[Vision2020] SERIOUS: Chinese Army Unit Is Seen as Tied to Hacking Against U.S.

[Art Deco]

  [image: The New York Times] <http://www.nytimes.com/>

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February 18, 2013
Chinese Army Unit Is Seen as Tied to Hacking Against U.S. By DAVID E.
SANGER<http://topics.nytimes.com/top/reference/timestopics/people/s/david_e_sanger/index.html>,
DAVID BARBOZA<http://topics.nytimes.com/top/reference/timestopics/people/b/david_barboza/index.html>and
NICOLE
PERLROTH<http://topics.nytimes.com/top/reference/timestopics/people/p/nicole_perlroth/index.html>

On the outskirts of Shanghai, in a run-down neighborhood dominated by a
12-story white office tower, sits a People’s Liberation Army base for
China<http://topics.nytimes.com/top/news/international/countriesandterritories/china/index.html?inline=nyt-geo>’s
growing corps of cyberwarriors.

The building off Datong Road, surrounded by restaurants, massage parlors
and a wine importer, is the headquarters of P.L.A. Unit 61398. A growing
body of digital forensic evidence — confirmed by American intelligence
officials who say they have tapped into the activity of the army unit for
years — leaves little doubt that an overwhelming percentage of the attacks
on American corporations, organizations and government agencies originate
in and around the white tower.

An unusually detailed 60-page study <http://www.mandiant.com/apt1>, to be
released Tuesday by Mandiant, an American computer security firm, tracks
for the first time individual members of the most sophisticated of the
Chinese hacking groups — known to many of its victims in the United States
as “Comment Crew” or “Shanghai Group” — to the doorstep of the military
unit’s headquarters. The firm was not able to place the hackers inside the
12-story building, but makes a case there is no other plausible explanation
for why so many attacks come out of one comparatively small area.

“Either they are coming from inside Unit 61398,” said Kevin Mandia, the
founder and chief executive of Mandiant, in an interview last week, “or the
people who run the most-controlled, most-monitored Internet networks in the
world are clueless about thousands of people generating attacks from this
one neighborhood.”

Other security firms that have tracked “Comment Crew” say they also believe
the group is state-sponsored, and a recent classified National Intelligence
Estimate<http://topics.nytimes.com/top/reference/timestopics/organizations/i/us_intelligence_community/national_intelligence_estimates/index.html?inline=nyt-classifier>,
issued as a consensus document for all 16 of the United States intelligence
agencies, makes a strong case that many of these hacking groups are either
run by army officers or are contractors working for commands like Unit
61398, according to officials with knowledge of its classified content.

Mandiant provided an advance copy of its report to The New York Times,
saying it hoped to “bring visibility to the issues addressed in the
report.” Times reporters then tested the conclusions with other experts,
both inside and outside government, who have examined links between the
hacking groups and the army (Mandiant was hired by The New York Times
Company to investigate a sophisticated Chinese-origin attack on its news
operations, but concluded it was not the work of Comment Crew, but another
Chinese group. The firm is not currently working for the Times Company but
it is in discussions about a business relationship.)

While Comment Crew has drained terabytes of data from companies like
Coca-Cola, increasingly its focus is on companies involved in the critical
infrastructure of the United States — its electrical power grid, gas lines
and waterworks. According to the security researchers, one target was a
company with remote access to more than 60 percent of oil and gas pipelines
in North America. The unit was also among those that attacked the computer
security firm RSA, whose computer codes protect confidential corporate and
government databases.

Contacted Monday, officials at the Chinese embassy in Washington again
insisted that their government does not engage in computer hacking, and
that such activity is illegal. They describe China itself as a victim of
computer hacking, and point out, accurately, that there are many hacking
groups inside the United States. But in recent years the Chinese attacks
have grown significantly, security researchers say. Mandiant has detected
more than 140 Comment Crew intrusions since 2006. American intelligence
agencies and private security firms that track many of the 20 or so other
Chinese groups every day say those groups appear to be contractors with
links to the unit.

While the unit’s existence and operations are considered a Chinese state
secret, Representative Mike Rogers of Michigan, the Republican chairman of
the House Intelligence Committee, said in an interview that the Mandiant
report was “completely consistent with the type of activity the
Intelligence Committee has been seeing for some time.”

