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Russian Technology Espionage Exposed

Posted By Ariel Cohen On October 5, 2012 @ 11:40 am In Security | Comments Disabled

On October 3, the FBI reported [1] it had charged 11 people with running a military technology procurement network based in the United States and Russia that was allegedly illegally procuring [2] and exporting high-tech microelectronics to the Russian military and intelligence services. Alexander Fishenko, the owner of the Houston-based Arc Electronics Inc., was charged with operating as an unregistered foreign agent.

The exported microelectronics included radar and surveillance systems, weapons guidance systems, and detonation triggers; all subject to strict export controls that Fishenko’s firm evaded. Additionally, the Department of Commerce identified 165 foreign persons and companies for involvement as receivers, exporters, or facilitators of illegal exports.

Fishenko, a naturalized U.S. citizen, immigrated to the U.S. in 1994 from Russia. In 1998 he founded Arc Electronics in Houston, which, between 2002 and the present, exported $50 million worth of technology products to Russia. Fishenko is also a part owner and executive of Apex System LLC, a Moscow-based procurement firm, which was named as a defendant in the case. Allegedly, between October 2008 and the present, Fishenko sought to obtain advanced cutting-edge microelectronics from U.S. suppliers and illicitly export them to Russia.

According to court documents, the firm run by Fishenko induced domestic suppliers to sell it high-tech goods by providing them false end-user information and even concealing the fact that the firm was an exporter.

This case exposes yet another serious Russian espionage in addition to a 2010 incident. The arrest of 11 “suburban” deep penetration Russian agents by the FBI in the summer of 2010 and their subsequent Cold-War style exchange in a Swiss airport was an international media sensation and ridicule rather than a serious issue.

Suffice to say that Anna Chapman, the “honey trap” of the network, proceed to model [3] lingerie, instead of teaching in the SVR foreign intelligence academy. The Russian spies returned home as minor celebrities where they met Vladimir Putin, himself a former KGB spy, with whom they sang a sentimental song about the motherland.

The incident with the Houston firm shows that for Russia, human intelligence remains an important tool of Russian spying. Military technology procurement was and is an important part of espionage—not just for Russia, but also for China and even an ally like France. However, it is the scope and the brazenness of the current Russian operation which makes this FBI success outstanding.

According to senior intelligence officials, Russia is stepping up espionage worldwide. Open societies of the U.S. and Western Europe are traditional high-priority targets. In particular, computer networks are increasingly employed to spy. Why spend millions of dollars and years on deep penetrations, when Russian hackers—among the best in the world—can download terabytes of data in seconds?

In November 2011, a U.S. intelligence report to Congress warned [4] that foreign intelligence agencies, especially in China and Russia, are accelerating their efforts to steal sensitive technology data from U.S. companies through cyberspace. Cyber-espionage is even harder to track than HUMINT (human intelligence).

The New York indictments clearly demonstrate that Cold War habits die hard, especially in Russia—happy blather about the “reset” policy notwithstanding.

Spying is and will remain a long-term threat to U.S. security. “Even when presented with evidence of extensive espionage, the current Administration looks the other way. And America’s counterintelligence enterprise continues to lose ground,” Van Cleave writes. And herein lies the rub. As in the 2010 spy net case, the suspects are charged with failure to register as foreign agents and other lesser violations—not espionage.

Reluctant enforcement as well as lax persecution and punishment are no way to fight a massive threat to America’s qualitative military edge and national security.

Dmitri Titoff is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit http://www.heritage.org/about/departments/ylp.cfm [5].


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URL to article: http://blog.heritage.org/2012/10/05/russian-technology-espionage-exposed/

URLs in this post:

[1] reported: http://www.fbi.gov/houston/press-releases/2012/russian-agent-and-10-other-members-of-procurement-network-for-russian-military-and-intelligence-operating-in-the-u.s.-and-russia-indicted-in-new-york

[2] procuring: http://www.foxnews.com/us/2012/10/03/arrests-announced-in-illegal-export-high-tech-goods-from-us-to-russia/

[3] model: http://www.dailymail.co.uk/news/article-1321612/Russian-spy-Anna-Chapman-poses-lingerie-gun-Moscows-Maxim.html

[4] warned: http://www.reuters.com/article/2011/11/03/us-usa-cyber-china-idUSTRE7A23FX20111103

[5] http://www.heritage.org/about/departments/ylp.cfm: http://www.heritage.org/about/departments/ylp.cfm

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