21 July 2004

Homeland Security, Private Sector Partner on Economic Security

New program seeks to identify economic vulnerabilities in industry

By Erica Matsumoto
Washington File Staff Writer

Washington -- The U.S. Department of Homeland Security is partnering with corporations to increase national economic security, says a senior department official.

"We are looking to together systematically identify vulnerabilities within industries and financial systems that fuel corporations and to share this information with the private sector with the ultimate objective to eliminate or disrupt and dismantle those vulnerabilities," said Marcy Foreman, acting director of the Office of Investigations at Homeland Security's Immigration and Customs Enforcement agency (ICE) at a meeting announcing the department's "Cornerstone Initiative." The July 20 meeting in Washington was sponsored by the Center for Strategic and International Studies (CSIS).

Other speakers at the meeting were Michael Garcia of ICE, Carol Hallet of the U.S. Chamber of Commerce, Doug Doan of Homeland Security, Robert Bryden of the FedEx delivery service, and Congresswoman Katherine Harris (Republican-Florida).

Cornerstone targets the financing mechanisms used by terrorists to earn, move and store illicit funds. ICE has seized nearly $309 million leading to 1,700 arrests, Garcia said.

ICE, the second largest investigative agency in the federal government, was created by combining several federal agencies, including as the U.S. Customs Service and the Immigration and Naturalization Service.

Garcia recalled one illicit operation. Operating out of China, the organization was caught attempting to smuggle 20 containers of counterfeit goods, worth a total of $400 million, using a middleman broker in Lebanon.

Referring to a similar operation, Forman explained that while, "we did not tie that money necessarily to terrorism, we were able to prevent it from leaving this country."

"We are looking to choke off illegal funds, whether it's for terrorist or criminal activity, from leaving the country via currency, money service businesses, trade based money laundering."

Hallett commented that because many attempts of illegal profiteering require violating intellectual property rights, the problem of illegitimate goods has increased dramatically, "and it will only continue to increase."

"In 1982," Hallett continued, "trade of illegitimate goods drained $5.5 billion from the global economy. In 1992, the amount rose to $200 billion, and in 2003, it more than doubled to between $450 and $500 billion in losses globally."

"In the past we have always thought about the counterfeit Gucci bags or Hermes scarves," but there is a wider range of goods being illegally produced, she remarked. "For example, in the software business, 25 percent of all software in the United States and as high 40 percent worldwide is operating illegally pirated software. Software piracy is a $1.7 billion problem for Microsoft alone," she said.

The surge of trademark and intellectual property rights violations and copyright infringements have led the U.S. Chamber of Commerce to operate an extensive, comprehensive program.

"With a communications campaign to educate business, media and lawmakers about these crimes, and a cross-industry coalition of manufacturers, retailers and law enforcement officials," Hallett explained, "we are looking to share information with ICE so they can pursue what we can identify as a violation that law enforcement may not have identified yet."

"It's really difficult to pick out a fake oil filter from a real one, and unless the industry can help guide us and tell us what a fake oil filter looks like, we're pretty much blind and we're not going to find it," Doan said, emphasizing the importance of private-sector cooperation.

"Homeland security is a shared responsibility," Doan said.

Agreeing with Doan, Bryden said, "It's in our business interest to be proactive. We know our systems better than anybody else, and we certainly want to be partners in making sure that our system is not used to perpetuate some kind of terrorism atrocity on the U.S.," he said.

The message was clear. In an almost seamlessly integrated global economy, the effort to secure the nation's economic safety falls upon, to some degree, the shoulders of American corporations. "Everybody has a responsibility to national security," said Forman. "It's easy to point fingers and say this is so-and-so's responsibility. Individually we can bring a lot to the table, collectively we can make a major impact."