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U.S. spies on corruption overseas

The U.S. intelligence community maintains and continually updates a top secret database of international bribery, according to new reports by the State and Commerce departments.
/ Source: NBC News correspondent

The U.S. intelligence community uses electronic eavesdropping to maintain and update a top secret database of international bribery cases, according to new reports by the State and Commerce departments and senior U.S. officials. The information is being used extensively as leverage to help American companies compete abroad and is being matched by similar efforts on the part of U.S. economic competitors.

THE DATABASE built by U.S. intelligence agencies contains the names of foreign companies that offer bribes to win international contracts and is reported to list hundreds of contracts worth hundreds of billions of dollars that over the past 14 years went to the biggest briber rather than the highest bidder.

The database is developed mainly through electronic eavesdropping, say U.S. intelligence officials. Such eavesdropping, called communications intelligence or COMINT, is at the center of the “Echelon” controversy. European parliamentarians, among others, are accusing the United States of massive electronic spying for commercial purposes, using a worldwide network of spy sites linked by ferret software known as Echelon.

InsertArt(1696054)Under a U.S. law known as the Foreign Corrupt Practices Act (FCPA), the U.S. Department of Justice can bring criminal charges against American companies makes payments to foreign government officials in order to obtain or retain business. Companies, officers, and directors risk expensive and disruptive investigations, criminal and civil sanctions, and private lawsuits if they fail to take the steps necessary to avoid prohibited payments.

American companies have long complained that the law, which is tougher than legislation in many European and Asian nations, puts them at a disadvantage to competitors. Until recently, in some European countries, bribes could be written off as business expense for tax purposes.

The United States has repeatedly denied, as recently as this March, that it spies on overseas companies to provide economic advantage for U.S. firms. But is has admitted for years that it attempts to “level the playing field” for American companies by uncovering bribery by competitors. The database is used to help in that effort, say U.S. officials.

“Numbers like these indicate a lot of manpower is going into this effort,” said William M. Arkin, an independent military analyst and MSNBC consultant. “This is serious intelligence work.”

The specifics included in the bribery database remain classified. But its existence and some general information on what has been found are not. The database is openly discussed in the congressionally mandated reports issued just before the July 4th holiday by the State and Commerce Departments. A copy of the database was sent to Congress with the reports.

In its report, issued June 29, the State Department reported the database “lists foreign firms on which credible information exists indicating that they have been engaging in activities that would be prohibited by the [OECD] Convention [outlawing international bribery].

“During that period, we received allegations that bribes had been offered in some 353 international contracts worth about $165 billion. In deals where there were bribery allegations reported, U.S. competitors, and known outcomes, American firms lost 92 contracts worth approximately $26 billion.

“A large number of competitor firms from other countries have been engaged in bribery of foreign public officials.”

In an typical year, 1998, the U.S. intelligence community found that some 60 “major international contracts” valued at $30 billion went to the biggest briber, according to a little noticed February 1999 speech by then Secretary of Commerce William Daley.

“This was in just 12 months,” said Daley, the son of the former Chicago mayor and now campaign manager for Vice President Gore’s presidential bid. “Corruption, obviously, is big business.”

Jeffrey T. Richelson, an intelligence historian, suspects the European outcry over Echelon maybe related to what the program has found.

“It would be interesting to see how many instances of bribery involved companies from countries that are screaming the loudest about Echelon … particularly in Europe.”

A senior U.S. intelligence official noted as well that European complaints were akin to “the pot calling the kettle black” since European countries, including American allies, have long targeted U.S. economic secrets. “It’s hard to get morally exercised about French complaints about economic espionage!”

The United States began intensively monitoring international bribery starting in May 1994 in hopes of using the data to reverse some of the contracting decisions and enable American companies to get a fair share of the contracts, many of which were worth billions of dollars each.

A 1993 report by the CIA, based on an archival look at US intelligence files, indicated that U.S. spy agencies “had identified about 250 cases of aggressive lobbying by foreign governments on behalf of their domestic industries that are competing against U.S. firms for business overseas” between 1986 and 1993. And a 1995 report by the CIA indicated that in 1993 alone, the United States had found 51 contracts with a value of $28 billion that had been influenced by bribery or some other inappropriate activity by an overseas company. Combined with the latest reports’ figures, that means in the past 14 years the intelligence community has compiled a list of more than 650 contracts that were influenced by bribery.

The database has been used by the U.S. government to try to get what could be called restitution for American companies that lost business because of the bribery, say officials. In one of the few public discussions of what the United States does with the data, then CIA Director R. James Woolsey told a Washington think tank in 1994: “We collect intelligence on those efforts to bribe foreign companies and foreign governments into, for example, awarding an airport contract to a European firm rather than an American firm. And when we find out about those, and we do a fair amount of the time, we go not to the American corporation that’s competing, but the secretary of state, and he sends an American ambassador to see a president or a king, and he - that ambassador says, “Mr. President,” or “Your Majesty, your minister in charge of construction is on the take, and you have a lot going with the United States, and we don’t really take kindly to your operating that way. And so rather frequently what happens - not always - is that the contract is re-bid , sometimes the American corporation gets a share of it, sometimes the whole thing is done right, sometimes not.” has previously reported that in 1993 and 1994, the U.S. intelligence community had helped American firms win $16.5 billion in overseas contracts by alerting the governments in third world countries that ministers and others were “on the take.” Among the U.S. companies that have benefited are Raytheon, Boeing and Hughes Network Systems. Intelligence officials have clamped down on the release of such data since then although officials at the CIA, NSA, and State Department have said such activities continue.

Prior to 1992, the intelligence community did not monitor international trade communications for bribery. That year, the United States discovered inadvertently that a Japanese company had bribed a Syrian official in return for a $400 million power plant contract. After the Clinton administration, with its emphasis on economic security, came to power the next year, such monitoring became an intelligence community priority and the database was developed.

Robert Windrem is an investigative reporter for NBC.