Espionage in Universities: Shared Private/Corporate Security and  National Security Objectives (A Critical Thinking Exercise)
Espionage in Universities: Shared Private/Corporate Security and National Security Objectives (A Critical Thinking Exercise)

Espionage in Universities: Shared Private/Corporate Security and National Security Objectives (A Critical Thinking Exercise)

Despite the clear economic benefits and influence of international students within the Australian higher education sector, their direct and indirect intentions and actions remain mostly unknown, let alone the risk they may create.

International and Australian intelligence agencies have drawn attention to the threat of espionage and intellectual property theft, in addition to taking clear steps to combat the issues.

The University is vulnerable to espionage, and intellectual property theft and the potential for adverse outcomes warrants proactive risk mitigation and business continuity strategies and supporting action. This report has outlined the sequence and specific considerations required to evaluate the potential risks posed by espionage and theft potentially conducted by international students, in particular, Chinese nationals.

The recommendations include specific risk assessment steps, broader business continuity issues, effective risk management strategies and considerable evaluation and exploration of all facets of culture, inclusive of the organisation.

This mature, contemporary enterprise security risk management approach present further business opportunity and collaboration between the University and one if their critical stakeholders, the Australian Government.

Furthermore, this model will act as a model for other higher education providers to collaborate and follow, creating a more resilient industry and system.

Introduction

A few years ago (Jan-Mar 2019), the author conducted research and analysis into the potential and scale of espionage within a University setting, from the perspective of security, risk and management sciences.

I chose an Australian University context and long-standing local university (totally at random) with readily available online information, data and statistics for analysis. In this case, the University of Melbourne. I might add, this was prior to the Australian Government's Inquiry into national security risks affecting the Australian higher education and research sector. Another random coincidence.

Therefore, the following article on Espionage in Universities: Shared Private/Corporate Security and?National Security Objectives, serves as first and foremost as a critical thinking exercise for security, risk and management professionals, inclusive of students, scholars and other sectors of academia.

Caution: This remains an academic exercise supported by scientific enquiry and professional analysis. As a result, the process, observations and recommendations are not to be re-purposed or exaggerated for purposes of fear mongering, racism or other fears, phobias and unsubstantiated allegations.

Disclaimer: The University of Melbourne had no knowledge nor involvement in this research and analysis project. As a result, the university is in now way related, reflected nor specified in this academic thinking exercise.

Briefing Note: Espionage As A Security Risk Within The University

Subject: The threat and subsequent risk of espionage and intellectual property theft by international students at The University of Melbourne.

Summary: Limited empirical data is available with regards to the international student community, their access and desire to exploit proprietary and intellectual capital along with the University’s specific consideration and measures to detect, deter, management and respond to the threat of espionage.?The specific risk remains unexplored or assessed at present. This report identifies and recommends the specific steps required to commence the process to the point of maturity.

Issues: The university has significant financial and reputational exposure to the threat of espionage and exploitation of the university’s critical value creation streams such as research, curriculum and educational offerings.

The sensitivities of the matter cannot be understated in both terms of cultural variations and the presumption of innocence that has the potential to create a backlash more significant than that of the original threat of espionage.

Background: International and Australian government intelligence agencies have taken the unprecedented step of highlighting the threat of espionage by international students, which in turn has been distributed locally and globally via the media. Words have been reinforced by action, to the point that the Australian Security Intelligence Organisation (ASIO) has both briefed and engaged the majority of Australia’s leading higher learning institutions on this matter, including The University of Melbourne. Furthermore, recent changes to the laws and legal systems confirm the seriousness of the threat as viewed by the Australian Government.

Considerations: Detailed and comprehensive analysis and understanding of relationships, cultures, expectations and adverse outcomes need systematic consideration. Action and decisions must be risk-based with all known and assumed influences understood or declared.

International students are isolated, limited by language and come with a variety of influences and cultures inherently foreign to Australians and those outside the academic pursuits. A lack of understanding and knowledge contributes to an air of suspicion and the assumption of guilt. Chinese nationals, in particular, are known to have an affiliation with state political parties and participate in what is more commonly viewed as aggressive, collectivism commercial practices. Until proven otherwise, it is assumed that a portion of Chinese students will embrace and practices these norms irregularly or with frequency. It is essential that the university understand how this affects value creation and retention.

Conclusions: Addressing the topic of espionage with a considered, professional risk management methodology provides two significant benefits. Firstly, a greater understanding of all the issues, risks, options and management requirements only serves to increase the university’s resilience, reputation and risk management strategy, at the same time protecting market share and assets. Lastly, by focusing on an apex threat such as espionage, many ancillary and subordinate threats such as cybersecurity, illegal entry and fraud, for example, receive greater attention and prevention support also, possibly even illuminating some of the lower order threats in the process.

