June 11, 2019

Intelligence in the Interests of Private Business. Does It Have the Right to Exist? And if Yes, Then Which Intelligence?

The 3rd International Congress of Investigators and Experts on Crisis Situations

Kyiv, Ukraine June 6-7, 2019

Organizer of the Congress: “International Association of Investigators and Experts on Crisis Situations” (MAREKS). Global partner of the Congress: Independent Analytical Center for Geopolitical Studies “BORYSFEN INTEL”.

The congress was attended by President of the Independent Analytical Center for Geopolitical Studies “Borysfen Intel” Victor Hvozd with a presentation - “Intelligence in the Interests of Business. Professional Approach to Today's Realities and Tomorrow's Prospects”.




At the regular, third International Congress of Investigators and Experts on Crisis Situations, which took place in Kyiv during two days - June 6 and 7, the focus of attention was once again on the issue of security and efficiency of business, in particular, threats and risks that may and do arise in the private economic activity in Ukraine. Just a cursory list of people invited to participate in this Congress is enough to understand how relevant it was and what its organizers meant when they were raising for discussion these or those topics. In particular, guests from Austria, Israel, Germany, Lithuania, the USA, Turkey, some countries of the Middle East and others came to the Congress. And while experts from the West mainly shared experience of private structures that guarantee safe business activities, representatives of Arab business were more interested in how to secure their capital in Ukraine from, so to speak, inappropriate use. This was mainly spoken on during the discussion of the reports, when the participants of the event presented a sufficient number of different facts from their experience.

We should pay tribute to the initiators of the event: they tried to touch upon a wide range of topical themes, give explanations to facts and a legal assessment of the current Ukrainian legislation and the forms of its observance. But perhaps their greatest merit was the decision to invite intelligence professionals to participate in the work of the Congress. After all, without reliable information about the competitive environment, about the state of affairs in this or that market it is difficult to talk about effective business activity not only in Ukraine, but also abroad. In particular, this was emphasized by Yuriy Novy (one of the representatives of the well-known “Pinkerton” Company), George Hirtley (vice-secretary of IKD), Alex Auslander (member of the Detective Bureau of the IPA and Israeli WAD), etc. But such a participant of the Congress, as President of the Independent Analytical Center for Geopolitical Studies “Borysfen Intel” Victor Hvozd was asked to speak on the topic: “Intelligence in the Interests of Business (Professional Approach of Today's Realities and Tomorrow's Prospects).” Frankly speaking, this theme is so relevant and widespread that it is unlikely that it can be covered even within the two days reserved for the Congress. But what V. Hvozd told the audience was enough to realize how important today is the activity, to which the speaker devoted almost forty years of his life and gained a respectable experience. Having begun his speech with the history of the economic intelligence, or as it is also known- industrial espionage, V. Hvozd gradually moved to the present and its/his problems with this, so to speak, subject.

- Actually, originally it was impossible to talk about economic intelligence as a state instrument. - began his report V. Hvozd, - First there was a private commercial espionage. Traders sought to find out what goods, in what quality and in what quantity their competitors had brought to the market and at what price they would sell it. Naturally, they struggled to spoil the goods of competitors and spread rumors about its low quality, while praising their own craft. Now all these tricks have been given modern names - диффірмація, image, conjunctural analysis, advertising, etc. - but the essence of the actions has not changed. The impetus for the development of economic intelligence was provided in the late Middle Ages... Centers of this activity were Venice and Genoa, where commercial secrets were valued higher than political ones.

Having told about further experience of Venice, activities of the Spanish Habsburgs, German Fugger bankers, famous Rothschilds, etc., the speaker decided to analyze the economic intelligence of the United States, which historically paralleled both at the state and private levels, in detail and point by point to highlight its activities.

- The term economic intelligence activity, - explained V. Hvozd, demonstrating the next slide, - means active actions aimed at collection, theft, accumulation and processing of valuable information, unavailable to outsiders. Various, sometimes not quite “gentlemanly” methods were used to collect intelligence, but all of them were invariably quite effective: purchase of a competitor's goods; collecting at exhibitions or fairs, etc. available documentation and information; visiting enterprises; financing contracts for conducting research work abroad for the purpose of penetration into laboratories; sending students and interns to study abroad; unceasing talks, during which extra information is collected; stealing drawings and technical information; espionage and prosaic theft.

