger, Robert Kennedy and His Times (New York: Houghton Mifflin Harcourt, 2002), p. 585.
Charles D. Ellis and James R. Vertin, Wall Street People: True Stories of Today’s Masters and Moguls (New York: Wiley, 2001), p. 136.
Jon Nordheimer, “Financier Avoids Jail in Deal to Aid Homeless,” New York Times, February 13, 1988.
Fred R. Bleakley, “Wall Street’s Private Eye,” New York Times, March 4, 1985.
Daniel Pedersen, Ruth Marshall, and Jane Whitmore, “On Saddam’s Money Trail,” Newsweek, April 8, 1991.
Celestine Bohlen, “U.S. Company to Help Russia Track Billions,” New York Times, March 3, 1992.
L. J. Davis, “International Gumshoe,” New York Times, August 30, 1992.
Christopher Byron, “High Spy: Jules Kroll’s Modern Gumshoes Are on a Roll,” New York, May 13, 1991.
Bryan Burrough, “Pirate of the Caribbean,” Vanity Fair, July 2009.
“How Kroll Signed Off on $7 Billion Fraud,” Intelligence Online, July 15, 2009.
CHAPTER 6: THE CHOCOLATE WAR
“Nestlé S.A. to Acquire Spillers Petfoods,” Vevey, February 4, 1998. Press release. Available online at www.Nestlé.com/MediaCenter/PressReleases/AllPressReleases/SpillersPetfoods4Feb98.htm.
“Suggestions for Nestlé’s Public Relations Response,” obtained by the author.
Neil A. Lewis, “Giants in Candy Waging Battle over a Tiny Toy,” New York Times, September 28, 1997.
“Nestlé Announces Plans to Voluntarily Withdraw Nestlé Magic,” Business Wire, October 1, 1997.
“International Briefs: Nestlé to Buy Spillers from Dalgety,” New York Times, February 5, 1998.
The ratio of lobbying spending to earmark return was first calculated by the author in “Inside the Hidden World of Earmarks,” Business Week, September 17, 2007. Available online at www.businessweek.com/magazine/content/07_38/b4050059.htm?campaign_id=rss_daily.
Roald Dahl, Charlie and the Chocolate Factory (New York: Puffin, 1964), p. 19.
James Ridgeway, “Exclusive: Cops and Former Secret Service Agents Ran Black Ops on Green Groups,” Mother Jones, April 11, 2008. Available online at www.motherjones.com/news/feature/2008/04/firm-spied-on-environmental-groups.html.
“There’s Something about Mary: Unmasking a Gun Lobby Mole,” Mother Jones, July 30, 2008. Available online at www.motherjones.com/news/feature/2008/07/mary-mcfate-sapone-gun-lobby-nra-spy.html.
“Swiss Campaign Group Says Food Giant Nestlé Hired Spy against It,” Associated Press, June 20, 2008. Available online at www.iht.com/articles/ap/2008/06/20/business/EU-FIN-Switzerland-Nestlé-Activists-Infiltrated.php.
CHAPTER 7: TACTICAL BEHAVIOR ASSESSMENT
Transcripts of the UTStarcom call and the BIA analysis of it come from a confidential report produced by BIA for its client: “UTStarcom (UTSI: $8.54) Q2 Earnings Call August 2, 2005 Rating: Medium-High Level of Concern.”
UTStarcom’s press release from that day is on the company’s Web site at http://investorrelations.utstar.com/releasedetail.cfm?ReleaseID=175772.
Details of the movements of UTStarcom’s stock price can be found online at http://finance.yahoo.com/q/hp?s=UTSI&a=07&b=1&c=2005&d=10&e=1&f=2005&g=d.
Details of BIA’s activities have been compiled from on- and off-the-record accounts by participants in the events and people who were in a position to be familiar with the events. BIA declined to offer any comment or details of its activities during the research for this book. The backgrounds of its employees are taken from BIA documents obtained by the author as well as descriptions given to him by people familiar with the company.
Re-creation of the TBA method is based on interviews with trained practitioners and their trainees. It is also based on written training material produced by BIA and obtained by the author.
Descriptions of the founding of BIA are compiled from the on-the-record recollections of its former CEO Don Carlson, as well as off-the-record recollections of others familiar with BIA.
BIA’s self-description was included in a set of training materials handed out to clients: “Elicitation Skills: Increasing the Flow of Information.” The materials were obtained by the author.
The article was published on June 26, 2006, and is available online at http://online.barrons.com/article/SB115110330795289453.html.
