Espionage scandal prompts resignations of top Swiss banking executives

Credit SuisseTwo senior executives of Credit Suisse, one of the world’s most powerful banking firms, have resigned amidst a high-stakes espionage scandal that may have prompted a suicide and has shocked Switzerland. The alleged target of the espionage is Iqbal Khan, the former Chief Executive Officer (CEO) of Credit Suisse’s wealth-management division. The 43-year-old Khan moved to Switzerland from his native Pakistan at the age of 12. In 2013, after working for more than a decade as an auditor at Ernst & Young, he joined Credit Suisse. He quickly rose to head the institution’s wealth-management division and was credited with having nearly doubled its profits between 2016 and 2018.

Khan’s meteoric success brought him immense financial wealth. He soon bought a piece of property that is adjacent to the home of Tidjane Thiam, the 57-year-old CEO of Credit Suisse. Khan and his wife had the house on their property demolished and began a two-year project to build a new house. But the disruption caused by the large-scale construction project gave rise to a dispute between Thiam and Khan. Their rivalry escalated quickly and prompted the intervention of Credit Suisse board chairman Urs Rohner. However, the dispute between the two men was not resolved, and on July 1 of this year Khan left Credit Suisse. On August 29, Credit Suisse’s rival UBS announced that Khan would co-lead its global wealth management division.

It appears that some Credit Suisse executives were concerned that Khan might try to attract their firm’s customers to his new UBS portfolio. These concerns allegedly prompted Credit Suisse’s Chief Operating Officer (COO), Pierre-Olivier Bouee, to instruct the bank’s security department to keep tabs on Khan. The bank reportedly hired a private investigation firm, Investigo, to monitor Khan’s movements. There was an unexpected turn on September 17, when Khan noticed that he was being followed and promptly confronted an Investigo employee in downtown Zurich. On the same day, the former Credit Suisse star manager filed a complaint with the Zurich office of the Swiss Public Prosecutor.

On September 18, Credit Suisse gave orders to Investigo to stop keeping tabs on Khan. It also launched an internal investigation to evaluate the merits of the decision to spy on Khan. Meanwhile, the Swiss Public Prosecutor’s office announced that it had opened a criminal case on Investigo and had arrested three individuals in connection with the case. On September 24, a private investigator, who is believed to have been involved in Khan’s case, committed suicide. Media reports said the unidentified man was “an external security expert” who mediated between Credit Suisse and Investigo.

On Tuesday, Credit Suisse COO Bouee announced his resignation. Swiss media said the head of the bank’s global security division also resigned. Also on Tuesday, Credit Suisse’s internal investigation found that CEO Thiam had not been involved in the decision to spy on Khan.

Author: Joseph Fitsanakis | Date: 02 October 2019 | Permalink

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Italy arrests Russian ex-foreign ministry official for espionage following US request

Naples International AirportItaly has arrested a Russian business executive and former foreign ministry official who is wanted by the United States for carrying out espionage against an American aviation firm. Alexander Yuryevich Korshunov, 57, who is a former official in Russia’s Ministry of Foreign Affairs, was reportedly arrested on August 30 at Naples International Airport in Italy. On Thursday, the US Department of State filed a criminal complaint against Korshunov, accusing him of trade secret theft. According to the complaint, Korshunov’s espionage benefited a Russian state-owned aviation company. He was allegedly assisted by 59-year-old Maurizio aPolo Bianchi, an Italian citizen, who remains at large.

The US government claims that the two men conspired to steal blueprints for the design of gearbox accessories used in jet engines. The company they allegedly stole the information from is GE Aviation, a company based in the US state of Ohio. Bianchi reportedly used to work for one of GE Aviation’s subsidiaries in Italy and dealt with clients from Russia and China, among other countries. But he eventually left the company and joined another firm that contracted with Aviadvigatel, a subsidiary of United Engine Corporation. The latter is a Russian-owned aerospace company that employed Korshunov. During his work for Aviadvigatel, Bianchi is accused of having employed a number of current and former employees of GE Aviation as consultants. But the work that Bianchi carried out for his new company compromised trade secrets belonging to GE Aviation, according to the US Department of Justice. Moreover, the Department claims that both Bianchi and Korshunov, who supervised Bianchi’s work on behalf of Aviadvigatel, were aware that they were exploiting trade secrets that did not belong to them.

