By Bob Sullivan Technology correspondent
msnbc.com
updated 3/5/2007 7:22:44 PM ET 2007-03-06T00:22:44

Retail giant Wal-Mart said federal authorities are investigating a potential electronic spying incident involving one of its employees and a reporter for the New York Times. 

Wal-Mart announced Monday that an internal investigation begun in January revealed that a technician had intercepted telephone conversations and text messages between a New York Times reporter and public relations employees over a four-month period last year. That investigation also revealed that the employee had intercepted text messages and pages involving other individuals outside the company, it said.

The story conjured up last year's Hewlett Packard scandal, during which the company admitted hiring outside firms to spy on journalists. Wal-Mart officials, however, insisted the employee engaged in these electronic interceptions acted alone.

The employee was fired, Wal-Mart said, and the U.S. Attorney's Office has opened an investigation. The employee's direct supervisor also was fired, and another supervisor was disciplined, said Mona Williams, vice president of corporate communications for Wal-Mart. All three employees worked in the firm's information systems division at the company headquarters in Bentonville, Ark.

It was not clear what motivated the employee to intercept communications from a journalist. Williams refused to comment on that, saying release of those details could compromise the ongoing federal investigation. She did say public relations employees were unaware their conversations were being recorded by the employee.

Williams said the technician used company equipment to automatically record phone calls placed from the reporter's telephone number to the company. The technician also used personal equipment to pluck pager text messages out of the air within a range of a mile or so of the firm's headquarters, she said.

"(The technician) captured text message within range but preserved (only) those with (certain) keywords," Williams said. "Some had keywords that he was watching for."

Technology to intercept text pages is not commonly available at retail stores. Williams would not explain what tools to technician used to pluck the page messages out of the airwaves, other than to say "radio" technology was involved. She also refused to say what keywords the technician was looking for.  She said "a handful" of other individuals' messages were also snagged by the technician, but "none of them were reporters or public figures."

The reporter involved in the incident is Michael Barbaro, who frequently writes about Wal-Mart, said Diane McNulty, a spokeswoman for the Times.

“We are troubled by what appears to be inappropriate taping of our reporter’s conversations. At this point, we don’t know many of the key facts, such as what the purpose of this taping was and the extent, if any, to which the action was authorized,” McNulty said, reading from a a statement.

Chris Kofinis, a vocal critic of the retail giant who helps run the organization WakeUpWalMart.com, said he was concerned his organization's privacy also had been violated, because it has frequently communicated with Barbaro, the Times reporter. Kofinis said Wake Up Wal-Mart obtained several confidential internal Wal-Mart memos and provided them in August to Barbaro, who last October wrote a story about one of the memos citing Wake Up Wal-Mart as the source.

Wal-Mart said its employee's spying efforts began in September.

"It's deeply disturbing," Kofinis said. "We're not sure as to whether our own privacy has been compromised. Wal-Mart has a lot to answer for, and they are not answering right now."

Wal-Mart said it believed no laws had been broken in the incident, because it's legal in Arkansas for telephone conversations to be recorded as long as one of the parties involved is aware of the recording. Company policy allows phone calls to be recorded, but only with permission from Wal-Mart's legal department, it said.

"These recordings were not authorized by the company and were in direct violation of the established operational policy that forbids such activity without prior written approval from the legal department," Wal-Mart said in its statement.  "No such approval was ever sought and, had such approval been sought, it would have been denied."

The federal investigation was first revealed by NBC News' Pete Williams earlier Monday.

Wal-Mart said it had beefed up procedures to prevent unauthorized interceptions in the future, including physically removing recording equipment from technicians' computers. 

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