01 November 2006

Peter Sommer report on industrial espionage

I was rather shocked to read that my barrister at trial and appeal, Mr Gary Summers, has put something damaging to me on his chambers website about my case. This was after he said he would help me to prepare my further submission to the CCRC in 2003, when he was then based in the Andrew Trollope QC Chambers at 187 Fleet Street. The passage has since been removed, although more recently Gary Summers still refers to my case on his current page at 23 Essex Street Chambers, the Simon Russell Flint QC Chambers. Read a copy of what he said about me below.

With friends like these who needs enemies?

It was clear from the overwhelming evidence available to the jury that the appellant had known he was passing on information to Soviet intelligence rather than for the purposes of industrial espionage. Further revelations unavailable to the jury at trial, that had subsequently come to light, would not have affected the conviction. However, on the facts of the case, the sentence passed was longer than was justified by the information before the court, and would therefore be reduced from 25 to 20 years' imprisonment.
CA (Crim Div) (Lord Taylor LCJ, Forbes J, Tucker J) 8/6/95
References: LTL 14/6/2004
Barristers: Gary Summers

This is a little surprising to me because he always appeared very supportive towards my case whenever we have discussed it over the past 14 years. For example, below is a report that was commissioned about the evidence in my case concerning the possibility that industrial espionage was involved rather than spying for the Russians. Below is a copy of Peter Sommer's full report:

R v Michael John Smith

Report of Peter Sommer MA (Oxon), MBCS, MIPI

My name is Peter Sommer. I am a security consultant and author. I specialise in computer and information security and work principally in the financial services industry and for very large businesses. I am usually employed by insurers, loss adjusters, solicitors and as a specialist by major corporate security companies in the UK and USA. Many of my assignments and instructions have included concerns about industrial espionage.

Under the pseudonym Hugo Cornwall I am the author of The Hacker’s Handbook, about computer security, DataTheft, about computer and information security and The Industrial Espionage Handbook. I have amassed a considerable database of relevant case material. I lecture and run seminars both for businessmen and for academics and am on the Advisory Board to the Computer Security Research Centre at the London School of Economics. I read law at Oxford, holding a MA (Oxon), I am also a Member of the British Computer Society (MBCS) and a Member of the Institute of Private Investigators (MIPI).

I hold a UK amateur radio transmitting license, having passed the relevant technical examination, and this has given me some background in understanding some of the technical electronics documentation which is being produced in evidence in this case.

During the writing of The Industrial Espionage Handbook I spent some time researching the role of the intelligence agencies of nation states in conducting industrial espionage. The study included the activities of the former Soviet Union. I have since attempted to keep my knowledge up-to-date. However my knowledge is limited to what has been published openly.

At the request of Mr Smith’s legal team, I have read:
Complete Bundle of Interviews with Mr Smith
Complete Bundle of Exhibits as at April 21st 1993
Mr Smith’s Statement about “Harry”
Statement of Mrs “C”
Statement of Mr Oleg Gordievsky
Statements of Mr S L Cundy
Statement of Mr J R Welch
Statements of Mr G H Swallow
Statements of Mr D G Barlow
Statements of Sqdn Ldr C. Bagley, RAF
Statements of Mr G S Smith, MoD
Statement of Mr P L Knowlton, MoD
Statements of Mr M F Lewis, DRA, Malvern
Statement of Mr H A Deadman, DRA, Malvern
Statement of Mr K L Lewis, DRA, Malvern
Statement of Mr H M Lamberton, DRA, Malvern
Statement of Ms A M Hodge, DRA, Malvern
Statement of Mr M Allenson, DRA, Malvern
Statement of Mr J R Weatherley
Statement of Dr D I Weatherley, MoD
Statement of J F Wildish, MoD
Statement of Dr K A Gehring

I have been asked to deal with the following issues:

- Industrial Espionage, its extent, prevalence and methods

- State-sponsored Industrial Espionage

- Analysis of the credibility of Mr Smith’s account of his recruitment and involvement in industrial espionage; the possible targeting of GEC’s Hirst Research Centre by industrial spies; the plausibility of the existence of the alleged industrial espionage agent called “Harry”

- Review of Tradecraft Issues

- Analysis of alleged secrets revealed from the perspective of the existence of commercial customers

Industrial Espionage
One of Mr Smith’s lines of defence against Official Secrets Acts charges is that in 1990 and 1991 he was engaged in acts of industrial espionage. He denies any involvement in espionage where the customer was an enemy state. I think it will help if I sketch out the principle characteristics of industrial espionage.

The main distinction is the identity of the eventual customer. There is a considerable overlap of methods used in all forms of spying activity. In general terms, the aims of industrial espionage include:

* to gain economic, or possibly unfair, advantage over a competitor in business

* to obtain market research material at the lowest possible cost

* to exercise “due diligence” in the investigation of companies, individuals or products in whom investment is about to made

* to lower research and development costs by discovering what has already been achieved by others

* to acquire new technology at the lowest possible cost

* to discover developments in new technology affecting components that you may wish to incorporate into finished products that you produce yourself

* to avoid wasting research resources in following up lines which others have already found unprofitable

* to expand a list of potential customers/clients by seeing who buys from your competitors

* to determine your competitors’ detailed sales figures

* to discover the trade terms being offered by your competitors

* to ascertain if you are paying the lowest possible prices for your raw materials

* to calculate your competitors’ detailed costs breakdown

* to discover potential employees

* to acquire the data with which to perform “competitor analysis”

* to uncover marketing plans, product launches, etc, planned by rivals

* to win a competitive tender or auction

* to aid a merger or acquisition

* to fight off a hostile take-over

* to discover what others think of you

* (if a professional advisor or consultant) - to help secure a contract or to enhance services being provided to a client

* as a precursor to fraud or forgery

* to counter business fraud

* as a first step in the planned sabotage of a company or product

* to locate information that will aid the destruction of an individual’s reputation

* to pursue a personal vendetta

* (if employed by a foreign power with a substantial amount of industry in public ownership) - to help your country’s economy prosper more rapidly and at lower cost than would otherwise be the case

* to obtain information for the purposes of journalism

* to prevent others from spying on you - or to detect if they are trying to do so

Obviously not all of these will apply in the present case.

Industrial Espionage is the covert or unethical aspect of an activity that many companies indulge in called Competitor Intelligence. The aim of Competitor Intelligence is to acquire by open means information about your main competitors and from this to deduce their future strategy in relation to developing new products and/or financial and marketing strategies. The subject has been written about in a best-selling book by Professor Michael Porter of Harvard University called Competitive Strategy published in 1980. Books on the specific techniques include Corporate Intelligence and Espionage by Ells and Nehemis, 1984; Competitive Intelligence by Leonard Fuld, 1985; Business Competitor Intelligence: Methods of Collecting, Organising and Using Information by Sammon, Kurland and Spilatnic, 1987; The Trade Secrets Handbook by Unkovic, 1985; Beat the Competition! by Ian Gordon, 1989.

Companies in high-tech industries may also use industrial espionage to help them make detailed predictions about the time-scale of the evolution of new products. New consumer products such as Compact Discs, miniature camcorders and computer games machines are heavily dependent on new, very reliable and low cost components. For example, the CD-player uses very reliable and low cost miniature laser technology. Camcorders use sensitive charge-coupled devices (CCDs) to produce their high quality recorded pictures. On the other hand, despite many predictions over the last 15 years, the domestic flat-screen television set has not yet appeared because colour LCD (liquid crystal device) screens are still very expensive. Companies who back the wrong forecasts may lose very large sums of money. In consumer electronics, one can see this in the failure of a number of formats for audio and video tape machines. Similar considerations apply in the fields of industrial machinery, robotics and computers. Technological Forecasting is a perfectly respectable discipline - one of the classic books is Technological Forecasting in Perspective by Erich Jantsch, 1967. It is important to appreciate therefore that customers for high-tech industrial espionage include not only those who might manufacture a directly competing component, but also those who may wish to know when those components will become available to them at a price level which makes them suitable for inclusion in their own finished products.