There is no information on Bianchi’s whereabouts. If convicted, the two men face up to 10 years in prison each. On Thursday, the Russian President Vladimir Putin dismissed the charges against Korshunov as biased and said they were likely motivated by “unfair competition” practices by American companies. The Italian government has issued no public comment about Korshunov’s arrest.

Author: Joseph Fitsanakis | Date: 06 August 2019 | Permalink

Swiss to extradite brother of ‘leading biochemist’ who spied for Chinese firm

GlaxoSmithKlineA Swiss court has ordered the extradition to the United States of the brother of one of the world’s leading biochemists, who spied on a British pharmaceutical firm to help a Chinese startup. The extradition is part of a large corporate espionage case centered on Yu Xue, a Chinese scientist described by US federal prosecutors as “one of the world’s top protein biochemists”. Yu specializes in drug research for cancer and other serious terminal illnesses. From 2006 until 2016 he worked in the US for GlaxoSmithKline (GSK), a leading British pharmaceutical group.

In 2018, Yu was arrested by US authorities for stealing trade secrets from a GSK research facility in the US state of Pennsylvania, and giving them to a Chinese startup pharmaceutical company called Renopharma. He eventually pleaded guilty to stealing proprietary data from GSK, in a case that the US Department of Justice described as a textbook example of Chinese “economic warfare” against America. US government prosecutors also claim that Renopharma is almost wholly funded the Chinese government. The three co-founders of the Chinese firm have also been charged with corporate espionage targeting a US firm.

On May 28 Yu’s brother, Gongda Xue, was arrested in Basel, Switzerland. According to the US government, Gongda used GSK data stolen by his brother to carry out drug experimentation at the Friedrich Miescher Institute for Biomedical Research, where he worked as a post-doctoral trainee between 2008 and 2014. On Tuesday, the Swiss Federal Office of Justice (FOJ), ruled in favor of a request by the US government to extradite Gongda so he can be tried in Pennsylvaia. According to the FOJ, the Chinese scientist will be extradited as soon as his 30-day appeal period expires.

Author: Ian Allen | Date: 17 July 2019 | Permalink

Analysis: PRISM revelations harm US political, financial interests

NSA headquartersBy JOSEPH FITSANAKIS | intelNews.org |
Ever since June 6, when Edward Snowden, a former United States Central Intelligence Agency (CIA) technician, exposed a vast communications spying system called PRISM, observers have focused on the ramifications of this controversy inside America. But in an excellent analysis written for ComputerWorld magazine’s New Zealand edition, Taylor Armerding points out that Snowden’s revelation could result in extensive international blowback for the United States, in both the political and economic realms. Armerding quotes Toronto University political science professor Ron Deibert, who argues that this latest revelation of massive communications interception activity by the National Security Agency (NSA) carries with it “unintended consequences […] that will undermine US foreign policy interests”. Deibert points out that the spy scandal has the potential to undercut America’s role and influence in global Internet governance. In the words of renowned security expert Bruce Schneier, many around the world are beginning to view the US as “simply too untrustworthy to manage the Internet”. Even policymakers and ordinary users friendly to Washington are worried about what they perceive as the “huge disadvantages” of their dependence on US-managed Internet networks that host the content of social media sites, cloud computing databases, or telecommunications exchanges, says Deibert. But the biggest potential damage to US interests, argues Armerding, is not political, but economic. “It is not just personal information that is being swept into the NSA’s massive databases”, he notes; “it is corporate data as well”. Indeed, the vast foreign and domestic spying represented by PRISM poses a direct threat to the global competitiveness of the American technology sector. Read more of this post

