Angry congressmen yesterday watched videotapes of employes of a giant Japanese electronics company trying to buy International Business Machines Corp.'s trade secrets and then called for stiffer penalties against foreign companies that try to steal American high technology.
"It seems clear that the potential punishment involved is too light and the chance of being caught too remote from discouraging such practices from continuing," Rep. Edward J. Markey (D-Mass.) said at a congressional hearing that featured the first public airing of substantial excerpts from tapes made during an FBI sting operation involving employes of Hitachi Ltd..
Chairman John D. Dingell (D-Mich.) of the House Energy and Commerce Committee's oversight subcommittee questioned whether a Reagan administration proposal to increase penalties for industrial theft to $500,000 is enough, especially since the information could be worth many millions of dollars to foreign competitors.
Hitachi and its top executive involved in the attempt to buy the secrets of IBM's newest computer received the maximum penalty earlier this year--fines of $10,000 each. Another Hitachi executive was fined $7,500, while an American intermediary was fined $7,500. Nine other Hitachi executives charged in the theft are considered fugitives, although the Justice Department is seeking to have them brought to trial in the United States.
Markey called the penalties infuriating, while Rep. Thomas J. Bliley (R-Va.) said the FBI sting tapes show Hitachi to be "a commercial outlaw." Dingell said industrial piracy by foreign firms costs millions of American jobs.
Ironically, the congressmen watched the videotapes on six TV monitors clearly marked "Made in Japan."
The tapes were released to the public May 13 by U.S. District Judge Spencer Williams over the objections of Hitachi.
The showing for the congressmen opened with a meeting on Nov. 18, 1981, in which FBI undercover agent Alan J. Garretson slowly counted out $7,000 in $100 bills paid to him by Jun Naruse, a Hitachi senior engineer, while hidden cameras captured the scene. Garretson then handed over a receipt for that payment and one for $3,000 received a few days earlier for giving Naruse a chance to photograph IBM's newest computer.
Later, another Hitachi engineer, Michihiro Hirai, asked Garretson to destroy his copy of the receipt because it identified the Japanese company as the source of the money. But Garretson insisted he needed "some kind of thing to show for my books when I got $10,000."
Another segment of the tape showed the most senior Hitachi official involved in the sting, Kisavuro Nakazawa, who was in charge of the company's computer works, bragging that he can spend up to $1 million to buy secret information.
Isao Ohnishi, another Hitachi official, was captured on tape explaining to Garretson that getting the IBM secrets a year before general release means they can have a competing product out a year earlier than they could if they had to go through the tedious process of reverse engineering. This means buying an IBM computer and painstakingly taking it apart to see how it works so it can be copied.
In a key segment, Garretson tried to draw out intermediary Tom Yoshida, an American, about his contacts with other Japanese high-tech companies and raised the possibility of selling the IBM secrets elsewhere.
"Do they spend the same kind of money to acquire this stuff?" the FBI agent asked.
"Yes and no," answered Yoshida. "I have my loyalty, too. If I'm doing this with Hitachi, then I won't go and tell the others . . . it's a business ethic, I think."