It is not possible reliably to estimate the amount of industrial espionage that goes on; the cases that come to light are the unsuccessful ones. However, to indicate its prevalence, it may be useful to list out a number of recent UK examples:

• In April 1993 Josef Szrajber and Paolo Sorelli were convicted of bribing senior managers at BP (British Petroleum) to reveal confidential details about projects the company was planning in North Sea oil fields. The men then approached large engineering companies in Europe and Japan and offered to sell them the information to ensure that their bid for a particular project was accepted. Some of the contracts were worth £2 million, and Szrajber and Sorelli took a typical commission of 2 or 3 per cent. [Independent, Daily Mail, Financial Times, 27 March 1993] Subsequently an allied set of charges were made against an executive of C.Itoh, the Japanese engineering company and the prosecution commenced at Southwark Crown Court on May 14th 1993. [FT 14 May 1993] In a similar case in Norway in October 1992, the German steel company Mannesmann Handel said it had paid $800,000 to a senior Statoil engineer in return for illicit information. [European, 1 October 1992.]

• Directors at NCP - National Car Parks - recruited the services of a security company to obtain information on a rival called Europarks which had appeared to be very successful in winning contracts. The security company placed their own people on the staff of Europarks, including one who became a confidential secretary. The facts are not disputed but the NCP director and staff member of the security company who were charged were found not guilty of conspiracy to defraud in March 1993. [Most UK newspapers covered this trial extensively in March 1993. The original investigations were by the Sunday Times 17 and 24 June, 1990, 5 August 1990]

• Part of the long-running dispute between British Airways and Virgin Atlantic has involved alleged computer hacking by BA staff into a seat reservation system used by Virgin. BA also allegedly paid for a corporate investigation company, Kroll Associates, to carry out a detailed investigation of one of its other rivals, Air Europe. [Many references, but notably Granada TV’s World in Action 27 April 1993] A private investigator who stole rubbish from a Sunday Times journalist covering the story was caught and convicted in December 1992. [Sunday Times 27 Dec 92]
• BTR, the industrial conglomerate, used corporate investigators to check the security of its own information systems before bidding successfully in 1991 for Hawker Siddeley, the engineering group. The company was surprised to see the quality of information abandoned nightly by staff in dustbins. [FT 16 Jan 93]

• The Rover Car Group asked John Stalker, the former deputy chief constable of Greater Manchester to lead an enquiry after details of the new 200, 400 and Landrover Discovery models were leaked to car magazines and also possibly to rivals. Approximately 50 people were interviewed, and though security measures were tightened as a result, there were no sackings. [Daily Telegraph, 21 September 1990, 4 October 1990; Independent 5 October 1990; Daily Telegraph, 17 June 1991]

• The Comet/Woolworths “biscuit tin” case was the first successful British prosecution for industrial espionage activities under the Interception of Communications Act, 1985. It involved telephone tapping during a bitter take-over battle with Dixons during 1986. Shortly before those events, officials at the Davenport Brewery in Birmingham, then facing a £38m takeover bid by the Wolverhampton and Dudley Brewery, had found a well-used bug; the perpetrators and their employers were never caught. [Observer 2 November 1986; Sunday Telegraph 16 March 1986; BBC News] Davenports was later sold to another brewery group, Greenhall Whitley, and they in turn eventually closed it down. Allegations of bugging arose during long-running the Argyll /Distillers/ Guinness affair. [Sunday Telegraph, 16 March 1986; Sunday Times, 16 March 1986] When the Independent newspaper was planning the launch of its Sunday edition a bug was discovered in the office wiring [Financial Times 5 April 1990] and during a £441 m hostile take-over bid for Laing Properties by P&O and Chelsfield in 1990 a bug was found at Laing’s headquarters in Watford. [Financial Times, 21 February 1990]

• A former sales manager in a computer company was found guilty of stealing confidential computer records from his former employer the day he left to start his own business. He stole a back-up tape containing details of 1700 clients and used the information to try and woo them to his new company. [Computing 23 September 1992]

• A security guard who worked at Vickers shipbuilding yard in Barrow and a cab-driver attempted to sell an anti-radar tile made of rubber and intended for Trident submarines to the Russians. The Russians were apparently not interested and calls were intercepted by the Security Service. The two were arrested and eventually sentenced to prison in July 1991. [Today 11 July 1991]

• Sun Life, one of Britain’s biggest life companies, admitted in October 1992 that it undertook a clandestine intelligence gathering operation against a more successful rival, Equitable Life. The plan was to drop an agent, in fact a Sun Life broker and sales manager behind enemy lines by encouraging him to apply for a job with the Equitable so that he could find out details of the training, marketing and administrative methods. [Independent 8 October 1992]

• Police who raided the London offices of Plasser’s, a railways machinery company, in September 1988 found two sets of confidential documents belonging to British Rail in the desk drawers of the managing director and company secretary. This emerged in a case in which BR staff were alleged to have been bribed. The documents included engineering drawings submitted to BR as part of a tender by NEI, a rival of Plasser, and confidential details of future BR policy. [Financial Times, 2 October 1992]

It is important to appreciate that in some cases, the same piece of paper, computer disk, drawing, or eavesdropped conversation can be of value and interest to both nation states and to private companies. As a result, the test whether a particular act is “industrial” or “state” espionage can only be the intended ultimate customer. In some cases you can infer this from the material that is stolen or copied. For example, the recipe and manufacturing process for a new type of chocolate bar, details of a new advertising campaign, a list of a company’s best customers and the Board Minutes of a company which the subject of a take-over are all fairly obviously “industrial”. On the other hand, the UK’s Contingency Plans to prevent an invasion of its sovereign territory and Cabinet or Ministerial Minutes in relation to a future diplomatic negotiation or European Community Meeting would be obviously “state”.

However, and this applies particularly in relation to the electronics industry, things may not be as clear cut. Many components and devices have a dual purpose, that is to say they have both a military and civilian use. The same transistors, integrated circuits and components can be used in domestic tvs, video-recorders, car engine management systems, and desk-top computers as well as in military radios, military radar and military avionics. In addition, devices first produced for military purposes may easily end up in consumer products. A good example is radar, developed by the UK during World War II to give advance warning about German bombing raids but without which modern air travel and the tourism industry could not function. Another example is spread-spectrum radio communications; ten years ago the sole application was for ultra-secure, non-eavesdroppable radio for military and diplomatic communications; today an adaptation is used in the “Rabbit” portable telephone service to be found in most High Streets and handsets for which cost under £100. For some complete items or products, the only difference may be whether it has been finished in a military camouflage green or in a colour more suited to domestic or office surroundings.

In the Far Eastern Economic Review, 28 February 1991, an article says: “Of the 20 critical technologies as defined by the Pentagon in its annual review in 1990, at least 15 are dual-use.” It went on to say that Japan was a leader in five. [p 61]

Even for devices the sole purpose of which appears to be within defence electronics, the customer of espionage activities may still be “industrial”, in the sense that the customer is a commercial company and not a state. In the West, most items of defence equipment are developed and manufactured by private companies under government contract. Companies within the defence industry compete strongly with each other. In fact the competition is often much more intense than that between comparable companies competing in the consumer market. This is because there is usually only one customer, the government, or a grouping such as NATO. Companies in the defence industry face the need to spend large sums of money on research and at there is a “winner takes all” auction for the right to a contract. The element of gamble is increased when it is appreciated that once a company has secured a contract for the armed forces of its own country, subsequent contracts, say for countries in the Gulf and Third World, then become a possibility.

Thus companies within the defence industry frequently spy on each other - and the material that is targeted is often subject to a state security classification. In the United States, the Boeing Company has been subjected to a whole series of scandals involving bribery and corruption. [Los Angeles Times, 26 June 1988, 18 August 1989, 7 November 1989; Boston Globe, 23 July 1988; Washington Post, 14 November 1989; Business Week, 4 July 1988] It might be useful at this point to quote two extracts from Fortune and Business Week:

Grover, Ronald; Payne, SethBusiness Week n3053 (Industrial/Technology Edition) PP: 58 May 23, 1988DOC TYPE: Journal article LANGUAGE: English LENGTH: 1 Pages

ABSTRACT: The US Justice Department is investigating allegations that top officials of Hughes Aircraft Co. (El Segundo, California) knew of illegal payments to an official of INTELSAT, the 114-nation satellite consortium. Subpoenas issued in April 1988 sought Hughes’ financial records related to suspected payments of $350,000 to Radiotourismo, a Venezuelan shell company started by former INTELSAT Deputy Director Jose L. Alegrett. Alegrett claims Hughes made monthly payments to Radiotourismo, and in turn, he supplied Hughes with internal INTELSAT documents. Albert D. Wheelon, Hughes chairman and chief executive, resigned in May 1988, possibly to restore the company’s credibility as it bids on a new $1.5-billion INTELSAT contract in the summer of 1988. Hughes Aircraft, now a subsidiary of General Motors Corp, and the producer of over half the communications satellites built in the US, needs the INTELSAT contract because its satellite revenues already have been affected adversely by cancellations in the US space shuttle program.

