US Official Singles Out China, Russia on Cyber-Spying

Nov 3, 2011 1:22pm

The U.S. intelligence community has taken a hard line against economic espionage by alerting U.S. business and industry to vast cyber-espionage operations emanating from China. “Made in the USA: Stolen and transferred to an unnamed country with a cool wall, great noodles and countless cyber-attacks,” reads a poster issued by the Office of the Director of National Intelligence (DNI) designed to raise awareness of the threat.

U.S. intelligence officials estimate that U.S. companies suffered losses of about $50 billion in 2009 from their research and development efforts. This loss represents trade secrets and intellectual property that have been seized through cyber-attacks, piracy and company insider thefts.

“If our research and development, $400 billion a year, is pilfered frankly it will destroy part of our economic viability in this country,”  said Robert “Bear” Bryant the National Counterintelligence Executive.

Bryant spoke at a press conference for the release of a report entitled: “Foreign Spies Stealing US Economic Secrets in Cyberspace.”

The outreach campaign by the DNI’s National Counterintelligence Executive and the report to Congress on the issue are designed to raise awareness and protect American ingenuity and businesses in tough economic times from foreign economic and industrial espionage.

Econ Espionage Made in the USA 235x300 US Official Singles Out China, Russia on Cyber Spying

Poster designed as part of an awareness campaign on economic espionage.

“Chinese actors are the world’s most active and persistent perpetrators of economic espionage,” the report notes. “U.S. corporations and cybersecurity specialists also have reported an onslaught of computer network intrusions originating from Internet Protocol addresses in China.

‪‬”China and Russia through their intelligence services, through their corporations, are attacking our research and development and that’s a serious issue.” Bryant said.  “If we build their economies on our information, I don’t think that’s right.”

The report cites Russia as a sophisticated adversary trying to move away from an economy dependent on natural resources, ‪”Moscow’s highly capable intelligence services are using HUMINT [human intelligence], cyber and other operations to collect economic information and technology to support Russia’s economic development and security.”

“Cyber has become a new basis for espionage tradecraft and the way that business is conducted.” said Sean Kanuck the National Intelligence Officer for cyber issues for the DNI and the National Intelligence Council.

The report references a finding by McAfee where a computer intrusion labeled “Night Dragon” traced to China indicated that individuals were attempting to obtain sensitive data from oil and gas companies.

Although the officials declined to discuss recent cases,  other U.S. officials have confirmed that China has been involved in a vast array of computer attacks including:

• The high-profile intrusions of Google’s Gmail by China in 2009 also targeted as many as 30 other high-tech companies including Yahoo, Adobe, Rackspace and Northrop Grumman. U.S. officials believe China was attempting to gain access to these firms’ networks to obtain intellectual property and source code information.
• China is also believed to be behind hacking into computer systems run by NASDAQ-OMX, the parent company of the NASDAQ stock exchange. The FBI and U.S. Secret Service are actively investigating the case.
• RSA, the security division of the EMC Corp., suffered a computer intrusion earlier this year that resulted in a breach of the firm’s intellectual property, Secure ID, which provides encrypted authentication services. SEC filings filed by EMC indicate the cyberbreach has cost the company more than $66 million.

Shawn Henry, the FBI’s executive assistant director, last month highlighted the damage a computer attack recently had on a major high-tech firm. “One company that was recently the victim of an intrusion determined it had lost 10 years worth of research and development – valued at $1 billion – virtually overnight,” Henry said in a speech delivered in Baltimore.

Members of Congress have also become more vocal on the issue with the head of the House Intelligence Committee, Rep. Mike Rogers, R-Mich., blasting China for stealing intellectual property from U.S. companies.

After the report was released Thursday Rep. Rogers said, “This once again underscores the need for America’s allies across Asia and Europe to join forces to pressure Beijing to end this illegal behavior.”

Aside from the recent cyber attacks, China has also relied on insiders to spy on major U.S. corporations. The report cites China’s Project 863, an arm of the Chinese government used to obtain Western technology.  Project 863 is referred to as the Chinese National High Technology Research and Development Program of China, according to Justice Department records.

Kexue Huang pleaded guilty last month to one charge of economic espionage before a federal judge in Indiana, admitting that while he worked at Dow AgroSciences LLC and Cargill he transferred company trade secrets to China.

Officials are trying to generate awareness among U.S. firms  to tackle the growing problem.

“Lots of companies are the victims and they don’t even know it,” said a senior intelligence official said who spoke on a condition of anonymity when speaking to reporters. “There is not a silver bullet here. We need to get this issue under control.”

While the report singles out China and Russia, it also notes that some U.S. allies target and acquire economic and high-tech information for their countries’ benefit.

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