According to the speaker, in the 1980s, in economic intelligence, apart from CIA, began to actively engage other agencies in the United States - the Federal Reserve, the US Department of Finance and Trade, which created structures for collecting the necessary information and its analysis, and thus destroyed the CIA's monopoly on this kind of activity. And, as a consequence, American economic intelligence later had the following levels: macroeconomic intelligence; economic counterintelligence; microeconomic intelligence for collecting commercial and industrial secrets of foreign competitors. And although the Americans successfully developed this type of activity, but they soon encountered problems with the staff which demanded some correction.

Over the last decades, the spending in the United States on the state economic intelligence is about 40% of all expenditures on the security services, and the intelligence itself has been shifting the focus of its military-political activity into the sphere of global business, especially when competition and struggle for new markets in the world are intensifying in the conditions of globalization and rapid development of new technologies and innovations. In accordance with such tasks, employees are also trained to have experience in business and finance. By the way, over the last  30 plus years, in American and European higher education institutions, more than one hundred advanced courses on various aspects of intelligence and counterintelligence have been included in the curricula for the training of scientists, interns, post graduate students and students.

With special attention the  audience of the Congress was listening to the information on the “business intelligence” Chinese style, which, for example, is sometimes referred to as “competitive” or “business intelligence”. If we take into account one more leader in this sphere- the PRC, then it appeared there with the beginning of economic reforms, in the 1980s, and already in the 1990s, the Chinese used in this matter their scientists and invited president of the the Society of Competitive Intelligence Professionals (SCIP) Zuru Nakagawa to share his experience. According to V. Hvozd, today most important components of economic intelligence, besides the state ones, are private information and consulting structures, and the cornerstone of the Chinese business intelligence system is the principle of “tsinbao”, which the Chinese State Commission on Science and Technology defines as “high-quality processing of information” by highly qualified specialists and analysts in the sphere.

Today China's Business Intelligence Union is the main organization that trains personnel for business intelligence - a professional state association of practitioners and researchers in the field of business intelligence, the official tasks of which are: protection of the legal rights of practitioners and researchers in the field of business intelligence; organization of communication and exchange of experience among researchers of the theory of business intelligence and practitioners; dissemination of knowledge in business intelligence within the society; development of international cooperation and communications in specialties; providing professional business intelligence consulting services.

Developing their activities in this direction, the Chinese have determined that the most problematic link is the proper personnel, which they began to prepare thoroughly and officially. Now more than 30 Chinese universities have introduced the specialty “Business Intelligence” into their plans as a separate direction. In addition: the Chinese economy's moving to the market rails and development of competition in the domestic market among Chinese enterprises have led to the fact that business intelligence methods began to be actively used by Chinese businessmen against their own rivals in the PRC. The Chinese are trying to “get” technology not only from foreign companies, but also from domestic ones. Thus, recruitment of competing firms in the PRC is virtually on the flow - up to 70% of private enterprises are subject to rivals' spying.

No less interesting and knowledgeable was V.Hvozd's telling about this kind of intelligence activity in other industrialized countries.

- Business and competitive intelligence are considered actually the same, - said V. Hvozd in his speech, - which means ethical intelligence, or, so to speak, conducting it by legal methods, which is analytical work carried out in the interests of business without use of operational methods and closed sources of information. But at the same time, the analysis of tools of competitive and business intelligence in the West suggests that the former is aimed at studying the immediate environment of the organization (or microenvironment) and studying the macro-environment through the prism of competition, while the latter focuses on the macroenvironment. With further development of society and acquisition of interdependence of the components of the environment have led to the understanding of the need for a cross-cutting analysis of the external environment as a whole, eroding the boundaries between the two concepts.

Outlining the role of the state at the present stage of development of social relations, the speaker pointed out that its actions were sometimes difficult to predict. But later it became clear that the government established and changed so-called rules of the game not arbitrarily, but in the interests of specific firms, competitors, and only publishes a competitive strategy. As a result, in the territories of, for example, the former USSR, evolution of development from business intelligence to competitive one (collection and processing of business information by legal and open methods, in which trends are analyzed through the prism of competition) is observed. Competitive intelligence not only shows the real alignment of forces in the market and the mechanisms of interaction on it, but it predicts and assesses scenarios and possible consequences of certain tactical or strategic decisions, thereby facilitating the decision-making process, which is delegated to lower levels.

