Chemical exchanges put security under microscope

Online marketplaces designed to speed business-to-business transactions in the chemicals industry are now rushing to examine their security systems to look for blind spots that could allow terrorists to obtain potentially deadly substances.

John Beasley, chairman and founder of ChemConnect Inc., said the San Francisco-based online exchange launched a full-scale investigation into its user screening and approval practices after the Sept. 11 terrorist attacks on the U.S.

“It will probably take a few weeks [to finish the probe], because we’re trying to figure out what we’re not doing,” Beasley said. “What we’re looking for is not obvious. To a degree, you have to think like a terrorist to figure it out.” Inc. in Houston has initiated a similar scouring of its security practices and technology, said Michael Ereli, vice president of technology at the ChemConnect rival.

CheMatch previously decided against requiring the use of digital certificates or biometric identifiers by people who process transactions through its systems. But that’s “the first thing we’re taking a second look at,” Ereli said. “It seemed too cumbersome at the time, but everything’s changed now.”

According to Beasley, the basic key to security for a business-to-business exchange is to gain familiarity with those who are trading goods in the largely faceless world of e-commerce. ChemConnect checks business licenses, hazardous-materials certifications and company profiles for every new user of the site, he said.

The exchange also blocks users from countries that are on U.S. State Department warning lists and cross-checks new users against FBI warning lists, Beasley said.

ChemConnect started as an industry bulletin board for companies informally seeking new business partners and is still sometimes used in that capacity. That type of use has drawn federal attention since the inception of the company’s Web site, Beasley said. Firms using the site as a bulletin board are expected to screen their potential trading partners themselves, he added.

Owen Kean, director of online communications at the American Chemistry Council Inc., a lobbying and safety guidelines group in Arlington, Va., noted that the chemicals industry is reviewing how securely it trades toxic, caustic and explosive materials. “Even what we thought was good may not be good enough,” he said.