Officials of Hitachi, the Japanese electronics giant, said today that a senior executive of the company authorized payment of $546,000 to receive secret technical data on new IBM computers but did not know the data were stolen.
The U.S. Justice Department yesterday charged the Hitachi executive, Kisaburo Nakazawa, and 17 other men with conspiring to transport stolen property.
The FBI announced it had arrested six men in California and issued warrants for 12 others in Japan, including Nakazawa.
In San Francisco, a top official of the U.S. attorney's office conceded that it is unlikely that the Japan-based executives of Hitachi Ltd. charged with pirating trade secrets will be prosecuted by U.S. authorities. John C. Gibbons, chief of the criminal division of the U.S. attorney's office for the Northern District of California, said that there is "nothing I am aware of" in extradition treaties between the United States and Japan that would allow U.S. officials to prosecute the Hitachi executives in Japan. Details on B1.
Hitachi and Mitsubishi Electric, the other Japanese firm whose employes are charged in the case, have denied any wrongdoing. The allegations of extensive industrial espionage, however, have raised concern in government and private business circles here that the case may further strain already tense economic ties between the United States and Japan.
While government and Hitachi officials were circumspect in their comments about the arrests and charges, there was an undercurrent in the Japanese press today linking the tactics apparently used by the FBI to those used in the Abscam cases, in which seven U.S. congressmen were convicted for taking bribes from undercover agents.
A Japanese government spokesman denied suggestions that the U.S. undercover operation was specifically aimed at Japanese business in connection with bilateral economic strains.
Chief Cabinet Secretary Kiichi Miyazawa said industrial espionage was becoming a serious problem as competition for high technology grows keen.
Yasukichi Hatano, general manager of Hitachi's computer division, told reporters tonight that Nakazawa, general manager of the company's Kanazawa works, authorized the payments without consulting company superiors after two Americans ostensibly representing a U.S.-based computer consulting firm approached Hitachi employes with offers of "very good information" on IBM computers.
Efforts to reach Nakazawa for comment were unsuccessful.
According to Hatano, Nakazawa "never thought the information was stolen or had been obtained in any unjust way." Hatano gave the names of the two Americans phonetically, as "Harrison" and "Kerrigan" and that of their company as "Glenmar" Associates. He said they first approached Kenji Hayashi, a senior engineer who was arrested in California yesterday.
After "enthusiastic canvassing" by the two men, according to Hatano, Nakazawa agreed to pay them $546,000 in two installments on May 19 and June 18 in return for what Hatano vaguely described as information on "technological trends concerning computer memory subsystems."
Justice Department officials have acknowledged that undercover FBI men set up a phony computer consulting firm in Santa Clara, Calif., to deal with Japanese citizens who were allegedly seeking confidential information from IBM to assist in the development of new-generation computers and computer software.
According to government affidavits filed in court, FBI agents allegedly received hundreds of thousands of dollars for the information on IBM and for promises of additional technical data and IBM property. The affidavits said that the information allegedly desired by the Japanese included design information on IBM's 3081 computer, a recently introduced model.
Hatano declined comment on what specific information had changed hands or had been promised Hitachi.
Court documents say the Justice Department alleges that an FBI agent received $26,000 for similar services from employes of Mitsubishi Electric. In a statement today, however, the company said it is "convinced that there is no basis in law or fact for these serious accusations."
The company, it said, "has always maintained the highest standards of ethical business conduct in all of its dealings and requires all of its employes to follow the same principle."
"These accusations," it went on, "appear to have arisen out of a terrible mistake by U.S. government authorities."
The allegations of espionage come to light at a time when Japanese computer manufacturers are aggressively vying with IBM and other U.S. producers for a bigger stake in the vast American data-processing market as well as in Japan's own domestic computer market, where IBM holds a dominant share.
In recent years, Japanese companies have based an increasing number of employes in the area in northern California known as "Silicon Valley," which is the nerve center of the U.S. computer and computer components industry. Some representatives there reportedly were given briefs to gather intelligence to help the companies stay abreast of IBM's technological developments.
Most of the information-gathering activities in California are aboveboard and routine, industry sources here asserted. But they acknowledged that IBM's unveiling of its new 3081 model late last year whetted Japanese competitors' appetite for new data. Hitachi, Mitsubishi Electric and other Japanese manufacturers, these analysts said, are now able to produce main-frame hardware comparable with IBM's new machine but lag seriously behind in developing the necessary software.
The FBI's disclosure was particularly embarrassing for Japanese trade officials who have been forced to deal with increasing pressure from their American counterparts in recent months for Japan to open wider its markets for sophisticated, high-technology goods to help reduce the ballooning trade surplus with the United States.
In public statements today, Japanese officials appeared to downplay the impact of the case by referring to it as a legal problem involving private- sector companies with no direct link to governmental trade relations between the two countries.
But one senior Foreign Ministry source, who did not want to be named, said privately that "if the allegations turn out to be true, it could create an image that Japan has got ahead by stealing technology, and that could be very damaging."