Recommendations: Conduct a systematic, positivist risk assessment of the threat. Integrate the process with contemporary business continuity practices, within a holistic framework provided by an enterprise security risk management strategy. Ensure all measures and actions are consistent with the universities organisational culture and respectful or inclusive of other valued cultural groups, communities, stakeholders and relationships.

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Espionage at the University: Security Risk Management

Background: As of Early 2019

The University of Melbourne is a 160-year-old institution located in the Australian state of Victoria, comprising three major divisions; Academic, Chancellery and University Services. The University is ranked number one in Australia and number 32 internationally. The University of Melbourne is 40% funded by The Australian Government and receives $171 million in grants annually. Fee-paying onshore overseas students generate $752,354,000 in revenue annually, in addition to research income which generates $475 million in revenue annually. The University of Melbourne’s annual revenue for 2017 was $2,511,203,000 with $5,631,745,000 in equity. (The University of Melbourne, 2018)

This report will focus on evaluating allegations and speculation that international students are conducting espionage and intellectual property theft on behalf of commercial or state actors.

The issue of espionage by state actors has been widely covered in the UK media (Corera, 2018), US media (Cohen, 2019) and echoed by Australia’s media (Seidel, 2019) in addition to public concerns expressed by Australia’s government intelligence agency (Dziedzic, 2017).

As of Dec 18, there were a total of 693,750 international students in Australia. Over 200,000 are Chinese citizens, up 11% on the previous year (Department of Education and Training, 2018a). China represents 30% of all international students, making Chinese students the single largest international student population in Australia. Higher Education accounts for 14% of all International Students. The University of Melbourne has approximately 20,358 onshore international students, representing 33% of all onshore students. (Department of Education and Training, 2018b).

Based on these figures, this report will focus specifically on Chinese international students and the risk posed by espionage and related commercial exploitation of government and commercial information or knowledge.

Threats to the University’s value creation, intellectual property and reputation would result in a significant adverse economic impact to the University, the state of Victoria and Australia.

Conversely, persecution and false allegations could have a comparable effect if the issue, context and management response are not adequately measured and understood. The risk must, therefore, be carefully considered. This report will investigate and recommend risk assessment methodologies, business continuity processes, risk management strategies and organisational culture considerations to support the University’s business resilience strategy.?With the intent of clarity, consistency and ease of sharing, figures and diagrams will be included where appropriate.

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Figure 1 - International Student Data December 2018 (Department of Education and Training, 2018a)

Assessment of Risk

Academics consider espionage an age-old profession, noting historical references in The Bible and Sun Tzu’s original works (Miller, 2012).

Moreover, the modernity view is that “espionage is a fact of life”.

The primary focus of espionage is information, and virtually anyone can carry out the task.

The apparent proliferation and concerns relating to espionage are demonstrated by claims that “every nation has laws prohibiting and criminalising espionage” (Miller, 2012). In order to deter and punish espionage activity, effective laws and legal structures criminalising and prohibiting the collection and use of classified, proprietary information are essential. Recent amendments to Australia’s national security and criminal codes (National Security Legislation, 2018) include a broader definition of espionage and the inclusion for specific theft of trade secrets involving a foreign government principal.

As a measure of the seriousness in which the government views espionage, penalties range from 10 years to life imprisonment.

International legal experts have recently declared that espionage remains an enduring threat (Vara, 2015).

Conversely, commercial entities have expended greater resources in the protection of intellectual property than its creation in recent times (Grabiszewski et al., 2018).

The selection and prioritisation of an appropriate risk assessment methodology, ideally suited to the unique business case of higher education, will need to encompass multicultural, commercial and government perspectives.

There is an overwhelming temptation to streamline the assessment of espionage as a valid risk to the university into a series of mathematical and numerical calculations.

However, purely technical analysis has been identified as inappropriate for cultural and sociological risk assessments (Waring and Glendon, 1998) as is the likely case with espionage.

Based on the minimal volume of successful prosecutions and sentencing of espionage cases, much like terrorism, it can, therefore, be considered both a rare and complex offence to prove, making strategic and probabilistic risk assessments difficult (Bamfield, 2014).

Probabilistic risk assessments, especially those involving independent, calculating human threats, especially through bounded rationality modelling can be misleading at best (Brown and Cox, 2001).

Contemporary anthropological assessments recommend multi-sited ethnographic assessments (Figueroa, 2013), inclusive of several techniques and methodologies, to better understand all the associated human factors, cultures and risks. Research for this approach proposes to cut across dichotomies (Marcus, 1995) which are particularly relevant in an urban-based University environment.

Future predictions, forecasts and outcomes assessments can benefit from the Delphi method (Merna and Al Thani, 2005) whereby expert groups initially and independently considered the risk, ultimately converging assessments into a single consensus, discarding significant outliers.