Inside the biggest Pentagon scanRoss, IrwinFortune v127n1 PP: 88-92 Jan 11, 1993DOC TYPE: Journal article LANGUAGE: English LENGTH: 5 PagesWORD COUNT: 2991

ABSTRACT: Since it was launched in September 1986, Operation Ill Wind, the biggest and most successful federal investigation ever of defense procurement fraud, has led to the conviction of 9 government officials, 42 Washington consultants and corporate executives, and 7 companies. The best known are United Technologies, Unisys, Loral Corp., and Teledyne. Unisys agreed to pay the biggest total penalty - $163 million in fines, damages, and forfeitures, plus the cost of the investigation. The highest ranking official involved in the scandal was Melvyn R. Paisley, Assistant Secretary of the Navy. One scheme of Paisley and defense consultant William M. Galvin involved getting the Navy to select Martin Marietta as prime contractor on a research program. They agreed to form a company called Sapphire Systems that would become a subcontractor on the program, though Paisley’s financial interest in it would naturally remain concealed. By the end of April 1986, initial funding for the project had been approved, with $900,000 to go to Marietta and $300,000 for Sapphire.

Paisley was sentenced to 48 months in jail and fine $50,000 in 1991.

In the present case, exhibit No 4 (Statement Ref JS/16) in Mr Smith’s hand apparently contains the letters “SDI”, probably referring the Strategic Defense Initiative. It seems to entirely plausible to me that GEC activity in relation to the Strategic Defense Initiative, if that is what this document addresses, could be of considerable interest to other US, UK and European defence electronics contractors. I will return to this matter in greater detail later.

Soviet and other State-sponsored Industrial Espionage
I now want to turn what is publicly known about industrial espionage activity carried out by the former Soviet Union. Before the revolutionary events of 1990 and 1991, its state espionage organisation, the KGB, targeted individual privately-owned companies in countries like the United States or the United Kingdom. It should be remembered that before the Soviet Union broke up all Soviet industry was state-owned and the KGB had an obvious interest in supporting state enterprises, the Western equivalent of which would have been in private ownership and producing goods solely for civilian use.

A great deal is known about Soviet activity in this area, at least as it was in 1979 and 1980. In 1983 the French counter-intelligence service acquired a whole series of Russian documents from an employee in Department T of the KGB. They provided assessments of how successfully information requirements had been met by various gathering agencies; they also made claims about the value to the USSR of all these acquisitions. The French showed these documents - they are sometimes called “Farewell” after the code-name for the agent - to selected journalists and independent academics without allowing direct publication; nearly all of the accounts in the public domain of Russian high tech espionage are based on them. At the time, at the head of the Soviet gathering of spetsinformatsiya - special information - was the Military Industrial Commission (VPK by its Russian initials), which was chaired by a Deputy Prime Minister. [The main accounts are: Financial Times 17 May 1986; Soviet Industrial Espionage by Philip Hanson in Bulletin of the Atomic Scientists, April 1987; Washington Post. 2 April 1985; The New Wizard War, Robin Shotwell Metcalfe (Tempus/Microsoft Press, Redmond WA, 1988).]

However the position since the collapse, first of the Soviet Union and then of the attempts to form an integrated Commonwealth of Independent States (CIS), it has become much more difficult to see which Russian organisations today would be collecting “industrial” information. [An assessment of post-1991 developments in Russian intelligence agencies appears in Industrial Spying: The Russian Threat against British Industry by Nicholas A C van der Bijl in Professional Security, May 1992. A further assessment is given, passim, in Information Security and Intelligence: The Changing Threat by Wayne Madsen in Top Secret Newsletter, January/February, 1993.] It is even more difficult to identify who their customers would be, as Russia has a stalled and confused economy; it has not even decided how far it is going to adopt Western free market practices and privatisation. Until more material comes into the public domain, I believe we have to be somewhat sceptical of claims of post-1990 large-scale Russian espionage activity in pursuit of high-tech information.

The intelligence agencies of certain Western countries have also been accused of involvement in industrial espionage. Over the last two years in particular, the CIA has issued US companies with warnings about the activities of the French intelligence service, DGSE. They allege spying activity against the electronic components company Texas Instruments in 1991 and advised the aircraft manufacturer Hughes and others not to attend the Paris Air Show in June 1993. [For example, Washington Post 27 and 30 April 1993; Guardian and Financial Times 27 April 1993] Similar accusations have been substantiated against Israel and Japan. These countries are normally considered “friendly” but there is considerable state involvement in the respective defence manufacturers.

The credibility of Mr Smith’s account of his recruitment and involvement in industrial espionage
Mr Smith’s account in his interview and statement can best be tested by posing and then answering a series of questions:

Is GEC Hirst Research Centre (HRC) a likely target for industrial as well as state-sponsored espionage?

Yes. The range of activities of HRC is shown in Exhibit 3 (Statement Ref JS/15), pp 6-9. It is described as central research facility for the main group of GEG companies, with direct responsibility to the General Electrical Company plc. The organisation chart of GEC plc (p 8) shows that the activities of the Group include sections for Industrial, Metrology, Components, Consumer (which include manufacture of cooking appliances), Office Equipment and Medical activities. The organisation chart for Hirst Research Centre itself (p 9) includes sections devoted to telecommunications, photo-optics, infra-red, display and imaging, microwaves and gallium arsenide. All of these areas of research have obvious non-military applications.

If we look at the military applications, GEC have a number of obvious commercial rivals and companies who might use and/or develop components which compete with GEC devices. Most of the companies mentioned in the Paisley case, above, would fall into this category.

Can we believe in the existence of “Harry”, the person to whom Mr Smith allegedly sold industrial secrets?

Yes, people who might be termed professional industrial spies exist. Few companies indulging in such illegal activities as bribing individuals, placing “agents” inside a company or using such technical means as bugging, tapping and computer hacking would want to employ their own staff. The Sun Life case mentioned above is very much the exception. First, they may not have anyone suitable, second they are likely to want a layer of deniability in case things go wrong. “Harry” could be a detective or call himself a “management consultant” or “defence consultant”. “Harry” appears to have guarded his anonymity carefully. In his Statement Mr Smith says: “… on reflection he provided no clues as to his identity. For example I never saw him arrive in a car or leave in a car and he never revealed who he was working for.” (last page). The BP case is a good example of the information intermediary. Other celebrated examples include Robert Aries who broked pharmaceutical information and was jailed in Paris in 1979. [Business Week, 5 May 1986; Counter Industrial Espionage by Peter Heims, pp 59-62.]

Is “Harry’s” behaviour believable?

Yes, he is at some risk and would not wish to be traced. If caught, he might face charges of conspiracy to defraud and publicity might limit his future earning power. This is what has happened to Szrajber and Sorelli, the oil industry “information brokers”. The method of approach (Interview: pp 553-556, 591-593, Mr Smith’s Statement, passim) - a phone call, a meeting in a pub, a further phone call, another pub meeting - shows the path of cautious seduction. If Mr Smith had turned him down at this point and gone to his employers, “Harry”, even if caught, could still claim that he had been “misunderstood”.

In the Interview, D. Sup. Macleod asks about the arrangements by which Mr Smith is contacted and what is supposed to happen if the meeting cannot be made at the agreed time. (Interview: pp 557-567, 601, Mr Smith’s Statement, passim). Mr Smith’s explanations are plausible. From his own point-of-view, “Harry” does not supply Mr Smith with any contact number as he prefers to run the risk of inconvenience if Mr Smith cannot make a meeting rather than providing a trail which might be his undoing. There is nothing in the material allegedly supplied that is obviously time-sensitive.

