French prosecutors pressed fraud charges against a Renault SA security manager and sidelined the carmaker’s espionage claims that led to the dismissal of three senior executives.
The Paris prosecutor opened a formal investigation into “organized fraud” and recommended that Dominique Gevrey be kept in detention after two days of questioning, said a Paris court official, who asked not to be identified in accordance with policy. The probe will not address Renault’s original spying claims, which remain on file until the case concludes, the official said.
Advertisement
“Renault wants the whole truth to come out and will repair any injustice that has been done,” company spokeswoman Frederique Le Greves said by telephone, declining to comment further until the Paris Chief Prosecutor publishes a statement on the case, expected tomorrow.
Renault dismissed upstream development chief Michel Balthazard and two other executives in January after its internal probe concluded they had received payments from Chinese companies via foreign accounts. The company paid 250,000 euros ($347,000) for information about the accounts without knowing who supplied it, company attorney Jean Reinhart said March 9.
Chief Operating Officer Patrick Pelata told Le Figaro last week that he may have been misled over the evidence, pledging that Renault would hold management accountable “right up to me” if the three executives were cleared of selling secrets.
Consistently DeniedBalthazard, his subordinate Bertrand Rochette and deputy electric-car program chief Matthieu Tenenbaum have consistently denied the allegations since their dismissal in January, when Renault lodged its espionage complaint with prosecutors. The three have also filed criminal defamation claims.
“We’ve said from the start that our client is a victim of slander, as well as collateral damage inflicted by Renault’s dysfunctional management,” Balthazard’s lawyer Pierre-Olivier Sur said by telephone. “Renault has posed as a victim, first of espionage and now of fraud, but the only victims here are our client and his co-accused.”
Tenenbaum “is waiting to hear what Renault has to propose” and doesn’t rule out returning to work, his lawyer Thibault de Montbrial said. “First of all we’re waiting for an official declaration of his innocence, since the prejudice he has suffered increases with every day that passes.”
Defending the carmaker’s espionage claims in January, Chief Executive Officer Carlos Ghosn said he had personally overseen the internal probe and its “multiple” findings against the three executives. “If there were no certainties about this, we wouldn’t be where we are now,” he said on TF1 television.
Renault last week publicly ordered Gevrey and his colleague Marc Tixador to reveal the source of the banking information, after police failed to find any trace of the alleged accounts in Switzerland and Liechtenstein, where legal authorities cooperated with the investigation.
Tixador and Renault Security Director Remi Pagnie were also questioned by police over the weekend and released without charge overnight, the court official said today. Gevrey, a former French intelligence agent, was arrested on March 11 at Paris Charles de Gaulle airport as he prepared to board a flight to an African country, the official said.
Firms don’t take the threat of cyber espionage seriously enough, says Ovum.
A report by the research firm urged businesses to address the issue as it’s “as relevant to them as it is to national security organisations”.
“Cyber criminals are graduating from stealing credit cards and banking credentials to targeting corporate plans and proprietary information. They want valuable information such as product and technology blueprints, customer lists, or information that can be used to embarrass or disadvantage a victim,” said Graham Titterington, Ovum’s principal analyst.
“Almost every organisation has sensitive information that would damage it if it were to be leaked out; however, many have overlooked cyber espionage in their preoccupation with preventing the theft of financial data. This needs to change, and enterprises need to wake up to the danger posed or risk losing valuable information and having to deal with the consequences.”
Titterington said employees that work from home are the weakest link in corporate security defences. He urged firms to restrict the number of staff that have access to sensitive data, as well as conducting a risk analysis of all devices that access the network including removeable media.
Alex Donnelly, portfolio manager of Damovo UK, said it was “extremely worrying” that companies are turning a blind eye to cyber espionage.
“Even more worrying is the suggestion that home and remote workers are a possible weak link. If you have the right technology in place and your remote workers are sticking to the rules then there is absolutely no reason for there to be any risk to them or the company,” he said.
“Businesses must therefore take every opportunity to ensure policies can be enforced and that mobile devices are within the control of the IT department, to minimise risk and the threat of cyber espionage.”
Federal prosecutors in the espionage case against a former National Security Agency employee, who allegedly gave classified information to a Baltimore Sun reporter, want to invoke a little-used rule that allows them to use code words in the courtroom — making portions of a public trial private.
The “silent witness rule,” is meant to minimize the disclosure of classified information by allowing only those directly involved in a case — the judge, jury, witnesses, lawyers and defendants — to see it. Any public discussion of the secret details must be done in code.
“They literally have a key, a glossary, that the jury would have that the public would not,” said Abbe D. Lowell, a Washington, D.C., defense attorney. He argued against the rule’s use in an espionage case that was filed (and later dropped) against two pro-Israel lobbyists.
Judges typically allow the rule to be used only in a very limited way, lawyers said, noting that secret codes quickly become confusing and risk violating the defendant’s constitutional rights to a public trial.
“It’s literally been used three or four times in the last 30 years,” said Jonathan Lamb, a California attorney who published a lengthy article about the rule in 2008 while attending Pepperdine University Law School.
Plans to use the “silent witness rule,” first reported Thursday by Politico, were outlined last month in legal documents in the case of Thomas Drake. The former high-ranking NSA employee was indicted under the Espionage Act in April on charges that he illegally retained national defense information, obstructed justice and made false statements to agents for the FBI.