The White House said it was “aware” of the Mandiant report, and Tommy
Vietor, the spokesman for the National Security Council, said, “We have
repeatedly raised our concerns at the highest levels about cybertheft with
senior Chinese officials, including in the military, and we will continue
to do so.”

The United States government is planning to begin a more aggressive defense
against Chinese hacking groups, starting on Tuesday. Under a directive
signed by President Obama last week, the government plans to share with
American Internet providers information it has gathered about the unique
digital signatures of the largest of the groups, including Comment Crew and
others emanating from near where Unit 61398 is based.

But the government warnings will not explicitly link those groups, or the
giant computer servers they use, to the Chinese army. The question of
whether to publicly name the unit and accuse it of widespread theft is the
subject of ongoing debate.

“There are huge diplomatic sensitivities here,” said one intelligence
official, with frustration in his voice.

But Obama administration officials say they are planning to tell China’s
new leaders in coming weeks that the volume and sophistication of the
attacks have become so intense that they threaten the fundamental
relationship between Washington and Beijing.

The United States government also has cyberwarriors. Working with Israel,
the United States has used malicious software called
Stuxnet<http://topics.nytimes.com/top/reference/timestopics/subjects/c/computer_malware/stuxnet/index.html?inline=nyt-classifier>to
disrupt Iran’s uranium enrichment program. But government officials
insist they operate under strict, if classified, rules that bar using
offensive weapons for nonmilitary purposes or stealing corporate data.

The United States finds itself in something of an asymmetrical digital war
with China. “In the cold war, we were focused every day on the nuclear
command centers around Moscow,” one senior defense official said recently.
“Today, it’s fair to say that we worry as much about the computer servers
in Shanghai.”

* A Shadowy Unit *

Unit 61398 — formally, the 2nd Bureau of the People’s Liberation Army’s
General Staff Department’s 3rd Department — exists almost nowhere in
official Chinese military descriptions. Yet intelligence analysts who have
studied the group say it is the central element of Chinese computer
espionage. The unit was described in
2011<https://docs.google.com/viewer?a=v&q=cache:QLvB_WIQ6z0J:project2049.net/documents/pla_third_department_sigint_cyber_stokes_lin_hsiao.pdf+&hl=en&gl=us&pid=bl&srcid=ADGEESh-EoSj0ZopvaIazud-WLlaKjAvdQnFDzRu2XuDx_bOHw1dhUnJYPvXP0CAOzoQ_SeQkFWEXWcT7ZHxt-lZl8D-iIWOcXhStEDpGohPV-3LJdFHWbzFG-OLp6OeHOhIFWFnyH6V&sig=AHIEtbS4XW9PM4-nJHgLCXAnBzrIFP1whQ>as
the “premier entity targeting the United States and Canada, most
likely
focusing on political, economic, and military-related intelligence” by the
Project 2049 Institute, a nongovernmental organization in Virginia that
studies security and policy issues in Asia.

While the Obama administration has never publicly discussed the Chinese
unit’s activities, a secret State Department
cable<http://www.nytimes.com/2010/12/05/world/asia/05wikileaks-china.html?pagewanted=all>written
the day before Barack Obama was elected president in November 2008
described at length American concerns about the group’s attacks on
government sites. (At the time American intelligence agencies called the
unit “Byzantine Candor,” a code word dropped after the cable was published
by WikiLeaks.)

The Defense Department and the State Department were particular targets,
the cable said, describing how the group’s intruders send e-mails, called
“spearphishing” attacks, that placed malware on target computers once the
recipient clicked on them. From there, they were inside the systems.

American officials say that a combination of diplomatic concerns and the
desire to follow the unit’s activities have kept the government from going
public. But Mandiant’s report is forcing the issue into public view.

For more than six years, Mandiant tracked the actions of Comment Crew, so
named for the attackers’ penchant for embedding hidden code or comments
into Web pages. Based on the digital crumbs the group left behind — its
attackers have been known to use the same malware, Web domains, Internet
protocol addresses, hacking tools and techniques across attacks — Mandiant
followed 141 attacks by the group, which it called “A.P.T. 1” for Advanced
Persistent Threat 1.

“But those are only the ones we could easily identify,” said Mr. Mandia.
Other security experts estimate that the group is responsible for thousands
of attacks.