Would “Harry” have been able to identify Mr Smith as a target for corruption in the way suggested in the Interview and Statement?

The explanations Mr Smith gives on pp 552, 581, 592 and 723-726 of his Interview and on the first page in the extract from his Statement are plausible. On p 581, Mr Smith says of “Harry”: “he didn’t seem to know a lot, but I think he must have known something because he seemed ... to be too familiar with me.” Slightly later he says he has the impression that he had been chosen. In reply to questioning by D Sgt Beels he says that “Harry” had the impression that he had access to a number of projects within GEC Hirst Research Centre. Mr Smith speculates but does not know whether “Harry” contacted others at GEC Hirst Research Centre. On p 592, Mr Smith says he was contacted at work - he repeats this in his Statement. In his Statement Mr Smith explains how the internal telephone system at GEC Hirst Research Centre connects to the outside world.

It must be borne in mind that in industrial espionage, as in all forms of intelligence gathering, heavy reliance is paid on researching open sources before seeking covert or illegal means. As mentioned above, “Harry” runs a risk in approaching Mr Smith - at the worst he could be turned in to the police; alternatively his activities can come to the attention of GEC Hirst Research Centre who would introduce measures which would prevent his approaching other GEC Hirst Research Centre staffers. It makes sense that he would take a great deal of trouble in deciding whom to approach.

Mr Smith is in fact a classic recruit for bribery and corruption - disappointed in career, relatively poorly motivated towards his employer and with a job that gives him considerable internal mobility. His job in quality assurance took him over many parts of the GEC Hirst Research Centre facility and he had a legitimate reason for asking for documentation and information. At the same time, he was not a high-flying researcher. He had a relatively lowly status within the organisation. His career was progressing poorly - he failed his higher degree, his poor security rating denied him work on many interesting projects. (It is worth pointing out in passing that over the years GEC, in common with other parts of the UK electronics industry, has tended to concentrate more on defence electronics rather than consumer electronics which these days is dominated by the Japanese. This means that Mr Smith did not have particularly good prospects elsewhere in the UK electronics industry). In addition, GEC Hirst Research Centre itself was slimming down, with fewer staff being employed, down from 400-500 people in April 1990 to 350-400 people by June 1992.

From the point-of-view of “Harry”, Mr Smith would appear very promising. I have of course not been able to visit GEC Hirst Research Centre to examine its security and personnel procedures and in any event the situation today may be different from those in existence during 1991 and 1992. However, it is possible that “Harry”, if he was a professional private detective or from a similar background, could have discovered details about Mr Smith from discarded GEC documentation such as old phone books and old internal organisation charts or by over-hearing conversations in nearby pubs. A further method would be the use of a series of “pretext calls” - telephone calls to people within GEC using such cover stories as being an insurance or pensions salesman, “old friend”, or tax official. These methods are used to obtain details of bank accounts and tax status of individuals. [See, for example, Sunday Times 21 March 1993] In principle, finding some-one’s telephone extension number is not difficult even it is not “freely available”.

Are the sums of money involved believable?

Yes, if anything they are rather low. D Sup Macleod says of the £12,000 figure: “That must obviously have been very important information to them to have paid that kind of money to you.” (Interview p 597). He is wrong. Let us take a very pessimistic view of the value of the work going on at GEC Hirst Research Centre. Even if we suppose that “Harry”’s client was mainly interested in finding out about GEC’s failures, perhaps to avoid unfruitful lines of research, £12,000 for several documents covering many different areas seems like a bargain. £12,000 is the approximate equivalent of 3 months of a research leader’s annual salary. This figure would not include pension costs or such perks as a motor car. It completely ignores the cost of the resources within the laboratory - the equipment, the raw materials - which would surely be a great deal more. Josef Szrajber and Paolo Sorelli, the men convicted of bribing BP officials, are believed to have earned a minimum of £0.5m each.

“Harry” appears to have adopted a vacuum-cleaner type of approach - he was apparently willing to take almost anything. At these prices he could afford to discard most of the material; only a very small percentage needed to be relevant for the total £12,000 to be earned out. Incidentally, another benefit of this approach was that he would have been able to conceal the specific interests of his client - which might in turn have made it easier to identify who that client was.

For 8 or 9 risky meetings covering between 12 and 16 topics and with documentation to back it up, Mr Smith gets paid an average of £1333 a meeting and between £750 and £1000 for each technology area covered.

Is Mr Smith’s relationship with “Harry” believable?"

Yes. Few people who have been bribed and corrupted subject themselves to psychological profiling, but in general terms, Mr Smith’s motivation and behaviour, as described in his Statement and in Interview correspond to what is believed to happen in most corruption cases.

He does not allow himself to be recruited immediately but is gradually seduced. He tells himself the information he is passing over is not particularly important, nor are the sums of money offered so large as to present great difficulties in terms of absorbing them into his regular life-style. At the time his annual salary was £18,200 (Interview p 734). In the classic corruption methodology, the corrupted individual is often asked initially to carry out tasks which present little difficulty in handling on moral grounds. Later, once the individual is entrapped, more onerous demands may be made. In the event, it looks as though Mr Smith’s access to information useful to “Harry”’s client was very limited, so that this second stage did not take place.

In his Statement, Mr Smith describes his attitude quite precisely and candidly: "… I recall a figure of £10,000 being mentioned. It was obviously very tempting for me as I couldn’t see what useful information I could provide or harm that I could do to the company ... I felt that this was a risk worth taking. 10 years had elapsed since my security clearance had been taken away from me. I had come to the conclusion that I would never get my status back ... quite frankly I was being greedy. My career had not advanced in the way I would have hoped and I was frustrated by this ... I would describe my state of mind at this time as one of niggling dissatisfaction with my lot within the Company.”

Mr Smith’s overall demeanour
I have examined the series of Interviews Mr Smith gave after his-arrest and have attempted to see if he is overall demeanour in handling the situation in which he found himself - arrested on a charge under the Official Secrets Acts - is consistent with his claim of having been involved simply in industrial espionage between 1990 and 1992 with a man called “Harry”.

I should say that although I am not a formally trained investigator, two significant areas of my work involve frequent assessment of statements. On behalf of insurers I often look at banks that have recently suffered large losses and have to evaluate conflicting statements as to what has happened or what the bank intends to do to prevent re-occurrence. I also work with fraud investigators and usually see statements in printed form and advise, among other things, on internal consistency.

In general terms, it seems to me that one can read the Interview as follows: Mr Smith has no experience of being a trained KGB spy, is belligerent and puzzled, hopes that the police have made a mistake and that he can continue with the remainder of his life. He is anxious to conceal his involvement in industrial espionage as this would undoubtedly harm his future job prospects. In fact, he makes rather a mess of the interview.

In more detail: Mr Smith is first told by police about their knowledge of “Victor” in the second interview, at about 1800 hrs on the Saturday he is picked up by them, (p 50) He is shown a picture of Viktor Oshchenko and given a full name by about 1920 hrs on the same day. A minute or so later he is accused of being a KGB agent. MS complains he can’t answer questions if he doesn’t know the substance of the accusation. By 1930 he is told that his phone line has been tapped. (D Sup Macleod has already said “I will prove it evidentially” on p 51).

The next interview starts the following day at 1408 hrs. He has had the whole morning in which to consider his position. Shortly into the interview he is played the phone call. He responds and D Sup Macleod then explains about the extent of defections of former KGB agents and leakages of KGB information.

Mr Smith does not appear to have the coherent plan to meet the situation one might expect of a KGB asset who has been in the role of 17 years, who has allegedly had training in “trade-craft” and who has been trusted to empty Dead Letter Boxes in which he otherwise had no direct operational interest. One must wonder, did he never receive training in how to react to an accusation? Even if he did not, did it never occur to him that he might one day come under suspicion and that he ought to rehearse what he would do? Coherent strategies could include invoking a right to silence, and/or attempting to ascertain exactly how much the authorities knew about his activities, and/or producing a well-worked out “explanation” reasonably early in the interview proceedings.

The industrial espionage explanation and the revelation of the existence of “Harry” doesn’t appear until 1455 hrs on the following Tuesday (p 552). In the meantime Mr Smith has been belligerent and surprisingly unaware of the position he was in. Yet from the evening of the first day, the Saturday, a guilty KGB agent must have known things were “all up” and his only courses were to keep silent or to be completely co-operative in the hope of getting a reduced sentence. Any lingering doubts about the extent of MI5/SB knowledge must have evaporated by the time interviewing resumed on the Sunday afternoon.

