Shhh… Hackers Target Database of Chinese with Ties to US Government

Check out the NYT article below.

Hackers May Have Obtained Names of Chinese With Ties to U.S. Government

By DAVID E. SANGER and JULIE HIRSCHFELD DAVISJUNE 10, 2015

WASHINGTON — Investigators say that the Chinese hackers who attacked the databases of the Office of Personnel Management may have obtained the names of Chinese relatives, friends and frequent associates of American diplomats and other government officials, information that Beijing could use for blackmail or retaliation.

Federal employees who handle national security information are required to list some or all of their foreign contacts, depending on the agency, to receive high-level clearances. Investigators say that the hackers obtained many of the lists, and they are trying to determine how many of those thousands of names were compromised.

In classified briefings to members of Congress in recent days, intelligence officials have described what appears to be a systematic Chinese effort to build databases that explain the inner workings of the United States government. The information includes friends and relatives, around the world, of diplomats, of White House officials and of officials from government agencies, like nuclear experts and trade negotiators.

“They are pumping this through their databases just as the N.S.A. pumps telephone data through their databases,” said James Lewis, a cyberexpert at the Center for Strategic and International Studies. “It gives the Chinese the ability to exploit who is listed as a foreign contact. And if you are a Chinese person who didn’t report your contacts or relationships with an American, you may have a problem.”

Officials have conceded in the briefings that most of the compromised data was not encrypted, though they have argued that the attacks were so sophisticated and well hidden that encryption might have done little good.

The first attack, which began at the end of 2013 and was disclosed in the middle of last year, was aimed at the databases used by investigators who conduct security reviews. The investigators worked for a contracting firm on behalf of the Office of Personnel Management, and the firm was fired in August.

The broader attack on the personnel office’s main databases followed in December. That attack, announced last week, involved the records of more than four million current and former federal employees, most of whom have no security clearances.

White House and personnel office officials have provided few details about the latest breach. But the Department of Homeland Security has been telling outside experts and members of Congress that it regards the detection of the attack as a success, because it made use of new “signatures” of foreign hackers, based on characteristics of computer code, to find the attack.

In a statement, the personnel office said Wednesday that “it was because of these new enhancements to our IT systems that O.P.M. was able to identify these intrusions.” But the detection happened in April, five months after the attack began.

The list of relatives and “close or continuous contacts” is a standard part of the forms and interviews required of American officials every five years for top-secret and other high-level clearances, and government officials consider the lists to be especially delicate.

In 2010, when The New York Times was preparing to publish articles based on 250,000 secret State Department cables obtained by WikiLeaks, the newspaper complied with a request by the department to redact the names of any Chinese citizens who were described in the cables as providing information to American Embassy officials. Officials cited fear of retaliation by the Chinese authorities.

Officials say they do not know how much of the compromised data was exposed to the Chinese hackers. While State Department employees, especially new ones, are required to list all their foreign friends, diplomats have so many foreign contacts that they are not expected to list them all.

But other government officials are frequently asked to do so, especially in interviews with investigators. The notes from those interviews, conducted by a spinoff of the personnel office called the United States Investigative Service, were obtained by hackers in the earlier episode last year.

Intelligence agencies use a different system, so the contacts of operatives like those in the C.I.A. were not in the databases.

But the standard form that anyone with a national security job fills out includes information about spouses, divorces and even distant foreign relatives, as well as the names of current or past foreign girlfriends and boyfriends, bankruptcies, debts and other financial information. And it appears that the hackers reached, and presumably downloaded, images of those forms.

“I can’t say whether this was more damaging than WikiLeaks; it’s different in nature,” said Representative Adam B. Schiff, a California Democrat who is a member of the House Intelligence Committee, which was briefed by intelligence officials, the Department of Homeland Security and the personnel office on Tuesday. Mr. Schiff, who declined to speak about the specifics of the briefing, added, “But it is certainly one of the most damaging losses I can think of.”

Investigators were surprised to find that the personnel office, which had already been so heavily criticized for lax security that its inspector general wanted parts of the system shut down, did not encrypt any of the most sensitive data.

The damage was not limited to information about China, though that presumably would have been of most interest to the hackers. They are likely to be particularly interested in the contacts of Energy Department officials who work on nuclear weapons or nuclear intelligence, Commerce Department or trade officials working on delicate issues like the negotiations over the Trans-Pacific Partnership, and, of course, White House officials.

