Corporate Cloak and Dagger

New efforts are under way to stop an epidemic of industrial espionage

Albert Franz Kessler, 39, a well-to-do Swiss citizen with business interests in Southern California, was among the passengers boarding the London-bound Trans World Airlines jetliner in Los Angeles last May 28. Wearing crisply pressed slacks and a sports shirt, Kessler was looking forward to a relaxing flight as he waited in line to board his plane. But suddenly he spotted two U.S. customs agents at the door of the Boeing 747. All at once nervous, he tried to back away from the entrance to the plane.

Too late. The men rushed forward and arrested him. The charge: conspiring to export advanced electronic defense gear illegally. Inside two Samsonite suitcases that Kessler had checked, agents found more than $200,000 worth of radar and communications testing equipment made by Hughes Aircraft Corp. Last week Kessler and two accused accomplices went on trial in Los Angeles. Kessler, wearing a rumpled suit this time, was handcuffed as he entered the federal courtroom. He and Dierk Hagemann of West Germany and Robert Lambert, a California export consultant, sat silently while their lawyers questioned prospective jurors. The products confiscated at the airport were now in cartons stacked next to the jury box. The intended destination of the goods remains unknown, but officials believe that it was the Soviet Union. Said Donald Roberts, Customs Service assistant regional director, before the trial, which is expected to last several weeks: "This is an extremely important case for us."

Industrial espionage is hardly a new phenomenon. Since earliest times, in fact, it has been a source of fear and the cause of extraordinary precautions. The ancient Chinese were so eager to preserve the secret of silkmaking that they prescribed death by torture for revealing it to outsiders. In 1790 Samuel Slater evaded English laws against exporting textile manufacturing plans by memorizing the layout of a mill to build the first cotton-yarn factory in America.

Today, however, many companies and countries pursue corporate secrets like sharks in a frenzy at feeding time. As Japan, the Soviet Union and Western countries vie with ever increasing intensity for industrial power, the pressure to save years of research time and expense by stealing know-how has created an industrial espionage epidemic. In West Germany, where intrigue has been a way of life since the onset of the cold war, last year for the first time there were more known cases of business spying than of political espionage. In the U.S., thefts of secrets ranging from technological breakthroughs to mailing lists now cost American firms up to $20 billion annually, according to August Bequai, a Washington lawyer and leading security expert. Says he: "Little companies steal from big companies. Big companies steal from little companies. Everybody steals from everybody."