As Mandiant mapped the Internet protocol addresses and other bits of
digital evidence, it all led back to the edges of Pudong district of
Shanghai, right around the Unit 61398 headquarters. The group’s report,
along with 3,000 addresses and other indicators that can be used to
identify the source of attacks, concludes “the totality of the evidence”
leads to the conclusion that “A.P.T. 1 is Unit 61398.”

Mandiant discovered that two sets of I.P. addresses used in the attacks
were registered in the same neighborhood as Unit 61398’s building.

“It’s where more than 90 percent of the attacks we followed come from,”
said Mr. Mandia.

The only other possibility, the report concludes with a touch of sarcasm,
is that “a secret, resourced organization full of mainland Chinese speakers
with direct access to Shanghai-based telecommunications infrastructure is
engaged in a multiyear enterprise-scale computer espionage campaign right
outside of Unit 61398’s gates.”

The most fascinating elements of the Mandiant report follow the
keystroke-by-keystroke actions of several of the hackers who the firm
believes work for the P.L.A. Mandiant tracked their activities from inside
the computer systems of American companies they were invading. The
companies had given Mandiant investigators full access to rid them of the
Chinese spies.

One of the most visible hackers it followed is UglyGorilla, who first
appeared on a Chinese military forum in January 2004, asking whether China
has a “similar force” to the “cyber army” being set up by the American
military.

By 2007 UglyGorilla was turning out a suite of malware with what the report
called a “clearly identifiable signature.” Another hacker, called “DOTA” by
Mandiant, created e-mail accounts that were used to plant malware. That
hacker was tracked frequently using a password that appeared to be based on
his military unit’s designation. DOTA and UglyGorilla both used the same
I.P. addresses linked back to Unit 61398’s neighborhood.

Mandiant discovered several cases in which attackers logged into their
Facebook and Twitter accounts to get around China’s firewall that blocks
ordinary citizen’s access, making it easier to track down their real
identities.

Mandiant also discovered an internal China Telecom memo discussing the
state-owned telecom company’s decision to install high-speed fiber-optic
lines for Unit 61398’s headquarters.

China’s defense ministry has denied that it is responsible for initiating
attacks. “It is unprofessional and groundless to accuse the Chinese
military of launching cyberattacks without any conclusive evidence,” it
said last month, one of the statements that prompted Mandiant to make
public its evidence.

* Escalating Attacks *

Mandiant believes Unit 61398 conducted sporadic attacks on American
corporate and government computer networks; the earliest it found was in
2006. Two years ago the numbers spiked. Mandiant discovered some of the
intrusions were long-running. On average the group would stay inside a
network, stealing data and passwords, for a year; in one case it had access
for four years and 10 months.

Mandiant has watched the group as it has stolen technology blueprints,
manufacturing processes, clinical trial results, pricing documents,
negotiation strategies and other proprietary information from more than 100
of its clients, mostly in the United States. Mandiant identified attacks on
20 industries, from military contractors to chemical plants, mining
companies and satellite and telecommunications corporations.

Mandiant’s report does not name the victims, who usually insist on
anonymity. A 2009 attack on Coca-Cola coincided with the beverage giant’s
failed attempt to acquire the China Huiyuan Juice Group for $2.4 billion,
according to people with knowledge of the results of the company’s
investigation.

As Coca-Cola executives were negotiating what would have been the largest
foreign purchase of a Chinese company, Comment Crew was busy rummaging
through their computers in an apparent effort to learn more about
Coca-Cola’s negotiation strategy.

The attack on Coca-Cola began, like hundreds before it, with a seemingly
innocuous e-mail to an executive that was, in fact, a spearphishing attack.
When the executive clicked on a malicious link in the e-mail, it gave the
attackers a foothold inside Coca-Cola’s network. From inside, they sent
confidential company files through a maze of computers back to Shanghai, on
a weekly basis, unnoticed.

Two years later, Comment Crew was one of at least three Chinese-based
groups to mount a similar attack on RSA, the computer security company
owned by EMC, a large technology company. It is best known for its SecurID
token, carried by employees at United States intelligence agencies,
military contractors and many major companies. (The New York Times also
uses the firm’s tokens to allow access to its e-mail and production systems
remotely.) RSA has offered to replace SecurID tokens for customers and said
it had added new layers of security to its products.

As in the Coca-Cola case, the attack began with a targeted, cleverly
fashioned poisoned e-mail to an RSA employee. Two months later, hackers
breached Lockheed Martin, the nation’s largest defense contractor, partly
by using the information they gleaned from the RSA attack.

