S. Korea Said to Eye U.S. Tech
They're 'Trying to Beat Our Controls,' Says DIA
South Korea is stepping up efforts to gather critical technology secrets by means legal and illegal -- prompting increased fear among government officials and industrial security experts of intellectual property rip-offs.
In their zeal to acquire technological data, South Korean officials are "trying to beat the system, to beat our controls" on technology exports, said James Dearlove, a Defense Intelligence Agency official charged with monitoring technology trade issues.
The technologies most sought by South Korea are: nuclear energy; biotech; and aerospace, including rockets, computers and aircraft.
But this semi-secret conflict between technology thieves and corporate security officials has yielded few decisive victories. On May 2, General Electric Co. announced it had settled a technology-theft case with Korea-based Iljin Corp., found guilty in August 1993 by a federal court in Boston of stealing GE's unique industrial diamond-making technology, with the help of a Chinese-born former GE employee.
The court barred the Korean-based branch of Iljin from making any diamonds for seven years, but under a complicated settlement, Iljin wound up with a license to continue producing them, General Electric spokesman George Jamison said May 13.
On April 30, U.S. Trade Representative Mickey Kantor reaffirmed South Korea's place in the Priority Watch List of countries whose laws on intellectual property rights or market access inhibit U.S. exports.
Although "Korea has made great strides in the past year in protecting intellectual property rights...Korean customs regulations do not provide an adequate basis to prevent the exportation of infringing goods [built using stolen ideas, data or trademarks] and the Korean trade secrets law does not adequately protect proprietary information," according to an April 30 statement by Kantor's office.
The other countries placed on the watch list were Japan, the 12-nation European Union, Thailand, Turkey and Saudi Arabia.
"The Koreans are wonderful people..... but as businessmen, they'll squeeze you dry," Daryl Plunk, a vice president of Washington-based Richard Allen Co. Inc., an international trade consulting group, said May 16. Because of various difficulties, including thorny contract laws and intellectual property theft, "there is a lot of trepidation among foreign companies going into Korea," he said. To make their case that South Korean officials are stepping up efforts to gather technology, U.S. government officials cite the GE case as well as more recent statements by South Korean officials.
For example, the South Korean Foreign Ministry directed Jan. 29 that 15 embassies, including the embassy in Washington, collect technological data, according to the daily newspaper Yonhap.
Also, Kim Tok, head of the main Korean intelligence service, said Feb. 28 that his agency planned to launch a five-year campaign intended to protect Korean technology secrets and to gather data, the newspaper said.
These moves comes as Korean government officials try to promote technological cooperation among South Korean companies, partly through the creation of roughly 30 government-sponsored technology incubation centers. About 600 billion Korean won, or $740 million, will be spent on the centers by 1998, according to a report in a June 25 1993 edition of the U.S. government's Foreign Broadcast Information Service publication.
Creation of the centers is part of a large-scale Korean effort to advance their economy, partly by fostering the production of technologies such as memory chips, and partly through international technology-cooperation deals with companies in the United States, China, Russia and Mexico.
Like other governments such as France, India and China, Korean government officials gather technological information by a variety of legal and illegal methods, say government and industry security experts. Among the methods cited by Dearlove at a May 4 security conference in McLean, Va., are: extensive review of computerized data-bases maintained by U.S. companies and government agencies; creating Korean-owned research centers in the United States; and sponsoring U.S.-Korean technology-transfer conferences.
For example, Korean embassy officials have worked with the U.S.-Korea Science and Technology Corp., Annandale, Va., to host a May 25 conference at the Capitol Hilton Hotel. Washington, intended to help Korean officials work with American companies on aerospace, nuclear and biotech deals, according to Oh Kwon, the embassy's science attache.
The nuclear technology being sought by Korea is for peaceful purposes, although some of the aerospace technology has a military use, said Kwon. However, an official from the U.S. State Department said the conference was intended primarily to bolster the role of the Korean Ministry of Science and Technology, which is proposing to create a series of joint U.S.-Korean research programs. Any significant U.S.-Korean business deals will be made privately between U.S. and Korean companies, he predicted, adding the conference is "a triumph of form over substance."
Other methods of gathering technology are the recruiting of current and former employees of high-technology companies, and the creation of associations of immigrant scientists, such as Rockville, Md-based Korean Association of Scientists and Engineers in America Inc., DIA's Dearlove said.
Korean officials defended their policies, saying their actions are above-board and legal, and similar to the U.S. government's efforts to gather data and foster technology development. "We are protecting all international property rights," including software, Kwon said.
"The illegal gathering of information is mostly private," he said.
Also, Korean government officials are trying to reshape laws and policies that have caused problems for U.S. businesses, he said. However, time is needed to ensure the new policies are implemented throughout the Korean government's bureaucracy, he said.
"The general trend is a positive one," said the U.S. State Department official, despite any efforts by firms to pirate U.S. technologies or products.
Saeyoung Ahn, the executive director of the Korean Scientists and Engineers Association, said the 9,000 members of his organization gather to exchange job and technical information. The information is published in the association's newsletters, which are read in Korea, he said. However, "we don't know about our individual members. Whatever they do is beyond our control," he said.
Harry Brandon, who retired from the Federal Bureau of Investigation in December as head of counter-intelligence and international terrorism, urged companies to pay increased attention to security of proprietary secrets.
Companies should identify their critical information, especially when dealing with foreign companies, and protect it with legal agreements and common-sense security measures, such as the use of cryptography to hide critical messages and phone conversations, Brandon said.
Companies seeking aid can turn to the FBI, the CIA or the Pentagon, he said. All three agencies can provide companies with outlines of threats they face and possible security measures, he said.