In a conference call with reporters on Wednesday, Senator Angus King, an independent from Maine on both the Intelligence Committee and the Armed Services Committee, called for the United States to retaliate for these kinds of losses. “Nation-states need to know that if they attack us this way, something bad is going to happen to their cyberinfrastructure,” he said.

But Mr. King said he could not say if the attacks on the personnel office were state-sponsored, adding, “I have to be careful; I can’t confirm the identity of the entity behind the attack.” The Obama administration has not formally named China, but there has been no effort to hide the attribution in the classified hearings.

The scope of the breach is remarkable, experts say, because the personnel office apparently learned little from earlier government data breaches like the WikiLeaks case and the surveillance revelations by Edward J. Snowden, both of which involved unencrypted data.

President Obama has said he regards the threat of cyberintrusions as a persistent challenge in a world in which both state and nonstate actors “are sending everything they’ve got at trying to breach these systems.”

The problem “is going to accelerate, and that means that we have to be as nimble, as aggressive and as well resourced as those who are trying to break into these systems,” he said at a news conference this week.

The White House has stopped short of blaming Katherine Archuleta, the director of the personnel office, for the breach, emphasizing that securing government computer systems is a challenging task.

Correction: June 10, 2015

An earlier version of a photo caption with this article misstated the name of the federal office building where employees handle national security information are required to list their foreign contacts. It is the Office of Personnel Management building, not Office of Personal Management.

Matt Apuzzo contributed reporting.

Shhh… US in Long Battle As China Request Source Code From Western Technology Companies

This spat on intrusive rules is going to be a huge long battle.

The US is voicing opposition to Chinese rules that foreign vendors hand over the source code if they were to supply computer equipments to Chinese banks – which could expand to other sectors as the matter is “part of a wider review”.

Other measures to comply with include the setting up of research and development centers in China and building “ports” for Chinese officials to manage and monitor the data processed by their hardware.

Submitting to these “intrusive rules” for a slice of the huge Chinese markets also means alienating the rest of the world – as complying with these rules means creating backdoors, adopting Chinese encryption algorithms and disclosing sensitive intellectual property.

Find out more from this video:

US-China Spat on Intrusive Rules – And Actual Intrusions

Speaking of “intrusive rules” (see BBC report far below) and “actual intrusions” in China, the latter I have expanded recently in two articles – one on Apple yesterday and the other on VPN blocks last week – and merged in this new column I’m also pasting right below.

The long and short of it, it’s espionage made easy. Period.


Apple Lets Down Its Asia Users

Written by Vanson Soo
MON,02 FEBRUARY 2015

Knuckling under to China on security inspections

If you are a die-hard fan of Apple products and if you, your company or business have anything to do with mainland China, recent developments involving the US tech giant can be construed as bad news, with deeper implications than what was generally thought and reported.

First, about Apple.

I have always liked the beauty and elegance of Apple products. I have owned two Mac laptops and an iPhone but I have shunned them as anyone deeply conscious and concerned about privacy and security should do. Edward Snowden, for example, who laid bare extensive snooping by the US National Security Agency, recently said he had never used the iPhone given the existence of secret surveillance spyware hidden in the devices.

Consider the latest news that Apple Inc. has caved in to Chinese demands for security inspections of its China-made devices including iPhones, iPads and Mac computers. The move understandably makes business sense to Apple [and its shareholders] as China is just too huge a market to ignore – so the Cupertino-based company [whose market capitalization hit US$683 billion last week, more than double Microsoft’s US$338 billion] realized it simply couldn’t ignore Beijing’s “concerns” about national security arising from the iPhone’s ability to zero in onto a user’s location.

Now pause right there. No, there’s no typo above. And yes, the Android and Blackberry smartphones can also mark a user’s location. So what’s the catch? Figure that out – it’s not difficult.

What Apple found they can ignore is the privacy and security of its die-hard users – after all, it has been well documented that Apple users were [and probably still are] known for their cult-like loyalty to the brand. Look no further for evidence than last summer when Apple announced its plan to host some of its data from its China-based users on servers based inside the country and claimed the company was not concerned about any security risks from using servers hosted by China Telecom, one of the three state-owned Chinese carriers.

The company has also denied working with any government agencies to create back doors into its products or servers… So surrendering to security audits wouldn’t?

If only Apple users managed to chuck away their cult mentality and come to their senses about their privacy and security risks, the firm would realize the Google approach, though still not perfect, is a better way of cultivating brand loyalty.

