India nabs low-tech espionage ring targeting energy industry

Law enforcement officials in India shut down a corporate espionage ring that had pilfered high-value information and data from government energy agencies. On the night of February 19, a special investigative unit of the Delhi police arrested a group of three men who had stolen sensitive documents about energy policies and pricing from the petroleum ministry.

The men were arrested as they left the ministry’s office building on Tuesday night carrying the stolen documents. “A trap was laid and three men were arrested from outside the office and official documents recovered from them,” said Bhim Bassi, Delhi’s Commissioner of Police.

Over the past week, the investigation has expanded dramatically. At least two high-profile energy consultants have been arrested. Investigators have raided the offices of several of India’s largest energy companies, including Reliance Industries and the Essar Group. Senior executives at these and other large energy companies in India have been questioned by investigators.

India’s energy sector is dominated by multinational conglomerate companies like the Essar Group, which operates in more than a dozen countries and reported $15 billion in revenues in 2010. Essar owns subsidiary companies in oil, power, steel, telecommunications and logistics. It is controlled by brothers Shashi and Ravi Ruia. In 2014, the brothers had a total net worth of $5.9 billion, according to Forbes.

Reliance Industries is controlled by Mukesh Ambani. Although Ambani is still the richest person in India, hit total net worth has fallen significantly from more than $43 billion in 2008 to $18.6 billion in 2014, according to Forbes.

The stolen documents included “internal communications on decisions with far-reaching commercial impact, such as gas pricing and arbitration cases against Reliance Industries with billions of dollars at stake,” according to The Times of India. Despite the potentially far-reaching implications of the breach, the espionage ring seems to have relied on fairly mundane tactics.

At least three of the people arrested had at one time been employed by the government. They used forged identification cards and entry passes to enter the petroleum ministry’s office after hours. They disabled surveillance cameras and used duplicate keys to access sensitive documents.

Many of the documents stolen were sold to interested parties at prices of less than $100. However, in some cases, they charged $150,000 or more for documents that were more difficult to obtain. The classified information was allegedly used not only used for strategic corporate decisions, but was also used as insider information to take positions in the market, according to The Times of India.

In recent years, India has restructured its domestic oil and gas industries in an effort to reduce regulation and promote competition. The most recent wave of reforms have begun phasing out price controls on retail sales of diesel and gasoline. The implications of how the process shakes out are potentially huge for major refiners, including Reliance Industries and Essar.

In any event, the arrests and ongoing investigation are more evidence that the government of India is serious about solving its energy problems. For international energy companies investing in India like SunEdison, this is good news. It means the rule of law matters in India.

http://www.forbes.com/sites/williampentland/2015/02/28/india-nabs-low-tech-espionage-ring-targeting-energy-industry/2/?ss=energy