The 10-count indictment states that Drake, who worked at the NSA from 2001 to 2008, gave classified information to an unidentified reporter, but it does not charge him with leaking.
Defense filings identify the journalist as Siobhan Gorman, who now works for The Wall Street Journal.
In 2006 and 2007, while at The Baltimore Sun, Gorman wrote a series of articles exposing management and programmatic problems at the Fort Meade-based agency, sometimes quoting anonymous sources. Drake was a source for many of the articles, his indictment states.
A private hearing has been set in Baltimore for March 31 to discuss the issue and the evidence with Judge Richard D. Bennett of U.S. District Court.
It’s unclear how much information the federal government wants to introduce under the silent witness rule in the Drake case. Court filings have referred only to “several … exhibits” and “several classified statements.”
Both the prosecution and defense attorneys declined to comment beyond the legal filings Thursday.
Lowell gave an example from his case that would have forced witnesses to utter statements like, “When [the defendant] and I were talking about Country A, we discussed the fact that there was a possibility that Leader 1 might not appreciate the United States’ sanction on Topic C.”
That’s “impossible for a jury to follow, and it will cripple a defendant’s rights to really cross-examine and confront the evidence against him,” Lowell said.
Free speech advocates point to his case as an example of hypocrisy within the Obama administration, which campaigned on a platform of government transparency, yet has brought more leak prosecutions than the three previous administrations combined. Drake’s defense attorneys say he is more whistleblower than traitor.
“The documents at issue in this case concern NSA’s waste, fraud, and abuse,” Maryland federal public defender James Wyda, who represents Drake, wrote in court filings. “Most importantly, Mr. Drake’s activities relating to these documents were intended to reveal the waste, fraud, and abuse that cost the taxpayers money, weakened our civil liberties, and hindered our nation’s ability to identify potential threats against our security.”
Federal prosecutors have filed a motion asking that Gorman’s newspaper articles not be admitted, or acknowledged, during trial, calling them “irrelevant.”
Bennett has yet to rule on that motion. He’ll consider the “silent witness rule” at the end of the month, though his actual order in the case could also be secret, said Lamb, the California attorney.
“Often, the records are sealed, so we don’t actually know whether the court ended up applying the rule,” Lamb said. “It’s this murky doctrine that’s out there that may or may not be used, and when it is used, it’s unclear … how.”
ASIO has created a unit to combat cyber spying, in the latest move by government to protect Australia’s online networks.
Known as the cyber espionage branch, it was formed in the past nine months and is believed to be under the control of ASIO’s counter-espionage and interference division.
The unit’s existence is expected to be announced by Attorney-General Robert McClelland in a speech tonight at Canberra’s National Security College.
”ASIO is … working to guard against foreign interference and espionage,” Mr McClelland will say, according to a copy of the speech provided to this website.
”This co-operation is crucial, especially to countering the threat posed by those using the internet as a modern espionage tool.”
NEW YORK – A one-time billionaire hedge fund founder tapped longtime friends who worked for public companies for secrets to earn tens of millions of dollars in illegal profits, a prosecutor told a jury Wednesday at what the government has described as the biggest hedge fund insider trading trial ever.
“Greed and corruption. That’s what this case is all about,” Assistant U.S. Attorney Jonathan Streeter told the jury in Manhattan at the start of his opening statement.
Raj Rajaratnam traded on secret information “again and again and again” between 2003 and 2009 as he operated a family of hedge funds at his New York-based hedge fund, Galleon Group LLC, Streeter said.
The trial comes more than a year after prosecutors announced that they had raised the stakes in their effort to root out corruption on Wall Street by using wiretaps for the first time on a wide scale to eavesdrop on the private conversations of insiders at public companies and at hedge funds. Too often, they said, those calls revealed insider information being passed around casually.
Rajaratnam has pleaded not guilty to securities fraud and conspiracy to commit securities fraud. The Galleon founder, who has been free on $100 million bail since his October 2008 arrest, stood up briefly as his name was mentioned when jurors entered the room for opening statements.
Defense lawyer John Dowd told the jury “the evidence will show the government has it wrong. And the government has it wrong because it believed the word of unbelievable people.”
He said the government “ignored the public record and failed to do its homework.”
Streeter told jurors they would hear Rajaratnam on secretly recorded phone calls talking about insider deals and even revealing an effort to cover them up afterwards by disguising what was known about public companies.
The prosecutor said one of those calls was with fellow employees a day after he learned in October 2008 from a board member at Goldman Sachs that the firm was going to lose money for the first time in its history as a public company.
“I heard yesterday from somebody who’s on the board of Goldman Sachs that they’re going to lose $2 a share,” Streeter said Rajaratnam told employees on the call.
The prosecutor said Wall Street had it “exactly wrong” at the time, expecting Goldman Sachs to earn a profit amidst the worst of the economic crisis.
Streeter said Rajaratnam saved millions of dollars by selling all his Goldman stock. A month earlier, he had earned close to $1 million when the same Goldman board member, Rajat Gupta, told him that Goldman had received an offer from Warren Buffett’s Berkshire Hathaway to invest $5 billion in the banking giant, Streeter said.
Gupta has not been charged criminally but has been charged civilly by the Securities and Exchange Commission.
Streeter said the jury would hear from several of the 19 people who have pleaded guilty in the probe, which resulted in more than two dozen arrests. He said they would also view phone and trading records.