And in case you’re wondering, I use Linux most of the time – and shun the most popular Linux distributions to be on the safe side.a

Now next. And this is bad news with far-reaching global implications – and it’s affecting not just only those based in China.

News surfaced in late January that some foreign-based virtual private network (VPN) vendors found their services in China had been disrupted following a government crackdown – which the authorities labeled as an “upgrade” of its Internet censorship – to block the use of VPNs as a way to escape the so-called Great Firewall.

The real impact is not merely on domestic residents who were cut off from YouTube, BBC/CNN news and other information sources but resident expatriates, multinationals, foreign embassies and those traveling to China, especially businessmen and executives. Think: Chinese espionage now made easy!

Many China-based internet users use VPNs to access external news sources but this is also bad news for companies and government offices based in China as well as anyone visiting the Chinese mainland – as many businessmen and executives use VPNs, as part of their company (and security) practice, on their business trips. Many foreigners and businesses residing in China also use VPNs for their day-to-day communications.

The VPNs provide an encrypted pipe between a computer or smartphone and an overseas server such that any communications would be channeled through it, which effectively shields internet traffic from government filters that have set criteria on what sites can be accessed.

And as China is fast moving beyond the “factories of the world” tag to become a global economic powerhouse and important trading partner to many developed and developing countries, this is one development to keep a close watch on.

Obama-XiJinping5

29 January 2015 Last updated at 14:35

US tech firms ask China to postpone ‘intrusive’ rules

By Kevin Rawlinson BBC News

US business groups are seeking “urgent discussions” over new Chinese rules requiring foreign firms to hand over source code and other measures.

The groups wrote to senior government officials after the introduction of the cybersecurity regulations at the end of last year.

The US Chamber of Commerce and other groups called the rules “intrusive”.

The regulations initially apply to firms selling products to Chinese banks but are part of a wider review.

“An overly broad, opaque, discriminatory approach to cybersecurity policy that restricts global internet and ICT products and services would ultimately isolate Chinese ICT firms from the global marketplace and weaken cybersecurity, thereby harming China’s economic growth and development and restricting customer choice,” the letter read.

The groups said that the rules would force technology sellers to create backdoors for the Chinese government, adopt Chinese encryption algorithms and disclose sensitive intellectual property.

Firms planning to sell computer equipment to Chinese banks would also have to set up research and development centres in the country, get permits for workers servicing technology equipment and build “ports” which enable Chinese officials to manage and monitor data processed by their hardware, Reuters reported.

Source code is the usually tightly guarded series of commands that create programs. For most computing and networking equipment, it would have to be turned over to officials, according to the new regulations.

Tension

In the letter, a copy of which has been seen by the BBC, the groups have asked the Chinese government to delay implementation of the regulations and “grant an opportunity for discussion and dialogue for interested stakeholders with agencies responsible for the initiatives”.

They added: “The domestic purchasing and related requirements proposed recently for China’s banking sector… would unnecessarily restrict the ability of Chinese entities to source the most reliable and secure technologies, which are developed in the global supply chain,” the letter, which was dated 28 January, read.

The letter from the American groups, including the US Chamber of Commerce, AmCham China and 16 others, was addressed to the Central Leading Small Group for Cyberspace Affairs, which is led personally by Chinese President Xi Jinping.

It comes at a time of heightened tension between the USA and China over cybersecurity. In May last year, Beijing denounced US charges against Chinese army officers accused of economic cyber-espionage.

Pressure

It was also alleged that the US National Security Agency spied on Chinese firm Huawei, while the US Senate claimed that the Chinese government broke into the computers of airlines and military contractors.

American tech firms, such as Cisco and Microsoft, are facing increased pressure from Chinese authorities to accept rigorous security checks before their products can be purchased by China’s sprawling, state-run financial institutions.

Beijing has considered its reliance on foreign technology a national security weakness, particularly following former National Security Agency contractor Edward Snowden’s revelations that US spy agencies planted code in American-made software to snoop on overseas targets.

The cyber-space policy group approved a 22-page document in late 2014 that contained the heightened procurement rules for tech vendors, the New York Times reported on Thursday.

From Apple With Love – Granting Chinese Security Audits Leaves More Deep & Profound Implications Than Betrayal of Apple Die-Hards

I always like the beauty and elegance of Apple products (I had 2 Mac laptops and 1 iPhone) but I have to admit I have already shunned them as anyone deeply conscious and concerned about privacy and security should do – Snowden, for example, recently said he never used the iPhone given the existence of secret surveillance spyware in the devices.