Mandiant is not the only private firm tracking Comment Crew. In 2011, Joe
Stewart, a Dell SecureWorks researcher, was analyzing malware used in the
RSA attack when he discovered that the attackers had used a hacker tool to
mask their true location.

When he reverse-engineered the tool, he found that the vast majority of
stolen data had been transferred to the same range of I.P. addresses that
Mandiant later identified in Shanghai.

Dell SecureWorks says it believed Comment Crew includes the same group of
attackers behind Operation Shady RAT, an extensive computer espionage
campaign uncovered in 2011 in which more than 70 organizations over a
five-year period, including the United Nations, government agencies in the
United States, Canada, South Korea, Taiwan and Vietnam were targeted.

* Infrastructure at Risk *

What most worries American investigators is that the latest set of attacks
believed coming from Unit 61398 focus not just on stealing information, but
obtaining the ability to manipulate American critical infrastructure: the
power grids and other utilities.

Staff at Digital Bond, a small security firm that specializes in those
industrial-control computers, said that last June Comment Crew
unsuccessfully attacked it. A part-time employee at Digital Bond received
an e-mail that appeared to come from his boss, Dale Peterson. The e-mail,
in perfect English, discussed security weaknesses in critical
infrastructure systems, and asked the employee to click a link to a
document for more information. Mr. Peterson caught the e-mail and shared it
with other researchers, who found the link contained a remote-access tool
that would have given the attackers control over the employee’s computer
and potentially given them a front-row seat to confidential information
about Digital Bond’s clients, which include a major water project, a power
plant and a mining company.

Jaime Blasco, a security researcher at AlienVault, analyzed the computer
servers used in the attack, which led him to other victims, including the
Chertoff Group. That firm, headed by the former secretary of the Department
of Homeland Security, Michael Chertoff, has run simulations of an extensive
digital attack on the United States. Other attacks were made on a
contractor for the National Geospatial-Intelligence Agency, and the
National Electrical Manufacturers Association, a lobbying group that
represents companies that make components for power grids. Those
organizations confirmed they were attacked but have said they prevented
attackers from gaining access to their network.

Mr. Blasco said that, based on the forensics, all the victims had been hit
by Comment Crew. But the most troubling attack to date, security experts
say, was a successful invasion of the Canadian arm of Telvent. The company,
now owned by Schneider Electric, designs software that gives oil and gas
pipeline companies and power grid operators remote access to valves,
switches and security systems.

Telvent keeps detailed blueprints on more than half of all the oil and gas
pipelines in North and South America, and has access to their systems. In
September, Telvent Canada told customers that attackers had broken into its
systems and taken project files. That access was immediately cut, so that
the intruders could not take command of the systems.

Martin Hanna, a Schneider Electric spokesman, did not return requests for
comment, but security researchers who studied the malware used in the
attack, including Mr. Stewart at Dell SecureWorks and Mr. Blasco at
AlienVault, confirmed that the perpetrators were the Comment Crew.

“This is terrifying because — forget about the country — if someone hired
me and told me they wanted to have the offensive capability to take out as
many critical systems as possible, I would be going after the vendors and
do things like what happened to Telvent,“ Mr. Peterson of Digital Bond
said. “It’s the holy grail.”

Mr. Obama alluded to this concern in the State of the Union speech, without
mentioning China or any other nation. “We know foreign countries and
companies swipe our corporate secrets,” he said. “Now our enemies are also
seeking the ability to sabotage our power grid, our financial institutions,
our air-traffic control systems. We cannot look back years from now and
wonder why we did nothing.”

Mr. Obama faces a vexing choice: In a sprawling, vital relationship with
China, is it worth a major confrontation between the world’s largest and
second largest economy over computer hacking?

A few years ago, administration officials say, the theft of intellectual
property was an annoyance, resulting in the loss of billions of dollars of
revenue. But clearly something has changed. The mounting evidence of state
sponsorship, the increasing boldness of Unit 61398, and the growing threat
to American infrastructure are leading officials to conclude that a far
stronger response is necessary.

“Right now there is no incentive for the Chinese to stop doing this,” said
Mr. Rogers, the House intelligence chairman. “If we don’t create a high
price, it’s only going to keep accelerating.”


-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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