Energy Security Energy Security InitiativeInitiative

Federal Bureau of Federal Bureau of InvestigationInvestigation

SSRA Matthew W. EspenshadeSSRA Matthew W. Espenshade

10/07/200810/07/2008

Ft. Worth, TexasFt. Worth, TexasUNCLASSIFIEDUNCLASSIFIEDUNCLASSIFIEDUNCLASSIFIED

UNCLASSIFIEDUNCLASSIFIED

Today’s TopicsToday’s Topics

FBI Oilfield Theft Task ForceFBI Oilfield Theft Task Force Infrastructure Protection Infrastructure Protection Economic EspionageEconomic Espionage

FBI PrioritiesFBI Priorities

TerrorismTerrorismForeign CounterintelligenceForeign CounterintelligenceHigh Technology CrimesHigh Technology CrimesPublic CorruptionPublic CorruptionCivil RightsCivil RightsTransnational Criminal OrganizationsTransnational Criminal OrganizationsWhite Collar CrimeWhite Collar CrimeState, Local, International CooperationState, Local, International CooperationTechnology UpgradesTechnology Upgrades

Energy Security InitiativeEnergy Security Initiative: : The evolutionThe evolution

Terrorism – Concentrated on Terrorism – Concentrated on infrastructure protection. FBI and private infrastructure protection. FBI and private sector coordinating response to incidents sector coordinating response to incidents or mitigated attacks, investigation and or mitigated attacks, investigation and monitoring of threats. JTTF monitoring of threats. JTTF establishment.establishment.

Economic EspionageEconomic Espionage Oilfield Theft Task Force – equipment, Oilfield Theft Task Force – equipment,

product, servicesproduct, services

Critical InfrastructuresCritical InfrastructuresCritical InfrastructuresCritical Infrastructures

Services so vital that their Services so vital that their incapacity or destruction incapacity or destruction would have a debilitating would have a debilitating impact on the defense or impact on the defense or economic security of the economic security of the United States.United States.

- - Executive Order 13010Executive Order 13010

Services so vital that their Services so vital that their incapacity or destruction incapacity or destruction would have a debilitating would have a debilitating impact on the defense or impact on the defense or economic security of the economic security of the United States.United States.

- - Executive Order 13010Executive Order 13010

CounterterrorismCounterterrorism Oil and Gas Infrastructure Oil and Gas Infrastructure

Targeting of oil and gas infrastructure Targeting of oil and gas infrastructure has been discussed by UBL since 1993.has been discussed by UBL since 1993.

Al Qaeda has discouraged attacks on Al Qaeda has discouraged attacks on Middle East production facilities.Middle East production facilities.

Encourages attacks on distribution and Encourages attacks on distribution and refinement that supplies the West. refinement that supplies the West.

Recent call for attacks on infrastructure Recent call for attacks on infrastructure in U.S., Canada, Mexico, and Venezuela.in U.S., Canada, Mexico, and Venezuela.

Infrastructure AttacksInfrastructure Attacks

2006 attack on Abqaiq oil refining 2006 attack on Abqaiq oil refining facility.facility.

Upsurge in Nigerian attacks and Upsurge in Nigerian attacks and kidnappings.kidnappings.

South American pipeline attacks.South American pipeline attacks. Relatively small number by actual Al-Relatively small number by actual Al-

Qaeda.Qaeda. Continued threat by domestic Continued threat by domestic

groups.groups.

““SVR’s activities in the West have SVR’s activities in the West have been increasingly driven by interests been increasingly driven by interests of Russian oil, gas, and defense of Russian oil, gas, and defense companies….. Energy sales require companies….. Energy sales require scientific-technical espionage scientific-technical espionage networks which the SVR has been networks which the SVR has been actively developing since the 1990s”actively developing since the 1990s”

-Jane’s Sentinel, March -Jane’s Sentinel, March 20042004

Espionage Espionage TrendsTrends

Economic Espionage Act of 1996Economic Espionage Act of 1996Title 18 U.S.C., Title 18 U.S.C., Section 1831Section 1831

Title 18 U.S.C., Title 18 U.S.C., Section 1832Section 1832

Knowingly targets Knowingly targets or acquiresor acquires

Trade SecretsTrade Secrets Trade SecretsTrade Secrets

For the benefit ofFor the benefit of Foreign Foreign government, government,

instrumentality, instrumentality, or agentor agent

Anyone other than Anyone other than the ownerthe owner

Max imprisonment Max imprisonment (Individual)(Individual)

15 years15 years 10 years10 years

Max fine Max fine (Individual)(Individual)

$500,000$500,000 less than less than $500,000$500,000

Max fine Max fine (Organization)(Organization)

$10 Million$10 Million $5 Million$5 Million

Trade SecretsTrade Secrets

All forms and types of financial, business, All forms and types of financial, business, scientific, technical, economic, or scientific, technical, economic, or engineering information, including engineering information, including patterns, plans, compilations, program patterns, plans, compilations, program devices, formulas, designs, prototypes, devices, formulas, designs, prototypes, methods, techniques, processes, methods, techniques, processes, procedures, programs, whether tangible or procedures, programs, whether tangible or intangible, and whether how stored….intangible, and whether how stored….

