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Internal Investigation Turned Foreign Espionage: 360° Due Diligence Case 2020

A Texas oilfield supply company engaged Orchid Law for an internal investigation of employees suspected of stealing confidential, proprietary business information and data for the benefit of a foreign competitor. Orchid Law are experts in energy M&A transactions and advisers to Asian and American companies.

Why Orchid Law?

The owners of the Texas company have worked and conducted business in the international and USA upstream oil and gas industry for many decades, including China. They knew we would know how to quietly and legally find proof of their suspicions that the employees stole information and data for Chinese companies offering promises of more money and ‘what else.’ Orchid Law’s focus: Conduct 360° Due Diligence, confirm the relationships/connections of the individuals to the Chinese companies and government, and find evidence of violations of substantive US federal and state laws. Also, the big question of Why our company, a small-medium size independent? To do so, we would figure out the motivations of the key people orchestrating the illegal activities. 

Were our client’s suspicions confirmed? Yes. Their former employees were hired away by companies set up under the laws of various states (such as Texas and California) with sources of funding and decision makers originating in China. Were the foreign owned companies playing fair and abiding by the federal and state antitrust and other substantive laws? No. Are other similarly situated companies in the oil and gas industry harmed by the illegal activities? Yes, economic espionage by foreign actors in the USA is systemic, happens often, and has been going on for years. 

We stop here as we are sworn to secrecy and now is not the time. Do take a few minutes, read the following public news releases, and fact check. 

Lessons Learned and Our Advice:

  • Protect your information, data, assets and business. Do it now, without delay. Fact: economic espionage, whether in form of security breaches, hacking, stealing computers, mimicking log-in and passwords, and old-fashion theft/breaking and entering, increases during periods of uncertainty and business down cycles. 
  • There are many (too many) cyber security and data privacy consultants offering services. Be sure to check on the consultants’ expertise, track record, and credentials, as claimed, before you open the door to your company’s database and systems.
  • Don’t ignore the auto password reminders. What good is the best encryption or sophisticated algorithm if the log-in is the administrator’s name and the password is ‘password’ or something so elementary that a novice can break in with no sweat?
  • Humans direct and conduct the illegal activity and breaches. Back to Trust. Can you trust unconditionally the people working for you? Don’t overthink, it is Yes or No.
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