News you may have missed #776

Alexei NavalnyBy I. ALLEN and T.W. COLEMAN | intelNews.org |
►►US Army critiques its own intel collection system. An intelligence gathering system, known as the Distributed Common Ground System (DCGS), widely used by the US Army in Afghanistan to detect roadside bombs and predict insurgent activity, has severe limitations and is “not suitable”. This is according to a memo sent on August 1 by the Army’s senior equipment tester, General Genaro J. Dellarocco, to the Army’s chief of staff, General Raymond Odierno. The memo hammers the DCGS system for its “poor reliability” and “significant limitations” during operational testing and evaluation earlier this year.
►►Russian lawyer exposes wiretap find on Tweeter. Russian lawyer and political activist Alexei Navalny, who discovered a wiretapping device at his workplace, allegedly installed by the Russian government, has used YouTube and Tweeter to publicize his discovery. The wiretap was allegedly found attached to a set of wires hidden inside the wall molding of Navalny’s office at the Moscow-based organization Anti-Corruption Fund. It was reportedly discovered with the help of a bug detector. The same wires seem to also be attached to a hidden camera.
►►Volkswagen victim of Chinese industrial espionage? A recent article by Agence France Presse claims that German-based Volkswagen has become a victim of industrial espionage. While operating under a joint partnership agreement with the Chinese automobile company First Automobile Works, to build and manufacture cars for China’s burgeoning domestic market, designs and technical specifications for Volkswagen engines were apparently stolen. An unnamed Volkswagen manager stated that the loss was “quite simply a catastrophe”. It’s worth noting, however, that a similar accusation leveled against China in 2011 by French automaker Renault, turned out to be a criminal hoax.

Situation Report: Samsung accuses LG of corporate espionage

Samsung smartphones on display in KoreaBy TIMOTHY W. COLEMAN | intelNews.org |
Most technology companies spar with rivals over patent portfolio infringement, pricing arrangements, bundling of products and services with partners, and other trade practices. More recently, technology companies have been waging a war for talent and human capital. But in Korea, a dispute between Samsung and LG Electronics has been taken to a new level with Samsung publicly accusing LG of conducting corporate espionage. According to VenterBeat, Samsung has leveled corporate espionage charges against an employee at LG regarding particularly sensitive display technology that is used in smartphones and other mobile devices. This technology is of great value to Samsung, as its displays are used in nearly 98 percent of mobile phones around the globe. The critical display technology, active-matrix organic light-emitting diode, or MOLED, technology, is an extremely thin-film, which is a lynchpin technology for televisions and mobile devices. This technology replaced previously existing display technologies because it required significantly less power and therefore less battery drain and it also increased response rates to mere milliseconds. Such technology was perfectly positioned to help spur on the proliferation of the mobile and smartphone boom. Read more of this post

Guest Comment: India’s corporate espionage boom

AssoCham IndiaBy BRITTANY MINDER | intelNews.org |
A survey conducted earlier this month by the Associated Chambers of Commerce and Industry of India (AssoCham) found that corporate espionage in India is surging. The June 14 survey found that 35 percent of Indian firms regularly and aggressively conduct research on competitors and employees, which goes far beyond the normative business intelligence realm. Secretary General of AssoCham, D.S. Rawat, maintained that “demand from certain industries, such as information technology, infrastructure, insurance, [and] banking and manufacturing is overwhelming”. With an increasing demand for espionage gadgetry, up nearly 30 percent from last year, the survey also noted that “almost all the company representatives in these domains acknowledged the prevalence of industrial espionage to gain access to information and steal trade secrets of their competitors through private deals with sleuths and spy agencies”. The appetite for corporate espionage and gadgets doesn’t stop at rival-on-rival activity; espionage is a pursuit while industrial espionage is a practice. Overall corporate vulnerabilities, a lack of appreciation for corporate security best practices, and the tangible motivation of revenue is, according to AssoCham, driving, “companies who have strong unions and are vulnerable to pilferage hire spy agencies and plant an under-cover agent, a mole in minor job profiles in rival companies to ascertain if union leaders are getting paid for creating trouble”. According to The New York Times, conservative acknowledgements of the boon of the corporate spy industry willingly concede that some companies even hire “mystery vendors” to gauge their own employees’ response to sifting from outsiders. Read more of this post