More specifically, the speaker analyzed the intelligence cycle, displaying its scheme on the screen. The most important feature is cyclicality and continuity, when a new task generates a new cycle. And its main task is to ensure that the data obtained at the initial stage of analytical processing, in the end are put onto the consumer's desk in the form of knowledge, that is, information on the basis of which a decision will be made. The process itself involves planning and setting tasks, collecting data, processing them, assessing the information, transfering this information, drawing conclusions. The speaker drew the audience's attention to the fact that recently corporate intelligence was added to business and competitive ones, and can be considered their “umbrella”. In general, the speaker proposed to perceive all this as a pyramid, where at the tactical level is the business intelligence, on the operational – competitive intelligence, and on the strategic - corporate intelligence.

As for the general perception of competitive intelligence, the speaker pointed out that it is oriented first of all to the market's future, ultimately to the maximum sale of manufactured goods, that is, to sale. At this,  business intelligence, or whatever it is called, business analytics is based predominantly on the past and on the already accumulated in the real-time information available in the company. Its activity is influenced by global geopolitical and technological changes, formation of a new socio-political context, changes in the competitive environment, where the emergence of commercial and other intelligences undermines the positions of state secret services, there is a diversification of information providers, economic competition is intensifying, many analysts go into the private sector, there are many private firms that provide various services in the field of information and analytical activities. The speaker also reminded that since the end of the 20th century, the so-called third revolution (comparable to the previous two that took place during the First and Second World Wars) have been taking place in intelligence activity.

In general, researchers believe that corporate intelligence, as already mentioned above, is a common umbrella for all types of intelligence that are used in business, which, in turn, should know everything about competitors and clients, be aware of market events, understand know what's what in the political and legislative environment. For corporations whose activities cover different regions of different countries, the following information gathered by political intelligence is extremely important: what lobbyist groups or groups of influence influence the decisions “for” or “against” the interests of the corporation, who is considered to be the key person on whom depends implementation of corporate plans. “The corporation itself should react to the situation and prevent unwanted solutions,” said V. Hvozd in his speech, “and act not only in the market sphere, where there is a strong influence of power structures, administrative methods, legal procedures, etc. To make such an activity effective, sufficient funds and time are needed”.

V. Hvozd, agrees with the conclusions of experts that large corporations must have corporate intelligence units that are not inferior to the equipment, staffing and professionalism of national special services.

Each of the speakers who took the floor after V. Hvozd, one way or another, added to the said before him or presented his vision of this kind of activity. Thus, the theme of the speech of the head of the Club of Economics of Ukraine, Natalia Herashchenko was “Economic Strategies for Business Development Security (Practical Experience of Innovative Cooperation with Investigators)”. Representative of the NGO “Professional Association of Personal Guards” Yevgen Soloshenko dedicated his speech to unique technical developments that guarantee to help disclose the surveillance. A guest from Lithuania, Romas Zaleskis, told about his practical developments in his speech “Detection of Business Lies (Polygraph? Profiling? Hypnosis?)”. President of the Association “Simka” Oleh Didych informed his colleagues on invisible threats to business.

Everybody agreed, that the theme of business security, raised at the Congress, is relevant for Ukraine. Especially active were foreign guests, who had a lot of questions to Ukrainian government officials. For example, how to invest foreign capital into the Ukrainian economy, in order to guarantee profits and benefits to Ukraine, not just to individual corruptors? How relevant are current risks in the development of construction business in Ukraine and what is the experience of individual foreign investors? And is trabshooting possible in Ukraine, and if so, who will do it?

As we see, further development of the world economy will have and has its own peculiarities, which we will have to take into consideration. Not accepting these peculiarities, open ignoring the warnings, unwillingness to keep pace with the course of time will only slow down the development of the Ukrainian state, put it at an unreasonable risk, the manifestation of which we are not just watching today - we feel it ll the time in big deeds and small affairs. Such as those mentioned by V.Leshchynskyi, the Chairman of the National Expert-Construction Alliance of Ukraine, who signed a memorandum of cooperation with the organizers of the 3rd International Congress of Investigators and Experts on Crisis Situations.

In the photos: participants of the 3rd International Congress of Investigators and Experts on Crisis Situations.

Photos by V. Raevskyi