'James Bond' Tactics Help Companies Spy on Each Other

CIA says OK for agents to moonlight for private clients.

February 16, 2010, 1:51 PM

Feb. 18, 2010 — -- James Bond, meet Fred Rustmann. A former CIA agent, Rustmann now runs a "corporate intelligence" firm that helps companies spy on each other. Like many veterans of the Central Intelligence Agency, Rustmann's spying tricks are in high demand by the private sector.

When one of Rustmann's clients wants to find out about, say, its competitors' upcoming product line-ups, it pays him to conduct undercover interviews with unsuspecting employees and dig through their garbage.

"You can find out all kinds of good stuff in the trash," says Rustmann, founder of CTC International, who spent 24 years in the CIA's clandestine service breaking into embassies and wiretapping foreign government officials.

Because it's illegal in the United States to trespass in order to retrieve trash, Rustmann says he often gets cleaning crews to sell him the garbage they collect. While the practice raises eyebrows among some in the rapidly growing "competitive intelligence" industry, Rustmann says he never breaks the law.

"Sometimes you have to go the extra yard for your client, without stepping over the line," he says.

Rustmann says his phone started ringing with job offers almost immediately after he retired from the CIA, where he served clandestinely in many countries, including Vietnam, Cambodia, France and Ethiopia. Companies are keen to tap CIA veterans' expertise with psychological analysis, undercover research and high-tech eavesdropping.

"Nobody is better at collecting information than the CIA," says Rustmann.

One of his favorite tactics is calling unsuspecting employees at a target company, indentifying CTC as a "research firm" -- which it is -- and then asking all kinds of juicy questions. As long as CTC doesn't lie about its identity and doesn't ask for trade secrets protected by the Economic Espionage Act of 1996, the practice is perfectly legal.

It's not just former CIA agents who do this type of work. Current operatives sometimes moonlight for private companies in order to earn some extra cash.

CIA OK's Moonlighters

News of this "moonlighting" has been making headlines after Politico reporter Eamon Javers broke it in a new book, "Broker, Trader, Lawyer Spy: The Secret World of Corporate Espionage," which details cases in which CIA employees helped hedge funds vet the companies they invested in.

The CIA has been open about its policy, and a CIA spokeswoman says that the agency allows employees to take second jobs in certain cases. She points out that all such requests for outside employment are vetted carefully for legality, propriety and security.

"There's a rigorous process to all this -- one that's been in place for decades," says CIA spokesperson Marie Harf. "The fact that people have the energy and creativity to run a business outside of work hours shouldn't be held against them. This is America, after all."

News reports about the policy were enough to anger some members of Congress. During an unrelated Congressional hearing two weeks ago, a congresswoman demanded an explanation from Dennis Blair, who as director of national intelligence oversees the CIA.

"I think there is a real potential of conflict," said Rep. Anna Eshoo, D-Calif., referring to reports she had seen about instances of moonlighting at hedge funds. "I was stunned to read about it."

Rustmann, who left the CIA in 1990 and says he never knew any moonlighters, was equally dismayed.

"People who are gainfully employed with the agency should not be doing anything else," says Rustmann. "It's a security problem if nothing else. They have so many secrets in their heads and now they're working with another boss. It's not a very comfortable situation. "

Of course, the vast majority of employees in the corporate intelligence industry have no ties to the CIA. The industry has grown rapidly over the past 10 years, and experts say most Fortune 500 companies now either hire consultants to help them gather intelligence about competitors or have units specifically dedicated to this task.

Most of the time, the work is mundane. Researchers search public databases, government filings, transcripts of television interviews and statements made at conferences to guess at their competitors' strategies. The practice of calling a company and posing as a non-threatening research firm, as CTC does, is also common practice. Buying trash, however, is considered unethical.

Ethical Image

Nevertheless, every once in a while a large transgression makes it into the headlines.

In 2000, for example, Oracle CEO Larry Ellison admitted to having hired a private detective agency that stole trash from a Washington trade group supporting Microsoft.

Ken Garrison, head of the Society of Competitive Intelligence Professionals, says most of the work done by his members involves carefully analyzing bits of information gathered legally and ethically.

"Multi-national companies have very long and specific ethics codes," he says, arguing that companies not only want to abide by the law but are also eager to operate ethically. "They don't want information gained by unethical means. This is not the image the company wants to put forth."

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