Excerpt of Spooked by Adam Penenberg, Marc Barry
(Page 3 of 4)
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"All right," Lee replied. Treating Yang like a dear uncle, he indicated Yang's bagel and said, "Eat it fresh, the next day it won't be good." The conversation continued in this friendly vein, covering Lee's daughter's PSAT scores, colleges, the word for "fungus" in Taiwanese ("Mei Jun"), and the fact that most Taiwanese graduate students resist learning English, the language of science. Ten minutes later Yang handed some papers to his daughter. "Why don't you take care of these," he said in a mixture of Mandarin and Taiwanese. "I think I only need this part." Sally cut out the confidential markings.
For the Yangs, meeting with Lee had become something of a ritual. Although Yang did visit America, it was usually Lee, a naturalized American born in Taiwan, who would trek to his homeland during the summer with his family on all-expense paid trips where he was treated as visiting royalty. He dropped off adhesives literature, books and research papers. He gave lectures on the science of glue, providing, the government would allege, detailed disclosures of Avery's confidential materials, including copies of new products and process ideas in the experimental phase. He handed off specifications Lee himself claimed were "extremely confidential." Then he picked up his bounty, which Four Pillars hid by depositing into Lee's sister-in-law's account in Taiwan or by paying him in traveler's checks.
But this time was different. At the behest of agents of the Federal Bureau of Investigations, Lee had requested that Yang and his daughter visit him in America. Yang, on his way to see tennis star Michael Chang play at the U.S. Open Tennis in Flushing, N.Y., planned his itinerary to include Cleveland. The hotel room had been wired with microphones and a hidden camera. A phalanx of FBI agents, led by Special Agent in charge Michael Bartholomew, were watching the whole thing unfold over closed-circuit TV. Ten months earlier Lee, in an earlier sting operation, had been videotaped by the FBI trying to steal a bogus Asian expansion planthe same plan Yang now possessed. When confronted Lee confessed and became the Government's star snitch, although not an overly cooperative one.
For 7 years Lee had been paid $25,000 annually by Four Pillars to slip the company information about adhesives, including, the Government would allege, a battery-label laminate Avery created for Duracell's PowerCheck battery, a chemical formula for diaper tape, complex recipes for adhesives and samples of Avery products in development. In 1989 alone, his first year working for Four Pillars, Lee sent 14 mailings and had become so attached to his sideline business with Four Pillars that he would use "we" in his correspondence with Yang & Co., as if his job at Avery were a mere afterthought.
To many whose idea of glue may be Elmer's, adhesive formulae may sound pretty mundane. In fact it is a cut-throat industry driven by research and development: It is a company's comparative advantage, raising high barriers to entry. Warp speed technological change makes it difficult for the little guy to keep up, even one like Four Pillars, which was the number one adhesives seller in Taiwan and a strong force in Mainland China, with $160 million in annual sales. One self-adhesive material can have up to 12 layers of separate chemicals, each with a different function, feature or capability. Each layer must be within a precise tolerance for thickness and coverage; it can't be too wet, or too dry, otherwise it will fall off or won't last; manufacturing and production has to be finely tuned and managed carefully. For Avery Dennison, 75 percent of its business relates to pressure sensitive adhesives, the stuff that makes peel-off labels peel off without leaving your fingers sticky.!
Its founder, R. Stanton Avery, formulated the first commercially viable self-adhesive label in 1935 and founded an entire industry. Now a $3.2 billion business, Avery supplies the labels used by the Internal Revenue Service on form 1040, peel-and-stick postage stamps, and its products are an unheralded yet profitable part of jeans, photographic film containers, price tags and shampoo bottles. The company is also a big player in the automotive, electronic and medical markets. To stay ahead, the company plows money into its R&D. From 1993 to 1996 alone, the company invested more than $200 million into research.
From Spooked: Espionage in Corporate America, by Adam L. Penenberg, Marc Barry. © December 5, 2000 , Adam L. Penenberg, Marc Barry. Used by permission of the publisher