This approach will be invaluable as multiple disciplines, and expert inputs will be required to identify and value knowledge capital and intellectual property most vulnerable to espionage and exploitation.

Groups tend to make riskier decisions than individuals and lay people (Smith & Brooks, 2012); it should be noted.

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Incorporating all the expanded facets of an Enterprise Security Risk Management (ESRM) strategy, such as financial, strategic, security and accidental, all risks can be adequately considered and treated (ASIS International, 2010).

Following on from this foundation is the requirement for integration with commercial business continuity management (BCM) objectives (Elliot, 2014).

Inclusive of BCM is the requirement for a Business Impact Analysis (BIA) to accurately identify the value creation streams and financial contributions to the University of Melbourne, beyond top-line revenue figures and calculations.

Inclusive of this risk assessment will be the requirement to value, prioritise and tailor measures specific to each identified risk, within the context of espionage and associated loss and exploitation of knowledge or intellectual property.

Business continuity issues are addressed in detail in the next section.

Business Continuity Issues

While the University may be considered a purely academic organisation, based on revenue and equity, the university is, in fact, comparable if not a more significant than many commercial enterprises and conventional businesses within Australia.?

Therefore, the concept and acceptance of business continuity may not be intuitively adopted by many elements of the university; it is no less a requirement than any other large, profitable business. Government stakeholders and ongoing investments further amplify this. Greater understanding of stakeholders is required.

Informal networks and relationships constitute a critical economic resource (Elliot, Swartz, et al., 2010). Academics acknowledge Elliot and Swartz’s guidance with regards to the identification of groups, especially pressure groups, that may or may not have a direct stake in the organisation so that possible issues can be anticipated and if possible avoided.?Simpson, 2013 underscores the necessity for this also in related literature.

It would seem prudent to adopt a crisis management approach to business continuity management, beyond previous cultural considerations during the risk assessment process, evaluation and exploration of various layers.

This layered investigation and evaluation are referred to as a ‘cultural onion’ (Elliot, 2014) by some academics.

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Figure 6- Cultural layers within a crisis and business continuity context

The general structure and flow for the university's business continuity management process should be commensurate with similar commercial entities, according to reputation, value creation, revenue and equity.

Figure 6 depicts the entire business continuity process from commencement to the creation of a functional plan.

Business continuity is more than just a finished plan.

The investment will be required in supportive and appropriate business continuity resources such as personnel, systems and operational services.

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A unique yet beneficial dimension of risk management for the university as it relates to espionage is the interest and provision of criminal laws and priority associated with the crime of intellectual property theft as provided by the Federal Government of Australia.

While “deterrence is an inherently unobservable phenomenon” (Brown, Ebson et, al., 2013) with offenders often unaware of the severity or nature of punishment, they play a pronounced role within the university’s risk management strategy.

Additionally, it positions the University’s security and risk management resources within the “hybrid agent” space between national and corporate security (Petersen, 2013a), affording a form of neo-liberalism governance.

Furthermore, preliminary academic research has identified broader, derived national security benefits in the area of espionage expenditure, elsewhere in the corporate and security landscape (Aniruddha, B et al., 2017), for both government and commercial organisations.

It is therefore foreseeable that by embracing a more active counter-espionage role, additional support will in turn flow from government sources.

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Observations: Universities in General

The university’s current interpretation and structure of security needs to evolve to a level of capability commensurate with the risk and responsibility.

At present, security is predominately outsourced to entry-level service providers with a focus on select physical security issues and investigations, not more complicated and systemic threats such as espionage or intellectual property theft.

The University’s in-house security management and expertise are limited.

Investment in people, knowledge, resources and services will need to be considered and addressed at all stages.

This business opportunity and investment will align the value of the organisation and potential threats with a comparable level of corporate security expertise and professionalism, based on economic rationality of measurement and calculation (Petersen, 2014b), inclusive of costs and benefits.

Development in this area further supports the hybrid corporate and national security objectives as researched by Petersen, 2014 and outlined with the Enterprise Security Risk Management strategy defined by ASIS International in 2010.?

The perceived threat of espionage is demonstrated by the continuing emphasis and focus, due to foreseeable competition among states, by Australia’s intelligence services on counter-espionage strategies analysis (Commonwealth of Australia, 2017).

Intellectual property is acknowledged as an essential component of the economy and organisational value creation (Grabiszewski et al., 2018).

A lack of understanding and identification of connected and related espionage threats remains an economic vulnerability (Wimmer, 2015), requiring a multi-disciplined approach.

Australia’s Security Intelligence Organisation (ASIO) has taken the unprecedented initiative in engaging with 18 universities in Australia (ASIO, 2018) to expressly address threats to students, staff, intellectual property, reputations and protection of commercial value.