Transcript of the Southwest earnings call used as a source for quotes was produced by Thompson StreetEvents, and is titled “LUV-Q2 2005 Southwest Airlines Earnings Conference Call.”
Southwest’s 2005 annual report is available on the Web site of the Securities and Exchange Commission at www.sec.gov/Archives/edgar/data/92380/000095013406001553/d32370e10vk.htm.
An image of Cascade’s headquarters can be found on Google Maps at http://maps.google.com/maps?f=q&hl=en&geocode=&q=2365+Carillon+Point,+Kir kland,+Washington&sll=37.0625,-95.677068&sspn=64.497063,108.984375&ie=UTF8&ll=47.657359,-122.206625&spn=0.003418,0.006652&t=h&z=17&iwloc=addr.
Information on Cascade Investment LLC is available on the Web site of the Securities and Exchange Commission at www.sec.gov/Archives/edgar/data/1052192/000104746908001369/a2182606z13f-hr.txt.
General Scale data available on the Web site of the U.S. Office of Personnel Management at http://opm.gov/oca/08tables/pdf/gs.pdf.
BIA’s document “Strategic Information Collection for Investors” was obtained by the author.
CHAPTER 8: THE EDDIE MURPHY STRATEGY
GeoEye’s May 2008 10-Q filing with the SEC can be found online at http://www.sec.gov/Archives/edgar/data/1040570/000095013308001863/w57751e10vq.htm.
The National Reconnaissance Office Web at www.nro.gov/corona/corona2.jpg site has a copy of the fist spy satellite picture.
This and other quotes from Trading Places can be found online at www.imdb.com/title/tt0086465/quotes.
The $100,000 annual fee was reported in Ben Paynter, “Feeding the Masses: Data In, Crop Predictions Out,” Wired, June 23, 2008. Available online at www.wired.com/science/discoveries/magazine/16-07/pb_feeding.
The press release is available on the USDA Web site at www.nass.usda.gov/Newsroom/printable/06_30_08.pdf?printable=true&contentidonly=true&contentid=2008/06/0171.xml. The acreage report of June 30, 2008, can be found at http://usda.mannlib.cornell.edu/usda/current/Acre/Acre-06-30-2008.pdf.
The history of U.S. commercial satellite imagery was ably laid out in Ann M. Florini and Yahya A. Dehqanzada, “No More Secrets? Policy Implications of Commercial Remote Sensing Satellites,” paper written for a Carnegie Endowment conference, 1999. Available online at https://www.policyarchive.org/bitstream/handle/10207/6465/satellite.pdf?sequence=1.
Joanne Irene Gabrynowicz, “The Perils of Landsat from Grassroots to Globalization: A Comprehensive Review of U.S. Remote Sensing Law with a Few Thoughts for the Future,” Chicago Journal of International Law (Summer 2005): 45.
The complete list is available at the NOAA Web
site, http://www.licensing.noaa.gov/licensees.html.
NOAA has a handy fact sheet on satellite regulations on its Web site at http://www.licensing.noaa.gov/faq.html.
The BBC account of the U.S. satellite action in Afghanistan, “U.S. Buys Afghan Image Rights,” appeared on October 17, 2001. Available online at http://news.bbc.co.uk/1/hi/sci/tech/1604426.stm.
Wilson et al. v. ImageSat International N.V. et al., CASE 1:07-cv-06176-DLC-DFE, filed July 2, 2007.
CHAPTER 9: NICK NO-NAME
“Esoteric: A Specialist Security and Covert Investigations Company,” corporate marketing brochure.
Michael McCahill and Clive Norris, “CCTV in London,” Centre for Criminology and Criminal Justice, University of Hull, 2002. Available online at www.urbaneye.net/results/ue_wp6.pdf.
CHAPTER 10: THEY’RE ALL KIND OF CRAZY
How Senator Frist’s decision leaked to Wall Street traders was first revealed by the author in “Washington Whispers to Wall Street,” Business Week, December 26, 2005. It can be found online at www.businessweek.com/magazine/content/05_52/b3965061.htm.
CHAPTER 11: IS THIS A GREAT COUNTRY, OR WHAT?
“German Corporate Spying Scandal Widens,” Spiegel Online International, June 9, 2008. Available online at www.spiegel.de/international/business/0,1518,558510,00.html.
“Germany’s Corporate Spying Scandal,” Time.com, May 27, 2008. Available online at www.time.com/time/business/article/0,8599,1809679,00.html?xid=feed-cnn-topics.
The e-mails between Hakluyt and Enron can be found online at www.enronexplorer.com.