China's Cyber-Militia

National Journal
(Excerpts from COVER STORY - China’s Cyber-Militia)

Full story:
http://www.nationaljournal.com/njmagazine/cs_20080531_6948.php

Chinese hackers pose a clear and present danger to U.S. government and private-sector computer networks and may be responsible for two major U.S. power blackouts.

by Shane Harris

Sat. May 31, 2008

Computer hackers in China, including those working on behalf of the Chinese government and military, have penetrated deeply into the information systems of U.S. companies and government agencies, stolen proprietary information from American executives in advance of their business meetings in China, and, in a few cases, gained access to electric power plants in the United States, possibly triggering two recent and widespread blackouts in Florida and the Northeast, according to U.S. government officials and computer-security experts.

One prominent expert told National Journal he believes that China’s People’s Liberation Army played a role in the power outages. Tim Bennett, the former president of the Cyber Security Industry Alliance, a leading trade group, said that U.S. intelligence officials have told him that the PLA in 2003 gained access to a network that controlled electric power systems serving the northeastern United States. The intelligence officials said that forensic analysis had confirmed the source, Bennett said. “They said that, with confidence, it had been traced back to the PLA.” These officials believe that the intrusion may have precipitated the largest blackout in North American history, which occurred in August of that year. A 9,300-square-mile area, touching Michigan, Ohio, New York, and parts of Canada, lost power; an estimated 50 million people were affected.

Officially, the blackout was attributed to a variety of factors, none of which involved foreign intervention. Investigators blamed “overgrown trees” that came into contact with strained high-voltage lines near facilities in Ohio owned by FirstEnergy Corp. More than 100 power plants were shut down during the cascading failure. A computer virus, then in wide circulation, disrupted the communications lines that utility companies use to manage the power grid, and this exacerbated the problem. The blackout prompted President Bush to address the nation the day it happened. Power was mostly restored within 24 hours.

There has never been an official U.S. government assertion of Chinese involvement in the outage, but intelligence and other government officials contacted for this story did not explicitly rule out a Chinese role. One security analyst in the private sector with close ties to the intelligence community said that some senior intelligence officials believe that China played a role in the 2003 blackout that is still not fully understood.

Bennett, whose former trade association includes some of the nation’s largest computer-security companies and who has testified before Congress on the vulnerability of information networks, also said that a blackout in February, which affected 3 million customers in South Florida, was precipitated by a cyber-hacker. That outage cut off electricity along Florida’s east coast, from Daytona Beach to Monroe County, and affected eight power-generating stations.

Bennett said that the chief executive officer of a security firm that belonged to Bennett’s trade group told him that federal officials had hired the CEO’s company to investigate the blackout for evidence of a network intrusion, and to “reverse engineer” the incident to see if China had played a role.

Bennett, who now works as a private consultant, said he decided to speak publicly about these incidents to point out that security for the nation’s critical electronic infrastructures remains intolerably weak and to emphasize that government and company officials haven’t sufficiently acknowledged these vulnerabilities.

The Florida Blackout
A second information-security expert independently corroborated Bennett’s account of the Florida blackout. According to this individual, who cited sources with direct knowledge of the investigation, a Chinese PLA hacker attempting to map Florida Power & Light’s computer infrastructure apparently made a mistake. “The hacker was probably supposed to be mapping the system for his bosses and just got carried away and had a ‘what happens if I pull on this’ moment.” The hacker triggered a cascade effect, shutting down large portions of the Florida power grid, the security expert said. “I suspect, as the system went down, the PLA hacker said something like, ‘Oops, my bad,’ in Chinese.”

The power company has blamed “human error” for the incident, specifically an engineer who improperly disabled safety backups while working on a faulty switch. But federal officials are still investigating the matter and have not issued a final report, a spokeswoman for the Federal Energy Regulatory Commission said. The industry source, who conducts security research for government and corporate clients, said that hackers in China have devoted considerable time and resources to mapping the technology infrastructure of other U.S. companies. That assertion has been backed up by the current vice chairman of the Joint Chiefs of Staff, who said last year that Chinese sources are probing U.S. government and commercial networks.

Asked whether Washington knew of hacker involvement in the two blackouts, Joel Brenner, the government’s senior counterintelligence official, told National Journal, “I can’t comment on that.” But he added, “It’s certainly possible that sort of thing could happen. The kinds of network exploitation one does to explore a network and map it and learn one’s way around it has to be done whether you are going to … steal information, bring [the network] down, or corrupt it.… The possible consequences of this behavior are profound.”

Brenner, who works for Director of National Intelligence Mike McConnell, looks for vulnerabilities in the government’s information networks. He pointed to China as a source of attacks against U.S. interests. “Some [attacks], we have high confidence, are coming from government-sponsored sites,” Brenner said. “The Chinese operate both through government agencies, as we do, but they also operate through sponsoring other organizations that are engaging in this kind of international hacking, whether or not under specific direction. It’s a kind of cyber-militia.… It’s coming in volumes that are just staggering.”

The Central Intelligence Agency’s chief cyber-security officer, Tom Donahue, said that hackers had breached the computer systems of utility companies outside the United States and that they had even demanded ransom. Donahue spoke at a January gathering in New Orleans of security executives from government agencies and some of the nation’s largest utility and energy companies. He said he suspected that some of the hackers had inside knowledge of the utility systems and that in at least one case, an intrusion caused a power outage that affected multiple cities. The CIA didn’t know who launched the attacks or why, Donahue said, “but all involved intrusions through the Internet.”

Donahue’s public remarks, which were unprecedented at the time, prompted questions about whether power plants in the United States had been hacked. Many computer-security experts, including Bennett, believe that his admission about foreign incidents was intended to warn American companies that if intrusions hadn’t already happened stateside, they certainly could. A CIA spokesman at the time said that Donahue’s comments were “designed to highlight to the audience the challenges posed by potential cyber intrusions.” The CIA declined National Journal’s request to interview Donahue.