Firms Use Spying to Silence Critics

Vans with blacked out windows. Midnight garbage thefts. Video cameras in the ceiling. Microphones in overhead sprinklers.

These are not just the trappings of cop and spy capers anymore. Private business has gone into the undercover surveillance business in a big way.

Companies are hiring private investigators for a variety of legitimate purposes: to plug leaks of sensitive documents, stop competitor spying, root out drug abuse or employee theft.

Lately, however, headlines suggest that such black-bag operations are also being turned to more unsavory uses: silencing critics, intimidating whistle-blowers or thwarting union organizers.

Aside from a general erosion in corporate ethics, experts say technical advances are the reason companies are pursuing such ends.

“What’s happened is that the impulse that was always there has received a big boost by the availability of technology,” said Gary T. Marx, a professor of sociology at the Massachusetts Institute of Technology and an expert in privacy issues. “That’s key. People often suggest that where there’s a will, there’s a way. But in the case of surveillance technology, if there’s a way, there’s a will.”

The irony is that companies that use private spying campaigns against critics run the risk of being found out. And when that happens, the embarrassment and public relations damage may exceed the perceived threat that prompted the spying in the first place.

Alyeska Pipeline Service Co., a consortium of seven major oil companies that operates the trans-Alaska pipeline, discovered that painful truth when a 1990 undercover sting came to light this year.

The sting was supposed to plug leaks of documents to a vocal industry critic, retired Virginia oil tanker broker Charles Hamel. Instead, news of the sting gave critics enough ammunition to force a congressional investigation, generate reams of humiliating press and exact an eleventh-hour apology from Alyeska officials.

Now, state officials in Virginia and Florida are investigating whether the sting violated state laws.

Company officials deny that they did anything illegal or improper. But Alyeska’s security contractor, Wackenhut Corp., is mulling whether the special investigations unit that conducted the sting is worth keeping, despite signs that such services remain in demand.

Companies have used private security firms to police operations as far back as the 1890s, when steel companies and railroads hired Pinkerton agents to smash strikes by nascent unions.

As the baseball bat has given way to the corporate lawyer, private security firms have turned to offering more routine services, including uniformed guards. Recently, however, special interest has been focused on providing undercover investigators for companies.

“Corporate America does seem to have a greater awareness (of such services) now, especially in times like this when a downturn in the economy and drug use in the workplace have exacerbated the need for capable and competent investigators,” said Thomas W. Wathen, chairman of Pinkerton’s Inc. in Van Nuys, successor to the historic firm.

Pinkerton recently bought a company called Business Risks International of Nashville, Tenn., in part to tap this market.

Because public law enforcement agencies are either too understaffed or unsophisticated to deal with most corporate crime, companies often hire their own investigators to gather evidence for criminal or civil prosecution.

A problem arises when companies cross the line dividing the protection of trade secrets from the persecution of inside or outside critics--particularly whistle-blowers, some of whom are protected by federal law.

Northern Telecom Inc., whose Nashville plant at the time made telecommunications equipment, was accused of such activity in a class-action lawsuit last year.

The company is alleged to have used elaborate electronic surveillance techniques to monitor the plant’s 200 to 500 workers from 1976 to 1989. During part of that time, the Communications Workers of America union was trying to organize the work force.

Microphones were hidden in sprinkler heads in corridors, meeting rooms and the employee cafeteria, said Jesse Parrish, president of CWA Local 3879 and a plaintiff. “Even the pay phone was bugged,” he said.

The company has denied using illegal surveillance or attempting to interfere with union organizing. Plant workers decertified the union in 1982.

In another lawsuit, Ed Bricker, a former worker at the Department of Energy’s Hanford Nuclear Reservation in Washington state, said he was subjected to spying and harassment when he blew the whistle on safety problems to Congress and the media.

Bricker complained about lax safety practices in the handling of plutonium. As a result, he fears that he may have been targeted by a private spying campaign designed to dig up dirt on him.

Bricker has alleged in the course of litigation that his mail was opened and documents taken from his house and that he was followed by vehicles with government plates.

“On my home telephone, I heard humming sounds, clicks, pops, sonar pings. One time my wife heard a tape recorder rewinding,” he said.