On the other hand, if we accept Mr Smith’s claim that he had never had anything to do with the KGB but that he had peddled low-level commercially sensitive information to an industrial spy, his behaviour becomes easier to comprehend. He finds the accusation of being a KGB asset preposterous; he takes a long time to understand how seriously the authorities have been regarding the matter and thus to what depth his background, affairs, and recent movements have been subject to scrutiny. His main concern is to conceal his industrial spying activities - and he has good reason to do so. He has not told his wife, whose good opinion of him he could lose. He must know that any accusation of industrial espionage would considerably reduce his chances of future work in the electronics industry.

This pattern of behaviour tends to suggest that he was not a long term KGB asset.

Against this: we have to accept his explanations for the “George” phone call, (pp 40, 112-116, 327, 378, 704) We have to accept his explanations of his movements during the week prior to his arrest. We have to tie in the discovered paperwork either to “Harry’s” needs or to the chaotic character of his last days at GEC, his inadvertent taking away of certain papers, and his decision to intend to destroy them rather than return them to GEC. We also need to be satisfied with his explanation about the “Williams” letter (pp 397ff, 429, 443).

I have looked at exhibits 30, 31, 32, 33 (Statement Ref Nos JS/41, 42, 43, 44) which it is alleged contain tradecraft markings. I have also read the commentary by Mr Oleg Gordievsky and Mrs “C”. I am not an expert in tradecraft and found the documents, which I have so far seen only in photo-copy, difficult to decipher. However I can offer the following general observations :

As Mrs “C” and Mr Gordievsky point out: it should be remembered that “tradecraft” in espionage arises out of the necessity for the parties to a transaction to avoid detection; in some cases it is also necessary so that one party is unable to recognise - and hence incriminate - the other. The activity of industrial espionage may appear less risky than that involving nation states and the hazards of surveillance by counter-espionage officers. Yet the participants to the selling of industrial secrets do face substantial disadvantages if caught. An employee selling his employer’s secrets risks losing not only his job but any chance of future employment in the same industry, or perhaps any form of comparable employment. A recipient, say if a private detective or “consultant”, may find themselves forever damned and unable to gain future clients. If the recipient can be connected with the eventual customer for the secrets, all that company’s commercial relationships with its customers, suppliers, bankers and professional advisors may come under review. This is in fact what has happened to BA in the wake of the Virgin affair. [See, for example, Sunday Times, 17 January 1993; Independent on Sunday, 17 January 1993; Sunday Telegraph, 17 January 1993; Guardian 28 April 1993]

Indeed, elements of tradecraft are also used in cases involving extortion and ransom, where often the most difficult part of the exercise from the criminal’s point-of-view is to communicate his requirements and collect the cash without being himself caught. The case in February 1992 of the Midlands estate agent, Stephanie Slater, comes to mind, where very elaborate tradecraft measures such as the use of a tape-recorded demand (played on the television Crimewatch programme), a tray and fishing line, numerous cash caches and the spraying of the figure 4 in white paint along a railway line were deployed. [Daily Telegraph 6 Feb 1992; Today 1 Feb 1992; Independent 1 Feb 1992]

It is not surprising that tradecraft is used in some cases of industrial spying. For example, when in 1988 a junior researcher at a Californian pharmaceutical company tried to sell the secrets of a genetically engineered anti-anaemia product, he used the code name “Pimpernell”. [The Amgen case, Los Angeles Times, 23 August 1988 and 11 April 1989] The accounts emerging about the BA/Virgin case show the use of cover names for certain of BA’s activities. For example, the accumulation of detrimental information on Richard Branson and Virgin by BA’s then PR Agency Broad Street Associates was called Operation Barbara. A firm of private investigators employed by BA carried out enquiries under the name of Operation Covent Garden and in their report referred to key personnel under code names. [Guardian 15 January 1993] It should also be borne in mind that large numbers former intelligence officers enter the private security industry [See, for example, the claims made by Gary Murray in Enemies of the State, published by Simon & Schuster, 1993. Murray is a private detective who says he was one of many recruited to carry out freelance operations for both MI5 and MI6.] - I am aware of many myself - and it is only to be expected that precise techniques learnt while in government service are later used for civilian requirements. [See Richard Norton-Taylor’s book In Defence of the Realm, published in 1990 and The Guardian, 8 May, 1993 for UK examples and Jim Hougan’s Spooks, published in 1978 for older, US examples] In November 1992, a former senior officer of the US National Security Agency, Gerard P. Burke, announced an agreement to set up a corporate security consultancy with a former KGB major-general, Yuri Dorzdov. [Washington Post, 19 November, 1992]

I had thought that one of the principles of tradecraft is that the users would not maintain an incriminating record, as Mr Smith is alleged to have done.

The actual techniques of tradecraft have been extensively written about both in quality spy novels and in non-fiction works. I draw particular attention to: Merchants of Treason by Thomas B Allen and Norman Polmar (Dell, NY, 1988) which provides a detailed account and photographs of the methods used by the Walker “Family of Spies” in 1985. It is worth noting that the photographs of tradecraft instruction offered in evidence by the FBI in that case show a wholly different level of detail from those that are alleged to appear in the Smith notes. In the fiction field, in John Le Carre’s Smiley’s People, p 60 in the Pan paperback edition, an old spy insists on “Moscow Rules” of tradecraft which are again described in considerable detail. When the book was made into a BBC-tv serial, the tradecraft - chalk markings and a thumb tack - formed part of the opening title sequence. The book was published in 1980.

On this basis the claims by Mr Gordievsky and Mrs “C” about the unique quality of the alleged marking in exhibits 30, 31, 32, 33 may be misplaced.

The Alleged Secrets
I now turn to the paperwork discovered in Mr Smith’s possession and which the prosecution allege show breaches of the Official Secrets Act. I should say that I am not a specialist in these areas of electronics; my knowledge is limited to what I have picked up as a holder of an amateur radio license. However 1 have read the material and discussed certain aspects with Dr Eamonn Maher who is providing his own Statement.

In order to demonstrate the plausibility of the “industrial espionage” explanation of Mr Smith’s activities, I believe that for each of the technologies described in the paperwork, one must show one of two things:

Either, that they are “dual purpose”, that is to say, with civilian as well as military applications.

Or, that there are in existence private companies within the defence industries of the UK and its immediate allies who are potential customers for such information in that they make competing products or manufacture products in which components developed by GEC Hirst Research Centre form an important part.

In some cases it is even possible to show that some of the potential customers for information originating from GEC Hirst Research Centre have in the past been involved in accusations of corruption and espionage. Thus, a number of US companies in the accounts below feature in the Paisley scandal (see above). Japanese companies that have been successfully sued in the USA include Hitachi and Mitsubishi (for theft of commercial secrets from IBM in the early 1980s) and Toshiba (for breaching COCOM exporting rules).

In order to obtain some of this information, in addition to the help from Dr Maher, I conducted some brief online searches on a variety of commercial electronic databases. Among these was INSPEC which is extensively used by those in the electronics industry to search for the existence of relevant academic papers through a wide variety of journals. INSPEC provides a series of abstracts - that is, a summary of the article together with details of the authors and their affiliations. “Affiliation” means the university, research laboratory or commercial business that has funded the work. From INSPEC, therefore, it is possible to identify the foreign countries and companies that are interested in a particular area of technology. These searches were by no means exhaustive and were confined to very recent events and published papers. [The searches are included in the associated Exhibits Bundle]

In order to aid the court as to the identities and backgrounds of the various companies mentioned, I have also included a series of notes on each derived from a variety of sources.

The Technologies Mentioned in the Prosecution Evidence
Below are the technologies referred to in the documents discovered in Mr Smith’s possession. It is instructive to review the assessments made by Prosecution Witnesses in their Statements. For the most part, they appear to have been asked to comment on the military significance of each of the technologies. However many of the Witnesses identify specific civil applications or describe the information allegedly collected by Mr Smith as primarily of commercial or industrial significance. The short-form descriptions of the GEC Hirst Research Centre material given below are slightly misleading as many of these topics are inter-related. To give two examples: Gallium Arsenide is used in MMIC components; some of the devices described can only be fabricated using micro-machining techniques.

