When Walls have Ears, Call a Debugging Man
(Business Week, October 31, 1964, Industries)
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Business counter-espionage experts use electronic marvels in their work, and their dollar volume gives only a hint of their importance in a world where secrets have a price
After long and costly geological work, an Oklahoma oil company finally pinpointed a tract it wanted to prospect. But when it turned its land agents loose, they found every drilling company in the area already there and much of the land newly leased.
It seemed too much of a coincidence, and the company president called in one of the dozen "sound men" in the U.S., experts on surveillance by electronic listening devices-"bugs." The sound man wired up every office, tapped every phone. With the records thus obtained, he was able to find the culprit who had been selling the company's hard-earned intelligence to outsiders. And just as in a Hollywood movie, it turned out to be the president's brother-in-law.
Across the country, a construction company that repeatedly was nosed out on important bids also suspected an inside leak. Again a sound man was called in and all the phones hooked up to recorders. The payoff came one night when a janitor found a paper so important that he picked up the nearest phone and spilled the information to the man outside who was buying it.
Counterspying. These case histories both are examples of what the sound men call legitimate bugging or counter-intrusion. In each case, a company was exercising its right to guard its own security. This is the end of the business all the electronic surveillance operators claim to be in.
As Robert Jefferies, vice-president of Police Systems, Inc., of Santa Ana, Calif., puts it: "We are the white hats." In the classic cowboy movie, you may recall, the good guys always wore the white hats. The black hats in the surveillance business are worn by somebody else, all the operators insist. They engage in aggressive espionage, where a company seeks to learn another's secrets.
One of the more notorious cases came out in the open a few years ago when a nine-camera television system was found installed behind overhead ventilation louvers in a Detroit auto design room. According to Jefferies, head offices of supermarket chains are prime targets for listening devices.
Big Brother. Cases of electronic surveillance invariably make headlines, often creating the impression that George Orwell's 1984 is upon us. The subject of spying is popular enough to have made Vance Packard's 'The Naked Society' a best seller earlier this year.
Packard suggests reasons for what he calls the boom in bugging: more security-consciousness these days, the depersonalization in vast business and governmental organizations, the rise in number of people trained in surveillance techniques.
Still those in the know say the extent of business espionage is exaggerated. They estimate that less than $1 million a year is spent on equipment, even when sales to government agencies are counted. They think another $1 million to $3 million may be spent for services of the sound men.
Under scrutiny. Small as it may be in dollar volume, the business of bugging has stirred a hornet's nest. At least two investigations have been launched:
*Cornelius E. Gallagher (D-N.J.) heads a House subcommittee that will hold hearings early next year. He feels Congress should redefine the rights of privacy.
*The New York City Bar Assn. will soon publish a major study of the effect of Orwellian technology on individual privacy in the U.S. Herbert Brownell, president of the group, says recent inventions "sharply challenge many of our basic assumptions as to what can be held private by individuals or organizations."
I. Like science fiction
Space Age technology has developed miniaturized but powerful electronic spying devices that rival science fiction, says Jefferies of Police Systems, Inc.
A listening device made up of a microphone and a tiny transmitter can be installed surreptitiously in a room or in a telephone itself. It will carry conversations to a listening post several hundred yards away, or it can be hooked up to a hidden recorder that's sensitive enough to be turned on and off by the sound of voices.
The telephone itself can be used to trigger the recorder when someone wants to monitor a conversation in the room; dialing the phone and letting it ring once might be the signal to turn the recorder on. Devices planted in houses or offices can also be triggered by radio energy, light, even a laser beam.
Smaller and smaller
Improvements continue to be made in shrinking the equipment.
Already well known is a transmitter the size of a lump of sugar. Now miniaturization has been extended to recorders. Jefferies has just returned from Japan, where he sewed up U.S. and Canadian distribution rights for a miniature wire recorder with a transmitter about twice the size of a pack of cigarettes. Its accessories include a tie-clasp microphone, a telephone pickup, remote pocket switch, and an earphone for monitoring the recording.
II. In the business
In the U.S., two companies dominate the manufacturing of electronic listening and detection devices.
Mosler Research Products, Inc., of Danbury, Conn., a wholly owned subsidiary of Mosler Safe Co., is believed to have about half the market; it talks freely about its work. Fargo Police Equipment Co., of San Francisco, is said to do about 20% of the business; it shuns interviews, and its fat catalog of surveillance equipment is marked confidential.
According to Fargo's Washington representative, the rest of the business is scattered among 100 companies. Jeffries says one of these companies, Kel Mfg. Co., of Belmont, Mass., is so secret that it pretends not to exist.
Using the equipment.
Jeffries claims to operate only in the counter-intrusion end of the business.
He says he has retainers from several clients, whose board rooms he checks regularly to make sure they are "clean"-not wired for sound by some outsider. He quotes high fees for the work, saying that debugging equipment is expensive. One sophisticated receiver costs $30,000, another $55,000. Jeffries operates a 1964 Lincoln fitted out as a rolling radar station.
With his mobile and portable equipment, Jeffries claims he can locate listening devices through the radiation they give out.
Fee schedule. Harold K. Lipset, president of Lipset Service of San Francisco, says the cost for a telephone tap runs from $75 to $250 a unit, and room microphones from $150 to $350. A search for bugging devices costs $250 for an average-sized office, $100 for a small conference room.
The bill to assure security for a meeting of 100 persons at which every chair and every person must be checked can run up to $1,000.
Monitoring office phones and tapping the premises in states where this is legal will cost $50 to $100 for each eight-hour day per eavesdropping device, or $10 per hour for the investigator's time plus equipment.
III. Mosler's experience
Mosler Research Products has been a subsidiary of Mosler Safe only since 1956 but has been selling security equipment for 18 years. It has three product lines: alarm systems, which are sold to banks, government offices, and factories; electronic investigative equipment (bugging devices), sold only to federal, state, and municipal agencies and licensed investigative agencies; and electronic anti-intrusion equipment (anti-bugging devices), sold to these and to private industry as well.
Ralph Ward, vice-president of sales, says most demand for debugging equipment has been from government agencies and defense contractors. There has been a spurt in demand recently from companies that don't have defense contracts.
"There is a greater awareness of the need to protect designs, formulas, and procedures," Ward says.
Top to bottom. Last year, Mosler installed an elaborate security system in a nine-story drug laboratory on the East Coast. An electronic master console monitors 120 points in the building. Every time a door opens, a light flashes on the panel and a bell rings; a record is also printed on a tape. If the guard monitoring the panel suspects something is wrong, he sends another guard to investigate.
This system cost $130,000. "That's not cheap," says Ward, "but you have to remember that the company's research achievements are its lifeblood, and the loss of a key formula can cost it may times the price of the system.
For company use. Mosler sells three kits for use of company security departments. A radio receiver kit costs $550; transmitters, between $150 and $220. A $315 wire investigative kit permits tapping of any wiring system, phone line, TV antenna lead-in, office intercommunications line, or doorbell.
Mosler's security or search kit for $310 has been sold by the hundreds to company security officers who need to check for wiretaps, hidden microphones, and radio transmitters. The kit includes a radio frequency probe, amplifier, headphones, and a metal detector.
Self-protection. What protection does a company have from intrusion by electronic devices? Not much, says Jeffries. Even in California, where laws prohibit the practice, electronic surveillance continues.
To safeguard phone conversations, Delcon Corp., of Palo Alto, Calif., makes a self-powered scrambler that the user holds over the mouthpiece. The person at the other end of the wire must have an identically coded scrambler to understand the garbled speech. Price is $550 a pair.