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26 October 2023

The risk of state-sponsored corporate espionage

Beginning with the arrest of a UK parliamentary researcher in September for alleged spying, the story of State-sponsored espionage has since been playing out across the headlines. With the Head of MI5 now suggesting that the scale of the threat may be far greater than was previously thought, Mark Jones, Partner in our Disputes Resolution Team, provides comment on the impact for businesses, and warns of the importance for companies of all sizes to take action against the very real threat of corporate espionage.

Back in September I commented on the arrest of an alleged Chinese spy with access to the heart of government and how the risk was not confined to parliament. Yesterday the Five Eyes Alliance which includes the head of MI5 joined his counterparts from the US, Canada, Australia and New Zealand to meet in Silicon Valley to talk openly about the risks of commercial espionage on behalf of China. It was an unusual move for the joint heads of their respective security services to talk so openly about their concerns. This underlines the significance of the threat and the need to make business aware of that threat.

No longer is big business the threat, instead small start-ups working in technology and innovation are the focus of hostile action. MI5 estimates that tens of thousands of UK companies could be at risk and that suspected Chinese agents have approached over 20,000 people in the UK over professional networking sites in order to try and obtain sensitive information.

Espionage has long been a criminal offence in the UK. However the National Security Act 2023, which came into force in July 2023, was introduced to address the risk of espionage, sabotage and foreign interference and carries a maximum sentence of 14 years imprisonment on conviction.

Given the level of the threat, businesses would be wise to undertake risk assessments to assess the level of threat their business may face and then put measures in place to address any risks which have been identified by way of a tailored policy to address the risks of espionage and theft of trade secrets. The key takeaway – think risk.

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Mark Jones
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