Micro-machining Project (JS/17) Cundy, p 71 says “It is largely a commercially confidential programme there being no immediate direct military significance” Again, Cundy, p 77: “All three projects are dual technologies able to deliver commercial products as well as military products.” Swallow says, p 90: “These handwritten notes give general data on the micromachining projects at HRC which are currently commercially orientated.” Barlow says, p 97: “Basically commercial information”. Weatherley, p 128, says: " ... another technology which has potential application to the radiation hardening of future systems and sensors.”

Mr Smith’s own notes (p 179 of the Exhibit Bundle) gives his own explanation and perception: “This is aiming at producing small 3 dimensional structures from mm to μm range, using semi-conductor related techniques ... the advantages are that they are consistent and reliable. Performance is fast, compact and light in weight using low power. They can be very easily integrated with electronics. Uses are: printing / data handling / telecoms / medical / fuel injection”. The note goes on to describe, among other things, an inkjet print-head nozzle and cryogenic refrigeration.

Radiation hardening as a desirable quality appears throughout many of the technologies described. I take this to mean electronic components and other devices which are able to withstand high levels of high energy particles (e.g. gamma radiation) and electromagnetic radiation such as one might find on a nuclear battlefield, in a nuclear reactor and in outer space.

The Inspec database shows papers on this topic coming from Japan, Sweden, France, Switzerland, USA and UK. Companies mentioned for their involvement include:Sharp Corp (Japan); Hitachi; Mead Corp (USA).

Silicon-on-Sapphire (JS/14, documents marked QSI-DR-251, QSI-CD-250, QSI-PS-298)) Cundy, says, p 83: “SOS [Silicon-on-sapphire] is of military use - being one of the first and still the best radiation hard integrated circuit technology. There are some commercial uses relating to satellites - those satellites can be both military and civil operations. Communications satellites - providing resilience against various forms of radiation ... Circuits produced by this technology have both military and commercial applications and are still in production in the UK and many parts of the Western world ... SOS technology is unique to GEC in the UK and there is a strong military interest and military applications predominate. We note that one of the suppliers is Japanese ...” Among the chips discovered was SLC3-5, a SOS test chip. Cundy, p 85 says. “In this case the customer was ESA” (European Space Agency). Hodge, p 120, says, “Silicon on sapphire technology has been developed with considerable support from MoD over a period of 15 years or so, with a view to its incorporation in military systems specifically. Technically there are claimed benefits of the technology for civil applications, but in practice the technology has been exploited almost exclusively for its tolerance to radiation so that it remained a military specific technology predominantly. Commercial as well as military satellites, also use this technology.” Weatherley, p 129, says, “... another technology of considerable defence relevance because of its ability to provide radiation-hardened components for sensors and weapons systems, and its high cost mitigates against wide commercial exploitation.”

An article in ESD, November 1987, is entitled: “Rad Hard CMOS SOS ICs Save Satellite Systems from Solar Storms”. This would appear to confirm a civilian requirement in satellites for telecommunications and entertainment purposes. An electronic search on the Inspec database shows recent technical articles on this technology being published in Poland, Sweden, USSR, Switzerland, Japan, East Germany and Cuba as well as the UK and USA. Companies associated with these papers include IBM, RCA, Rockwell, Oki and Toshiba.

Infra-red detectors - (JS/14, SR/4) Cundy, p 82, says “The device constructed by following the process is not a classified object, however it is sensitive military material because the detector was destined to be the front end of a high quality infra-red imaging system which permits all weather and night-time aircraft operations and night time visibility for gunners: There are no commercial applications for this type of device because the costs are far too high for this quality of device. There are a few highly specialised applications in civil fields such as helicopter borne surveillance of electricity supply lines - looking for hot spots which may be the precursors of breakdowns.” Lamberton, p 119, says: “These equipments are state-of-the-art military systems, in an area where the UK is a world leader (with the USA). Although not specifically classified, this information would be very valuable to foreign powers and disclosure would be damaging in that it could be used to develop a military capability which did not previously exist.”

However, one must ask ... would not this information be of value to companies producing lower-standard infrared devices, e.g. for night vision in the industrial security market of for camcorder owners - to tell them what one day may be affordable? General civilian applications for thermal imaging appear to include: civilian security and surveillance: movement and body-heat detectors; building surveying; pipe-line surveying; detection of bodies by the rescue and emergency services. Chemical Week of 12 March 1986 identifies leading players as CVD Inc, Barr & Stroud (UK) and Sumitomo.

High Temperature Super-conductivity - (see the Statement by Dr Gehring, pp 132-134). “The best example of a novel device employing super conductors is an ultra-sensitive detector of magnetic fields. This could be used for military applications, such as the detection of submarines, and for medical applications such as the detection of electrical signals in the human brain.”

In effect this is still a technology with very few immediate applications, military or civil, but prospects include magnetic levitation trains and power storage devices. Academic papers found on Inspec originated from the Ukraine, Germany, Austria, USA, UK, The Netherlands and China. Although most papers emerge from the universities, Rockwell is named.

Surface Acoustic Wave (SAW) devices (JS/15 and 20) Lewis, p 113, says “These devices are of considerable commercial importance, for example there is one in every TV and video recorder. They are also of military importance ...” Weatherley, p 129, says “ widely used in a variety of military systems.”

These are very common devices in all but the least sophisticated radio receivers and there appear to be numerous manufacturers.

Video line buffer (S/14) document marked QSI-DS 238. Cundy, p 83, says, “The document and product are both very old and of commercial interest only”.

Gallium Arsenide Technology - GaAs is used, among other things, extensively in high quality radio receivers where the more common silicon-based chips would be too noisy. (JS/14, document AN/102 Issue B Sept 1987). Cundy says, p 84 of GaAs MMICs “There is no immediate military significance to this note, however MMIC’s are largely only used for military purposes (costs high, performance high) .... Worldwide there are several companies in the USA, all established with heavy military funding, at a comparable technical level ...” Weatherley, p 129, says, “Potential applications are in many areas, but particularly those of smart weapons, radars and Electronic Warfare systems.”

Recent papers recorded by Inspec come from Israel, USA, Japan, Switzerland and UK. Companies mentioned include: Integrated Circuit Engineering Corp (of Scottsdale, Arizona), AT&T, GaAs Code Ltd, Nippon Mining, TRW Inc.

Micron Valve Project (JS/19). Cundy, p 72 says “Funding and therefore interest in this technology and its applications do include the DRA. There are some classified military aspects though most of the information we generate at HRC is not classified.” Cundy, p 77. “All three projects are dual technologies able to deliver commercial products as well as military products.” Barlow says, p 97, “Basically commercial information; technology has radiation hardness benefits which could make it of military interest.” Weatherley, p 128, says, “… of future Defence value because it offers the prospect of providing a means by which future sensors and systems might be hardened against radiation weapons”.

Gas sensors (Olfactory Research) - (JS/20). The main civil applications include: chemical detection, medical diagnostics, vehicle engine management systems, detection of narcotics, etc by Customs & Excise. Gundy says, p 72. “This is a largely commercial project with potential military/policing applications such as ‘sniffing’ for illicit substances by Customs &Excise ... It was however noteworthy that this project summary did not record who our main customer is nor the objective of that customer; that commercial customer has asked for extreme confidentiality from us ...” Lewis, p 111, says of documents AW/2-6, “The information might be of use to a foreign power as gas sensor are of value in both civilian and military applications ...” Weatherley, p 127, says, “The technique described has applications in Chemical and Biological Defence and in the detection of substances for Internal Security purposes.”

The Inspec database includes recent papers from Japan and the USA.

Biosensors Cundy, p 77. “All three projects are dual technologies able to deliver commercial products as well as military products.”

