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Corporate trash bin can be gold mine to an industrial spy

In murder mysteries, the butler always did it. But in the world of modern industrial espionage, keep your eye on the cleaning woman . . . or the trash man . . . or perhaps even the guy in the ragged coat rummaging through the office dumpster out back. He may be in search of more important office tidbits than apple cores and an old pastry.

As the scramble for information and data grows increasingly competitive within corporate America, companies and organizations across the United States are beefing up security measures in an effort to protect themselves and their confidential documents from an array of threats ranging from Soviet agents to free-lance industrial spies to direct business competitors. Corporations are estimated to have spent more than $12 billion in security costs in 1983.

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Security-related losses to businesses have been estimated at $40 billion a year.

One potentially damaging area where unescorted confidential information may pop up, according to security experts, is in the trash.

''Any good investigator looks in the garbage - it's a technique,'' says Robert F. Littlejohn of Pinkerton Inc., the New York-based corporate-security firm. ''The garbage tells a lot.''

Indeed, the technique widely used by federal, state, and local law enforcement officials to investigate criminals is also being employed by unscrupulous businessmen in an attempt to gain a competitive advantage in the marketplace.

They exploit the simple fact that most people don't pay close attention to what they throw into their garbage can.

Security experts say that, depending on the security conciousness of a firm's staff, the cleaning staff or the firm's garbage collectors may have access to a broad range of confidential records - imperfect photo copies of internal memos, discarded computer printouts, carbon paper used to type customer lists, and other documents.

In most cases, custodians could care less about corporate trash. But to a planted East-bloc agent or an industry competitor knee-deep in a dumpster, the trash might be extremely interesting:

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* US Navy personnel at the Naval Training Center in Orlando, Fla., in February 1981 mistakenly sent documents on nuclear propulsion to an open dump rather than to a Navy paper shredder. Sailors were later dispatched to the dump to retrieve the classified documents.

* In 1979, at the Subic Bay Naval Base in the Philippines, classified documents including the US Navy's plans for the Pacific region were accidentally discarded at an open dump because the base shredding machines weren't functioning. The documents were later recovered following a search of the dump site.

* In Oakland, Calif., in 1978, a business competitor to the Tennant Company recovered carbon inserts used by Tennant secretaries from a dumpster in the office complex. The carbons had been used in typing lists of Tennant's potential customers and the prices that would be quoted to those customers. The carbons could be read by holding them up to a light. That's exactly what Tennant's competitor did.

Such ''horror stories'' are becoming increasingly well known in corporate circles. They have led to a heightened concern about security - an area in which the private sector has generally lagged behind more security-concious government agencies. The US government remains America's largest buyer of paper shredding machines.

Soviet and East-bloc agents at work in the US are believed by government officials to be focusing their espionage efforts away from the Pentagon and established defense installations, and concentrating more on smaller defense contractors with the hope that they are more prone to make security-related mistakes. Such firms - often performing work at the cutting edge of military technology - are scattered throughout Silicon Valley and southern California.

In addition to a standard Defense Department security program that monitors all firms with government security clearances, the Federal Bureau of Investigation has in recent years conducted briefings for executives nationwide on the need for tighter corporate security.

The message is sinking in.

Sales of paper shredders are skyrocketing, according to industry sales agents and manufacturers. In the decade since Watergate, sales of paper shredders have increased from some $10 million a year to more than $50 million a year, say industry executives.

''It is the perception of the need for shredders that is growing,'' saysAlfred Magid of the Wilson Jones Company. The company's line of shredders has expanded to 22 different models ranging from $500 personal shredders to $8, 000 heavy-duty shredders.

''In our business it is kind of like selling insurance,'' says Sandy Alaynick , of the General Binding Corporation, one of the largest manufacturers of paper shredders in the US. ''Using a shredder is protection against that fear that somebody is going to get information about your business or something private about you personally that you don't want them to have.''

An alternative to buying a shredder has emerged in Boston. Dick Hannon runs a firm called Data Destruction Services Inc., and upon request he will dispatch one of his two vans to the site of the documents to be destroyed.

For such on-site destruction, Hannon charges $30 per 100 pounds. The sensative papers are fed into a $25,000 high-security shredder mounted in the back of his van and are promptly slashed into US government-approved high security confetti measuring 3/32ths of an inch. The Federal Reserve Bank uses a similar method to dispose of paper money being taken out of circulation.

He says the beauty of the system is that ranking corporate officials are able to stand in the parking lot and personally supervise the destruction of the corporate secrets. In some cases, he says, high-technology defense contractors even provide their own personnel to feed the documents into his 120-horsepower ''Data Grader.''

After two years in business his clients number 150, including Draper Laboratory, Wang Laboratories, and the Massachusetts Welfare Department. The firm is destroying approximately 15 tons of documents and records a week. He says he's considering franchising the business nationwide - beginning in Silicon Valley.

''We don't consider ourselves a rubbish company. We consider ourselves a security company,'' Hannon says.

He adds that companies requesting one can receive a certificate - a ''document of destruction'' - from the firm quaranteeing that their documents have been securely shredded.

GBC's Alaynick says, ''The paper explosion has brought on the need for this kind of security.''

He adds, ''In the last 14 months the number of people in the business has tripled. We are looking at 15 to 20 percent a year growth in sales, which means total industry sales of shredders will double in four or five years.''

Next: Is snooping in trash an invasion of privacy?

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