Consider the latest news that Apple Inc. has caved in to Chinese demands for security inspections of its China-made devices like the iPhones, iPads and Mac computers. The move understandably makes business sense to Apple (and its shareholders) as China is just too huge a market to ignore – so the Cupertino-based company (whose market capitalization hit $683 billion last week, more than double Microsoft’s $338 billion) realized it simply can’t ignore Beijing’s “concerns” about national security arising from the iPhone’s ability to zero in onto a user’s location.

Now pause right there. No, there’s no typo above. And yes, the Android and Blackberry smartphones can also mark a user’s location. So what’s the catch? Figure that out – it’s not difficult.

And what Apple found they can ignore is the privacy and security of its die-hard users – after all, it has been well-documented Apple users were (and probably still are) well known for their “cult” like loyalty to the brand. Look no further for evidence than last summer when Apple announced its plan to host some of its data from its China-based users on servers based inside the country and claimed the company was not concerned about any security risks from using servers hosted by China Telecom, one of the three state-owned Chinese carriers. The company has also denied working with any government agencies to create back doors into its products or servers… (So surrendering to security audits wouldn’t?)

If only Apple users somewhat managed to chuck away their cult mentality and come to their senses (about their privacy and security risks), the US tech giant would realize the Google approach (though still not the perfect example) is a better way to cultivating brand loyalty (see article below).

And in case you’re wondering, I use laptops with no parts made in China along with Linux most of the time – and shun the most popular Linux distributions to be on the safe side.


Apple’s New Security Concessions to Beijing

By Doug Young | January 27, 2015, 10:13 AM

Apple is deepening its uneasy embrace of Beijing security officials, with word that it has agreed to allow security audits for products that it sells in China. This latest development comes less than a year after Apple took the unusual step of moving some of the user information it collects to China-based servers, which was also aimed at placating security-conscious regulators in Beijing.

Apple’s increasingly close cooperation with Beijing contrasts sharply with Google, whose popular Internet products and services are increasingly being locked out of China as it refuses to play by Beijing’s rules. Other global tech giants are also having to deal with the delicate situation, each taking a slightly different approach to try to protect user privacy while complying with Beijing’s insistence that they make their information available to security-conscious government regulators.

As a relatively neutral observer, I can sympathize with both the Apples and Googles of the world. Companies like Apple have decided that China is simply too large for them to ignore, and thus are taking steps to address Beijing’s security concerns as a condition for access to the huge market. Microsoft has also taken a similar tack, and Facebook is showing it will also be willing to play by such rules with its recent repeated lobbying for a chance to set up a China-based service.

Google has taken a more defiant stance by refusing to compromise user privacy and free speech, with the result that a growing number of its products and services are now blocked in China. The company shuttered its China-based search website in 2010 over a dispute with Beijing on self censorship. Last year many of its global sites and even its Gmail email service also became increasingly difficult to access for users in China.

Apple isn’t being nearly so defiant, and the latest headlines say it has agreed to the audits of its products by the State Internet Information Office. The reports say Apple agreed to the audits when CEO Tim Cook met with State Internet Information Office official Lu Wei during a December trip to the U.S. I previously wrote about Lu’s trip after photos appeared on an official Chinese government website showing him visiting the offices of Facebook, Apple, and also Amazon.

Lu reportedly told Cook that China needs to be sure that Apple’s popular iPhones, iPads, and other products protect user privacy and also don’t compromise national security. Unlike other PC and cellphone makers that simply sell their devices to consumers, Apple actively keeps records of its product users and some of their usage habits and other related information on remote computers.

This latest move looks like an extension of another one last summer, which saw Apple agree to host some of the data from its China-based users on servers based inside the country. That move also looked aimed at calming national security worries from Beijing, since storing such information on China-based computers would make it more accessible to investigators conducting security-related probes.

In an interesting twist to the story, this latest report comes from a state-owned newspaper in Beijing, making it a sort of semi-official disclosure of China’s approach to the matter. That would follow the government’s own announcement of Lu Wei’s December trip, and perhaps shows that Beijing wants to be more open about steps it’s taking to address national security threats like terrorism. That kind of more open attitude could help both domestic and foreign companies to better navigate China’s tricky cyber realm, though it won’t be of much help to defiant companies like Google that are more intent on protecting free speech and user privacy.