MMIC devices - (monolithic microwave integrated circuits) ... Cundy, p77, “all components were fairly old some even up to 8 years old, none younger than 2 years old ...” “these are used in radar and may have an application in future instrument landing systems” (nb see also comments about Gallium Arsenide). Allenson, p 123, says of the documentation “These documents represent part of a venture by GEC to launch these chips for sale on the open commercial market and I judge the information would be freely available on request. The chips have application in both military and commercial systems ... The MMIC technology research programme and specific chip designs were funded by MoD and by GEC companies, including the military system companies, this was primarily with military systems in mind. The chips were being offered for sale, it is probable the most likely sale would be in military systems, commercial applications also exist”
Recent Inspec-recorded papers include those from France, USA, Denmark, Switzerland, USA, Japan. Company involved include Dassault Electronique, Lys & Optik, Westinghouse, Loral, Schott Glaswerke, Rockwell. Aviation Week, 19 October 1992 lists Lockheed and General Electric (the US company) as suppliers. The same magazine, 18 September 1989, mentions Lockheed Sanders, Raytheon and Texas Instruments as suppliers of MMIC devices. In the 24 April 1989 edition, Aviation Week also mentions Harris as a supplier.

Cryogenics (Document AW/3). Lamberton, p 118, says: “I consider that the data is of industrial or civilian relevance rather than military ...”

The main application is in thermal imaging, useful for surveying and by the rescue services (see above). Another application could be medical diagnosis. [Risk Management, February 1985] The search of recent papers in Inspec on thermal imaging in general produced papers from the USA, UK, Finland, Russia, Taiwan and Japan. Companies mentioned include General Motors and Mitsubishi. Aviation Week, 29 June 1992, mentions Hughes endeavours to get better performance in low cost systems. An article in Machine Design, 24 October, 1992 identifies Martin Marietta as a manufacturer of thermal imaging devices.

Rugate filters - (JS/16, AW/2) Barlow says, p 97, “References MoD establishments clear military applications, ref to SDI. The notes indicate a deep interest in technical and business details.” Lewis, p 116, says, “The document highlights the current state of progress on this contract ... Whilst many of the technical details have been published in the open literature, document AW/2 makes a connection between the devices produced and their application for laser protection particularly in the SDI context ... Taken as a whole, the document identifies certain aspects of the laser threat and methods for its countermeasure and in so doing compromises the security of the State.” Weatherley, p 128, says, “The Rugate filter process is well known, but the provision of information on the number of rejection notches ... have significance because they enable some performance characteristics of possible future UK defence systems to be deduced ....”

However, optical filters are mostly used in association with lasers. Lasers have substantial industrial applications and the filters can be used both to aid the construction of certain devices and to provide safety to operators. The Inspec database shows recent papers published in USA, Denmark, Switzerland and Japan, and associated with the following companies: Westinghouse, Schott Glaswerke, Lys & Optik

Quasi-optical radar - (JS/18, AW/4) This is described in the paperwork as having as its main application incorporation into motor cars, etc as an aid to parking and/or the efficient use of motorways. Gundy, p 71, says “This is a commercial project still in existence”. Barlow, p 96 says, “First 3½ pages contain commercial information. Last two paragraphs indicate potential military information.” Deadman, p 115, says. “The application of the technology to car radars is strictly commercial. However the exhibit contains a paragraph which identifies the specific application of this technology to missile systems and therefore would be of use to an enemy.” Weatherley, p 128, says, “The technique described has potential military applications, for example robotics, automatic route-finding and obstacle avoidance, and smart weaponry, but I believe the information presented is not of a sensitive nature.”

One article turned up by the search of Inspec seems to indicate another use of optical radar technology may be the measurement of ozone concentrations in the ionosphere. [Laser Physics, June 1992, pp 383-5. The authors, incidentally, are all Russian] Other articles refer to sea surface remote sensing. [Izvestiya Academy of-Sciences USSR, Atmospheric and Oceanic Physics, March 1992; EARSeL Workshop on Lidar Remote Sensing of Land and Sea Conference, May 1991, Florence, Italy] Countries involved in this technology appear to include Canada, Russia, Israel, Japan, USA and UK. However the core pre-occupation appears to be for short-range devices which are capable of measuring short distances very accurately and in particular with reference to auto-navigating vehicles. Recent papers on this subject have been published in Germany and the Netherlands. [Funkschau, 20 October 1989; Signal Processing, March 1991] The German company of Dornier Luftfahrt GmbH appears to have sponsored work on the autonomous navigation of robotic land vehicles using quasi-optical lasers as a sensory device. The US company Martin Marietta has sponsored similar work for underwater vehicles [Simulators IV Conference Proceedings, 1987] and the US Army also contributed a paper on sensors for autonomous navigation to a 1986 conference. [International Society for Optical Engineering].

Operators Confidence Facility (OCF) (JS 22-37). OCF is a test facility used by an operator to test the functions of the Information Friend or Foe Surveillance Radar within the Rapier short range air defence weapons system. Bagley, p 102, says “In my opinion these items have a military application only and could be useful to an enemy. Additionally I believe that knowledge of these drawings and processes could be commercially beneficial in terms of military production.” Smith, p 106, says: “In my view this information has only a military application. In my view this information might also be useful to an enemy.” Knowlton, p 109, says, “I was asked to express an opinion on the sensitivity of these articles in the context of national security and their usefulness to a foreign power. In my opinion, the articles seen do not on their own expose the country to any risk or exposure should they or the information reach a foreign power. However should the same information be added to other information known to be from the same Rapier or other system, they could and would be able to be used for a purpose which would be of use to a foreign power.” Weatherley, p 125, says, “The component is used to provide a delay in time for received radio frequency signals. Applications can include both military and civil radar systems of the appropriate frequency band. The frequency band specified is appropriate to the Rapier primary radar frequency.”

The Companies Interested in Similar Research Areas
The following are background notes on the companies that are mentioned in the previous section. The information was assembled from the Defense Manufacturers’ Association, Dun & Bradstreet and various online services. Where relevant I have linked individual companies to past accusations of bribery, corruption, industrial espionage and other issues of business ethics. The “Ill Wind” Affair has already been mentioned - the corruption involving many US Defense Industry companies and centered around Melvyn Paisley.

Another multi-company corruption scandal involved the attempt of former Israeli Air Force General Rami Dotan to defraud the U.S. military aid program of about $30 million. [Washington Post, 20 July 1992] Details of-these appear in my Footnotes Bundle but are referred to here:

AT&T: (US)
US Defence Contract Ranking ’90: No.23 @$917M
US Telephone Company. Information management systems

Barr & Stroud: (UK)
Division of Pilkington Optronics.
Sales ’91: Pounds 55M
Mechanical marine and precision engineering not elsewhere classified (UK SIC 3289).

Boeing Defense and Space Group: (US)
US Defence Contract Ranking ’90: No.11 @$2,267M
World Defence Revenue Ranking ’90: No. 6
$5,862M = 21% defence revenue out of total.
Sectors: Aeronautic Electronics Missiles
Aircraft, helicopters, diverse space

Dassault Electronique: (French)
World Defence Revenue Ranking ’90: No. 74
$566M = 72% defence revenue out of total.
Sectors: Electronics Missiles
Radars, communications, weapon systems, computers, missile guidance systems

GaAsCode: (US)
Not a limited company or very small?

General Electric Co. plc (GEC): (UK)
UK Defence Contract Ranking ’91: No.2 @Pounds800M
US Defence Contract Ranking ’90: No.57 @$269M
World Defence Revenue Ranking ’90: No. 9
$5,435M = 30% defence revenue out of total.
Sectors: Ships Electronics Engines Other
Aircraft electronics, HUDs, night vision systems, ASW systems, air data computers, flight controls, navigation systems and RPVs. Radar, navigation and electro-optical systems. Communication systems. Guided weapon systems. EW, IFF systems and avionics. Artillery systems and infra-red lenses.

General Electric (US): (US)
US Defence Contract Ranking ’90: No.3 @$5,589M
World Defence Revenue Ranking ’90: No. 2
$9600M = 17% defence revenue out of total.
Sectors: Aeronautic Engines Electronics Missiles
Communications, C3I, simulation, sensors, command and control, weapon systems, EW, electro-optics, airborne weapon systems, ground-based air defence systems, naval weapon systems, radar and underwater surveillance systems. Electrical and electronic systems and equipment. Submarine combat systems, ASW combat systems, radar systems.
- in 1992 settled charges that managers of its aircraft engine group conspired with a former Israeli Air Force General to defraud the US military aid program of $30m. [Washington Post 20 July 1992]

Harris: (US)
US Defence Contract Ranking ’90: No.71 @$188M
World Defence Revenue Ranking ’90: No. 59
$797M = 26% defence revenue out of total.
Sectors: Electronics
Communications systems

Hitachi: (Japanese)
Broad-based electronics conglomerate, including Communications, avionics, training and simulator systems.