The KEY!!The KEY!!

The owner of the trade secret has taken has The owner of the trade secret has taken has taken taken reasonable measuresreasonable measures to keep such to keep such information secret.information secret.

The information derives independent economic The information derives independent economic value, actual or potential, from not being value, actual or potential, from not being generally known to, and not being readily generally known to, and not being readily ascertainable through proper means by the ascertainable through proper means by the public.public.

AG can commence civil action at any point in AG can commence civil action at any point in investigation to protect further disclosure.investigation to protect further disclosure.

ECONOMIC ESPIONAGE 101ECONOMIC ESPIONAGE 101

WHOWHO are the players? are the players?

WHATWHAT are they after? are they after?

HOWHOW do they accomplish it? do they accomplish it?

WHYWHY do people engage in this? do people engage in this?

WHOWHO: Foreign Threat: Foreign Threat

Friend and FoeFriend and Foe Rich and PoorRich and Poor Low and High Low and High

TechnologiesTechnologies Government and PrivateGovernment and Private

90 Countries 90 Countries Targeted U.S. Targeted U.S. TechnologiesTechnologies

Foreign CollectorsForeign Collectors

CompaniesCompanies• Only way to compete with U.S.Only way to compete with U.S.• Gain access to U.S. dominated marketGain access to U.S. dominated market

IndividualsIndividuals• Bolster their stature in a foreign firmBolster their stature in a foreign firm• Revenge (Terminated)Revenge (Terminated)

PrivatePrivate

Foreign ThreatForeign Threat

Private Companies - 31%

Government Affiliated - 25%

Foreign Government - 15%

Unknown Affiliation - 15%

Individuals - 14%

•BUSINESS INFORMATION

•COMPUTER SOURCE CODE

•ACCESS CARD CONTROL

•TEST MATERIALS

•GENETIC SCREENING

•DNA CELL LINE

•ENGINEERING PLANS

•DRUG DELIVERY SYSTEMS

•MICRO PROCESS RESEARCH

•CUSTOMER ACCOUNT INFORMATION

•NETWORK SWITCH PLANS

•SOFTWARE DESIGN

•ULTRASOUND BLUEPRINTS

WHATWHAT are they after? are they after?

Unsolicited e-mails

Front companies

Recruitment by foreign intelligence services

Liaison with universities that have ties to defense contractors

Attending & hosting conferences

Hacking

Visiting scientific and research delegations

Circumventing export control laws

Researches and facilities relocated overseas

HOWHOW do they accomplish it? do they accomplish it?

Collection TechniquesCollection Techniques

US Travelers AbroadUS Travelers Abroad• Electronic monitoring Electronic monitoring

devicesdevices• Foreigners IOs trained to Foreigners IOs trained to

ask the right questionsask the right questions• AirportsAirports

Traditional EspionageTraditional Espionage• Spotting/Assessing/Spotting/Assessing/

RecruitingRecruiting

WHYWHY do people engage in this? do people engage in this?Recruited By Recruited By

Family Family oror Friend FriendRecruited By Recruited By Foreign IOForeign IOVolunteersVolunteers

Money

Ideology

Disgruntlement/RevengeIngratiation

Coercion Thrills/Self-importance

Personnel Security Research Center (PERSEREC)

HUMAN FIREWALLHUMAN FIREWALL• What projects are you working on?

•Would you be interested in joining me in a joint project?

•I’ve lost my access card/password; can you help me out?

•Come here often?

• Can I answer this question without giving away trade secrets?

•Why are you offering this to me?

•Do you have legitimate access?

•Mirror Mirror …

Oilfield Theft Task ForceOilfield Theft Task Force

Identified over $78 million in losses Identified over $78 million in losses due to theft 2005-2007. due to theft 2005-2007.

Similar per capita losses in Rocky Similar per capita losses in Rocky Mountain Region.Mountain Region.

Concentrate efforts on organized / Concentrate efforts on organized / interstate major theft organizations.interstate major theft organizations.

Mission StatementMission Statement

““To reduce the impact of oilfield theft To reduce the impact of oilfield theft by prioritizing and targeting the most by prioritizing and targeting the most significant organizations and significant organizations and individuals responsible for the theft individuals responsible for the theft and interstate shipment of oilfield and interstate shipment of oilfield equipment and product.”equipment and product.”

The ToolboxThe Toolbox

Employ proactive intelligence Employ proactive intelligence collection.collection.

Effective liaison with private sector.Effective liaison with private sector. Law Enforcement cooperation.Law Enforcement cooperation. Sophisticated investigative Sophisticated investigative

techniques.techniques. Enterprise Theory of Investigation.Enterprise Theory of Investigation.

QuestionsQuestions

SA Matthew W. EspenshadeSA Matthew W. Espenshadematthew.espenshade@ic.fbi.gov

(432) 570-0255(432) 570-0255