This further supports the Australian Government’s concerns and prioritisation of counter-espionage knowledge and practices. On an international level, the United States Government’s intelligence community assess that “China will exploit the openness of American society, especially academia, using a variety of means.” (Coats, 2019). Australia’s shared openness and values expose its economy, strategic interests and intellectual property to similar of not comparable threats of espionage.

Historical parallels for Australia can be perhaps be derived from analysis of pre-war espionage activities and success by Japan intelligence services and private trading firms (Llewelyn, 2019).

Concerns around the ‘vague’ wording of espionage laws in the US threaten successful prosecution and punishment (Miller, 2012).

This concern appears valid in the Australian context, with many Australian terrorism cases being downgraded or withdrawn (Tooma, 2019). One of the accused successfully sued the state’s counter-terrorism police and ASIO.

Practical, daily operational crime prevention and security management processes need to be implemented to address the economic and reputation risks resulting from espionage and knowledge capital theft.?Incorporating primary crime prevention, policing and information management strategies, a 5I’s (Intelligence, Intervention, Implementation, Involvement and Impact) framework (Ekblom, 2011) needs to be implemented as a matter of priority.

Despite all the science and best efforts, fallibility must be acknowledged. In particular, perpetrators may possess knowledge we do not, creating what researchers and analysts refer to as an “uncertainty set” (Brown and Cox, 2001) within calculations and assessments. Robust optimisation utilising the hedging of resources and applied security countermeasures should be maintained. This translates into diversified security measures in identified proportions rather than a single application of all resources to one specific risk or countermeasure. This minimises maximum expected loss and maximises minimum expected utility based on research and review by Brown and Cox, 2011.

Organisational Culture

Significant cultural variances exist between ethnic groups, university communities, state and international actors.

Viewpoints need to be balanced with xenophobic paranoia as researched in post-Edwardian times and similar frontier mentalities, which led to the stirring up of nationalistic sentiment and allegations that the Empire was being encroached upon by foreigners (Hepburn, 2005) as a result of the ease and frequency associated with international border traversing and trade.

More awareness, research and understanding are required of the international student population and dynamics within Australia. Specific to Australia’s higher education economy, Chinese nationals account for 28% of Australia’s international education exports, and tourism revenue yet remains poorly understood (Hughes, et, al. 2015), especially since they cite language and personal safety as reasons for not travelling within Australia or interacting with locals. Chinese student interactions with educators are weak and do not portray their “authentic self” (Bin, 2017). Repeated calls for improvement remain unrealised (Briguglio et, al. 2012). Chinese students rarely interact with local communities or domestic students (Yu, et al., 2018). Chinese students appear more permissive on issues such as plagiarism (Ehrich, 2016) and live in a ‘parallel society’ (Gomes, 2015). Power distance valuations (Parnell, J et al., 2010) are considered high in China and low in Australia (Waldman et al., 2006). What, if any, relevance to the Australia context needs more empirical evidence.

In China, 2,358 universities and 22 million students are routinely surveilled, censored, monitored and controlled by the Chinse Communist Party (CCP) (Yan, 2014). In 2010, 40.2 % of those who joined the CCP were university students (Dickson, 2014). China’s elite universities have up to 55% CCP membership rates.

Australian communities, universities and security professionals do not fully understand Chinese culture and international students.

The emphasis and depth of cultural risk assessment recommended in previous sections are clear and justified as a result.

Explicit fairness criterion must also be applied (McNamara, 2018).

Tony Ridley, MSc CSyP MSyl M.ISRM

Security, Risk & Management Sciences

Related Events:

Terms of Reference: The Parliamentary Joint Committee on Intelligence and Security

The Parliamentary Joint Committee on Intelligence and Security (the Committee) will inquire into and report on national security risks affecting the Australian higher education and research sector (the Sector), having regard to all institutions within the sector, including those engaged in:

  • Tertiary teaching;
  • Research;
  • The commercialisation of research with origins in the sector;
  • Grants and funding decisions in relation to the above activities;
  • Tertiary education-related representative bodies, coordination bodies or institutional groupings; and
  • Regulation of the above activities.

In considering national security risks to the Sector the Committee specifically seeks information on:

A. The prevalence, characteristics and significance of foreign interference, undisclosed foreign influence, data theft and espionage, and associated risks to Australia’s national security;

B. The Sector’s awareness of foreign interference, undisclosed foreign influence, data theft and espionage, and its capacity to identify and respond to these threats;

C. The adequacy and effectiveness of Australian Government policies and programs in identifying and responding to foreign interference, undisclosed foreign influence, data theft and espionage in the Sector;

D. Responses to this issue in other countries and their relevance to the Australian situation; and

E. Any other related matter.

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