GM Hughes Electronic Corp: (US)
US Defence Contract Ranking ’90: No.4 @$4,107M
World Defence Revenue Ranking ’90: No. 7
$5,860M = 75% defence revenue out of total.
Sectors: Aeronautic Engines Electronics
Electronic systems
A division of General Motors
- implicated in Ill Wind and Intelsat Affairs [Washington Post, 13 December 1993]

IBM Corp: (US)
World’s second largest computer company, but also:
US Defence Contract Ranking ’90: No.18 @$1,286M
World Defence Revenue Ranking ’90: No. 41
$1,311M = 2% defence revenue out of total.
Sectors: Other
Information processing systems and equipment, command and control systems.

Integrated Circuit Engineering Corporation: (US)
Latest sales: $6.3M
Engineering services (US SIC 8711)
Consulting engineers.

Lockheed Corp: (US)
US Defence Contract Ranking ’90: No.6 @3,553M
World Defence Revenue Ranking ’90: No. 5
$7,866M = 79% defence revenue out of total.
Sectors: Aeronautic
Avionics, other aerospace, equipment and aircraft modification. Missiles, aircraft, electronic systems, command and control, C3I systems. Missile systems, command and control and data systems. EW, countermeasures, electronics, radars, SIGINT, surveillance systems, command and control, training and simulation display systems, sonars.

Loral Corp: (US)
US Defence Contract Ranking ’90: No.31 @$618M
World Defence Revenue Ranking ’90: No. 33
$1,800M = 100% defence revenue out of total.
Sectors: Electronics
EW systems, C31, surveillance and targeting systems, simulation, electro-optical systems, missile systems and components, ammunition fuzes, FLIRs, radar reconnaissance systems, communications, ASW weapon systems, microwave systems. Tactical information and weapon control systems.
- implicated in Ill Wind Affair. [Washington Post, 9 December 1989]

Lys & Optik: (Danish)
30 employees, [similar size to I.C.E.C]
Testing of luminaires, light sources and materials, lighting calculations, computer programmes for lighting calculations, development of luminaires and measuring and control equipment. Research institutes. Laboratories. Software. Medical and orthopaedictechniques. Organic and inorganic chemicals and basic substances. Printing industry, publishing houses, engravers and printers, reproductions.

Mead Corporation: (US)
Over 225 divisions.
Mead Corporation, Chillicothe Division:
Subsidiary - no financial data.
Paper mill. Paper manufacturing.

Martin Marietta Corp: (US)
US Defence Contract Ranking ’90: No.7 @$3,492M
World Defence Revenue Ranking ’90: No. 10
$5,324M = 87% defence revenue out of total.
Sectors: Missiles
Electronics, communications, data management, rocket and missile components and assembly, missiles and related components, fire control systems, mortars, grenades, reactive armour, mine clearance systems.
Largest single contractor in Strategic Defense Initiative. [Washington Post, 19 December 1992]
- implicated in Paisley/Ill Wind Affair, former Chairman a long-standing friend of Paisley [Washington Post, 19 June 1991, 1 July 1991]

Oki Electric Industry Co. Ltd: (Japanese)
Broad-based Japanese electronics conglomerate, making computers, printers, radio equipment, communications, sonobuoys, sonars.

Philips Electronics NV: (Netherlands/Europe)
Sales $30,683M
US Defence Contract Ranking ’90: No.56 @$297M
4% defence revenue out of total.
Sectors: Electronics
Holding company.
e.g. Electronic security and communications systems (Phillips Crypto).

Trade name of General Electric (US), trade name used by many divisions.

Raytheon: (US)
US Defence Contract Ranking ’90: No.5 @$4,071M
World Defence Revenue Ranking ’90: No. 11
$5,075M = 55% defence revenue out of total.
Sectors: Electronics Missiles
Missile systems (Hawk, Patriot, Phoenix, Sparrow, SeaSparrow, Sidewinder), ECM systems, sonars, submarine communication and navigation systems, training systems, microwave systems, naval radar systems.
- implicated in Ill Wind Affair [Washington Post, 22 March 1990]

Rockwell International Corp: (US)
US Defence Contract Ranking ’90: No.13 @$2,217M
World Defence Revenue Ranking ’90: No. 18
$3,200M = 36% defence revenue out of total.
Sectors: Aeronautic Electronics Missiles
Aircraft and related systems/components/equipment, RPVs, weapon systems, airframe structures, navigation and communication systems, missiles, sensors, vehicle components, microelectronics. Chip manufacturer
Key SDI “Brilliant Eyes” contractor (sensor technologies designed to spot and track incoming missiles) [Washington Post, 19 December 1992]

Schott Glasverke: (German)
Sales $2,786M
Glass products.

Sharp: (Japan)
Trading name of Sharp Co. of Japan.

Sumitomo Heavy Industries Ltd: (Japan)
World Defence Revenue Ranking ’90: No. 120
$234M = 10% defence revenue out of total.
Sectors: Ships Small Arms Other
Small arms, aerospace components, shipbuilding.

Teledyne: (US)
US Defence Contract Ranking ’90: No.35 @$515M
World Defence Revenue Ranking ’90: No. 49
$968M = 28% defence revenue out of total.
Sectors: Engines Electronics Missiles
Optics, radars, missiles, data processing, training equipment, aerospace engines and power supply systems, aerospace electronics, UAVs, RPVs, target drones, electronic systems, computers, avionics and navigations systems.

Texas Instruments: (US)
US Defence Contract Ranking ’90: No.29 @$704M
World Defence Revenue Ranking ’90: No. 28
$2,124M = 32% defence revenue out of total.
Sectors: Electronics Other
FLIRs, radars, missile guidance systems, laser-guided munitions, communications and navigation systems, computers and optical components, electro-optics and semiconductors.

Thomson-CSF: (French)
World Defence Revenue Ranking ’90: No. 8
$5,838M = 80% defence revenue out of total.
Sectors: Artillery Missiles Electronics Other
Radars, countermeasures, Optronics, simulators, fuzes, power systems, communications, command systems, EW and navigation equipment. ASW, surface detection and naval combat systems. Air defence missiles and components. Naval ASW electronic combat systems (Thomson-Sintra). Proximity Fuzes, airborne optronic systems (Thomson-TRT). Air and ground munitions (Thomson-Brandt).

Toshiba: (Japanese)
World Defence Revenue Ranking ’90: No. 93
$444M = 2% defence revenue out of total.
Sectors: Electronics
Electronics and communication systems. Radars and information systems. Navigation systems.

US Defence Contract Ranking ’90: No.22 @$1,087M
World Defence Revenue Ranking ’90: No. 15
$3,300M = 40% defence revenue out of total.
Sectors: Electronics Vehicles
Electronic reconnaissance systems, satellites, undersea surveillance, C3I, missiles, communications, avionics, lasers.
Key SDI “Brilliant Pebbles” contractor. [Washington Post, 19 December 1992]

Unisys: (US)
US Defence Contract Ranking ’90: No.16 @$1,376M
World Defence Revenue Ranking ’90: No. 27
Sectors: Computers, Electronics
$2,200M = 22% defence revenue out of total.
Computer based information systems and related products, undersea systems, radars, surveillance and fire control systems, communications, information management systems, command and control.

United Technologies Corp: (US)
US Defence Contract Ranking ’90: No.8 @$2,856M
World Defence Revenue Ranking ’90: No. 13
$4,700M = 22% defence revenue out of total.
Sectors: Aeronautic Electronics Missiles
Engines, helicopters, electronics.
Includes Pratt & Whitney subsidiary
-implicated in “Ill Wind” and Dotan Affairs. [Washington Post 20 July 1992]

Westinghouse Electric Corp: (US)
US Defence Contract Ranking ’90: No. 12 @$2,243M
World Defence Revenue Ranking ’90: No. 19
$3,196M = 25% defence revenue out of total.
Sectors: Electronics
Airships, radars, C3 systems, ECM, missiles, air defence systems, torpedoes, sonars, communications, power supplies.