chinese-army-cyber-crime

Attorney General Eric Holder announced today that the Department of Justice has indicted five members of the Chinese army for hacking several U.S. companies including U.S. Steel (NYSE: X), Alcoa (NYSE: AA) and Allegheny Technologies (NYSE: ATI).

While cyber crime is nothing new, the frequency of incidents has increased significantly over the past few years. Just over a year ago, internet security firm Mandiant was able to link a series of attacks to a building in China operated by the Chinese military.

I first wrote about this Chinese army cyber crime last March. Since then, it seems the FBI has been putting together a case against several members of the Chinese army. Five members of the People’s Liberation Army Unit 61398 will be charged with several hacking incidents, including the incidents against U.S. Steel, Alcoa and Allegheny Technologies.

This marks the first time the FBI has charged members of a foreign government with cyber crime and the next stage of the ongoing but little-known cyber war between the U.S. and China.

According to the Wall Street Journal, these are among the incidents in question:

  • Alcoa – In 2008 the company announced a partnership with a Chinese state-owned entity. Weeks later thousands of internal communications about the deal were stolen.
  • Westinghouse – In 2010, while a deal to build power plants in China was being negotiated, plans for parts and technical specifications were stolen as well as sensitive internal communications about the deal.
  • U.S. Steel – In 2010, during a lawsuit over Chinese steel, malware was installed on U.S. Steel computers and used to exploit its computer systems.
  • SolarWorld – In 2012, during legal battles over trade agreements, thousands of files including sensitive financial information and manufacturing strategies were stolen.
  • Allegheny Technologies – In 2012, while engaged in both a joint venture and dispute with a Chinese company, the network credentials for every Allegheny employee were stolen and its network accessed.
  • United Steelworkers – Amidst disputes over Chinese trade practices, sensitive e-mails containing non-public strategies were stolen.

Reports from the Wall Street Journal indicate that these are just some of many hacking incidents and that, often, the U.S. companies victimized by these attacks don’t want to come forward for fear of losing the trust of their investors.

Prosecutors released photos of the suspects along with the indictments. At least two of these suspects are pictured wearing his People’s Liberation Army uniform.

Despite insistence by U.S. companies of China-based cyber warfare and complaints to Chinese officials by their U.S. counterparts, the Chinese government has officially denied any such wrongdoing. Not surprisingly the Chinese government also denies the specific incidents detailed in these recent indictments.

It is highly unlikely that the Chinese government will turn the suspects named in the indictments over the U.S. authorities. Still, this is a big step – even if only symbolically – towards casting a light on the shadow cyber war that is being fought all over the world.

U.S. officials have signaled a major change to the way these incidents of cyber warfare have been kept quiet. This represents a new and much less passive approach to battling Chinese army cyber crime – in the court of public opinion.

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