Understanding the motorsport industry

Sabotage and Espionage in Formula 1

Formula 1 is never far from controversy and more often than not, the stories that circulate off the track are as engaging as any racing that takes place on it.

With such enormous sums of money being involved and the reputation and public image of large corporations being leveraged on the conduct of relatively small groups of individuals, scandal is always hovering and circling above the paddock ready to pounce on the unwary or the unwise.

Benjamin Hoyle has certainly been unwise. Stories emerged in December 2015 suggesting that the ex-Mercedes-Benz High Performance Powertrains (MAHPP) engineer was being sued by his former employer on account of him stealing confidential data after he had given notice of his intention to move to another team. Mercedes acknowledged that it was seeking legal action against one of its employees but refused to name the individual concerned.

Mr. Hoyle, if indeed he is the employee in question, has found himself in very hot water. I would imagine that he is very much regretting his actions but also to an extent, wondering how on earth this story managed to gather such incredible momentum even outside of the motorsport press. I do not condone what he has done one little bit as deliberately copying and intending to distribute confidential information belonging to a corporation is very damaging. Formula 1 teams clearly spend enormous sums of money to get themselves a competitive advantage and so regard their secrets with enormous paranoia. It is not only the corporation that can be damaged however as many of the employees livelihoods rely on that team remaining competitive and eroding any advantage that they may have built up is potentially putting jobs at risk. It is a dangerous game to play and anyone with any morals should stop short of copying and using to their advantage something which does not belong to them.

All of that said however, would you be surprised to know that Ben Hoyle is not the first and certainly not the last F1 engineer to have copied material from one team to another ? Many of you will remember the incredible scandal caused by Mike Coughlan and the late Nigel Stepney when they copied a huge “dossier” of information relating to Ferrari and even allegedly sabotaged the fuel cells of the cars before leaving to head to McLaren in 2007. McLaren itself was fined a colossal $100 million for its part in that espionage and suggestions have been made that people high up in the McLaren management were fully aware of the plans and potential benefits that it could bring them. Scandal indeed.

Stories on this scale are uncommon and I think even the Ben Hoyle story will stop short of that high drama but on a small scale this kind of activity continues almost every day. Information is passed across each time employees move from team to team. Retained knowledge (that which is not written down but which is memorised or well understood) is a very difficult area as technically that IP still belongs to the former company but can often be “recycled” as a new idea when an employee arrives at a new team. It is near standard practice for new starters to be “debriefed” by senior engineers at every team to extract information that could be of use before that individual has a chance to forget it. Having attended numerous debriefs (and been subjected to them) however, I can tell you that it is not unheard of for people to produce papers, drawings and even photographs of components that they have been exposed to in previous employment. Whilst the competitive instinct in me is keenly interested to know as much as I can about our rivals, this kind of admission is rather silly in my view as characters who engage in it are unlikely to be trusted by their new teams given their attitude to the property of their former masters. Scandal or no scandal, espionage is an everyday normality in Formula 1.

In an effort to minimise risk and ensure that any information which is taken is out of date Formula 1 employees are typically on very long notice periods which they must serve before joining a rival. A six month notice is almost standard practice now for all but the most junior people and longer periods of up to a year are becoming increasingly common for very senior staff. The phrase “Gardening Leave” is frequently used to describe periods of enforced waiting where staff are either sent home on full pay to sit out their notice period (nice work if you can get it) or relocated to a room in the factory with no windows or network points where they can’t do any harm. These rooms are typically referred to as the “Departure Lounge” and can be immensely tedious places to be month after month.

Several teams (including MAHPP) put senior staff on fixed term contracts of either 2 or 3 years during which they cannot leave to join a rival. The legal footing of such arrangements is questionable but as Mr. Hoyle is finding out teams are not shy of trying to enforce them if it is in their interest to do so. Like almost anything in Formula 1 however, notice periods and contracts can be bought or shortened when enough money changes hands and much like football transfers, prize employees are now often traded or bought by the highest bidder. The salaries of individuals that are fought over in this way are presumably also not insubstantial and they normally drive much nicer cars than you or I…

It has been said recently that Honda have refused to “take outsiders” to run their Formula 1 engine program but on the face of it I think this is a grave mistake. Buying experience and knowledge as a newcomer to the sport (ignoring their previous involvement) is actually standard practice. BMW chose to do their own engine program in the early 2000’s but hired en-mass from British engine specialist Cosworth and effectively inherited their intellectual property in the process. Haas F1 will be a new team on the grid but has unashamedly bought every component that the rules allow from Ferrari, pushed the boundaries (I could another word) of legality regarding the sharing of aerodynamic data and hired senior engineers from just about every team on the grid. I should think that if you take a trip to the Haas F1 garage in Melbourne you will not hear very many American accents, at least not for the time being. Buying information in order to hit the ground running is a very sensible approach and information sharing, whether legal or not is the easiest way to do this. Cowboy hats off to them for just getting on with it.

In short, once caught up in this incestuous business you have a choice to make about where your morals lie. You will inevitably be exposed to valuable information and secrets in the course of your working day and if approached by another team, that knowledge can potentially up your bargaining price significantly. Be warned however, the paddock is also very small and if you make yourself a reputation as a cheat and a fraud then you will quickly be found out and your career might be somewhat shorter than you had hoped. Deciding what knowledge is morally yours and what belongs to the team is a difficult line to tread but in Mr. Hoyle’s case at least, the facts in the public domain suggest that he has well and truly crossed it and may pay a high price in the process.

Let that be warning to you.

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