The plant’s operators have denied the allegations in court filings. Craig Kuhlman, a spokesman for the plant, said the operators were prepared to look into Bricker’s allegations of surveillance but that Bricker was uncooperative.

In the meantime, a U.S. judge dismissed Bricker’s federal claims in September; Bricker is appealing. His claims are still pending in Washington state court.

Apparently not even lawyers are immune from private eyes. In Rochester, N.Y., last month, two men were charged with burglarizing the offices of a lawyer representing a homeowners association. The residents are opposing a Massachusetts company’s efforts to build a movie theater in their neighborhood.

The men were employed by Creative Services Inc., a Massachusetts private investigation firm hired by the theater company, National Amusements Inc.

Dressed in suits, they were seen hanging around the law firm’s lobby at the close of business Nov. 15. Building security officers later saw the men photographing documents on the lawyer’s desk, according to the criminal complaint.

“It’s outrageous,” said John Gerhard, managing director of the law firm. “Any information you need in a court of law can be obtained by legal means, and no one needs to resort to illegal means to obtain information to either prosecute or defend a case.”

Creative Services President Alan T. Sklar said the two men have been suspended, adding that his firm in no way authorized illegal or improper activity.

Russell Zuckerman, a lawyer for National Amusements, said Creative Services was hired to find out if a competing movie theater chain was behind the homeowners’ efforts to stop its theater. As for any burglary, he said: “We don’t condone it, we didn’t know it was going on, and we didn’t authorize it.”

The media can also be a target. Procter & Gamble Co., apparently angered over a story in the Wall Street Journal, asked Cincinnati law enforcement officials in July to subpoena records of long-distance telephone calls through Cincinnati Bell Inc. into and out of a Journal reporter’s Pittsburgh home.

The goal: to identify the reporter’s sources, the Journal reported.

When the investigation came to light, it was called off. The company has denied any intention to retaliate against the newspaper, but Procter & Gamble Chairman Edwin L. Artzt admitted in a letter to employees that the probe was “an error in judgment.”

Interestingly, at least one investigator believes that news of such probes may generate more clients. “This has been good for business,” Wayne Black, the private eye who masterminded the Alyeska/Wackenhut sting, said in a November interview.

It appears that Black made his statements a little prematurely.

A day after the interview, he was told by the security firm’s chairman, George Wackenhut, to quit or be fired, a company director said. Black quit.

Cloak, Dagger and Boardroom Private investigators can reach into a mixed bag of tricks to conduct covert surveilance. However, some techniques may not be legal, according to Eddy McClain, president of the investigative firm Krout & Schneider Inc. and past president of the California Assn. of Licensed Investigators. Recording Conversations: California state laws make it a crime in most cases to record a conversation without all parties consenting. That covers telephone conversations, use of body microphones and room bugs. The exception: when a crime is involved. In that case, a law enforcement agency must be called in. Federal law is less strict, requiring only permission of one party. Other states have different laws. Surreptitious Videotaping: “This is still a gray area,” McClain says. If video is made from a distance or sound is not a factor, it’s probably all right. But where conversations may be recorded, the law against recording conversations may apply. Videotaping restrooms, dressing rooms and other areas where a person has a “reasonable expectation of privacy” could expose an investigator to civil liability. If a person is in his front yard, a video made from acrossthe street is probably OK. But if a person is in the back yard surrounded by a hedge, and can be seen only by climbing a telephone pole, that is probably not OK. Reviewing Long-Distance Telephone Logs: Such records are considered privileged and can only be obtained legally through subpoena. Anyone who obtains them without one may be liable for civil penalties. Removal of Items From a Subject’s Residence: Generally considered outright theft. But investigators can remove trash, provided it is sitting at the curb for pickup. Otherwise, “it’s another gray area”, McClain says. Case laws has held both ways on “dumpster diving” of trash not a curbside. Misrepresentation or Subterfuge: The California business and professions code allows an investiagtor to pose as someone he is not to ferret out fraud. That can include putting an undercover employee into a company to monitor possible theft or drug abuse. Reviewing Private Credit Records: Federal law prohibits release of credit reports without the permission of the subject except for certain purposes, including credit transactions or pre-employment checks.