China Breach: McAfee Unmasks Massive US Computer Hack

Chinese hacking is not new. But the scale and audacity are becoming noticeable. The question is what to do about it.

You can identify the source, but if that same source is also one of your largest creditors as well as your largest source of crucial technological components, your options are not impressive.

Given China's downgrade of US debt this week, questions are beginning to surface about whether China has determined that now is the time to begin knocking the US off its perch. The timing is propotious, given the toxic nature of US politics and the resultant inability of the nation to agree on much of anything strategic. China also faces growing unrest as the western recession continues, impacting Chinese jobs and wages. Picking on an external adversary is a well-worn historical 'solution' to keep internal malcontents focused on anything other than their own government. Wherever you may be, your enemies are living in interesting times. JL

Ellen Nakashima reports in the Washington Post:

A leading computer security firm has used logs produced by a single server to trace the hacking of more than 70 corporations and government organizations over many months, and experts familiar with the analysis say the snooping probably originated in China.

Among the targets were the Hong Kong and New York offices of the Associated Press, where unsuspecting reporters working on China issues clicked on infected links in e-mail, the experts said. Other targets included the networks of the International Olympic Committee, the United Nations secretariat, a U.S. Energy Department lab, and a dozen U.S. defense firms, according to a report to be released Wednesday by McAfee, a security firm that monitors network intrusions around the world.
McAfee said hundreds of other servers have been used by the same adversary, which the company did not identify.

But James A. Lewis, a cybersecurity expert at the Center for Strategic and International Studies, said “the most likely candidate is China.” The target list’s emphasis on Taiwan and on Olympic organizations in the run-up to the Beijing Games in 2008 “points to China” as the perpetrator, he said. “This isn’t the first we’ve seen. This has been going on from China since at least 1998.”

Another computer expert with knowledge of the study, who spoke on the condition of anonymity out of reluctance to blame China publicly, said the intrusions appear to have originated in China.

The intruders were after data on sensitive U.S. military systems, as well as material from satellite communications, electronics, natural gas companies and even bid data from a Florida real estate company, McAfee said. Forty-nine of the 72 compromised organizations were in the United States.

“We’re facing a massive transfer of wealth in the form of intellectual property that is unprecedented in history,” said Dmitri Alperovitch, McAfee’s vice president of threat research. He would not name the private entities targeted, but said McAfee helped half a dozen of them investigate intrusions.

Some of the intrusions — such as one into the World Anti-Doping Agency in Montreal — are continuing, he said. Spokesmen for that organization and for the International Olympic Committee said they were not aware of the intrusions. A U.N. spokesman said technicians analyzing the logs have not seen evidence of stolen data. The Energy Department had no comment.

According to the report, which does not identify the AP by name, the organization’s New York office was targeted in August 2009 in an intrusion that lasted, on and off, for eight months. Its Hong Kong bureau was penetrated at the same time, in an intrusion that continued for 21 months.

AP spokesman Jack Stokes said the company was aware of the report. “We do not comment on network security,” he said.

The Associated Press has been targeted before. A March 2009 report by Canadian researchers about allegations of Chinese espionage against the Tibetan community found that computer systems in AP offices in Hong Kong and Britain had been compromised.

McAfee had been aware for years of a “command and control” server located in a Western country that was used to control malware deployed on target computers. But the firm just recently discovered that the hackers had made a tradecraft mistake, configuring the server to generate logs that identified every Internet protocol address the server had controlled since 2006.

Google’s disclosure early last year that hackers in China had broken into its networks and stolen valuable source code was a watershed moment: A major U.S. company volunteered that it had been hacked. Google also said that more than 20 other large companies were similarly targeted.

Scott Borg, chief economist at the U.S. Cyber Consequences Unit, a research group, has assessed the annual loss of intellectual property and investment opportunities across all industries at $6 billion to $20 billion, with a big part owing to oil industry losses. These firms spend hundreds of millions of dollars to explore oil fields before bidding on them, Borg said.

One measure of pain came recently when EMC Corp. disclosed that it had taken a $66 million charge to cover remediation costs associated with a March intrusion of its RSA division. That intrusion, which industry experts say appeared to have originated in China, resulted in the compromise of RSA’s SecurID computer tokens that companies and governments worldwide use to log on remotely to workplace systems.

As a result of the compromise, at least a dozen major financial institutions are switching to other vendors, said Gary McGraw, chief technology officer at Cigital, a security firm that works with banks. Stina Ehrensvard, chief executive of YubiKey in Palo Alto, Calif., said at least 25 firms have switched to YubiKey or are testing its token as a result of the RSA breach.