One slept with several cabinet ministers. Another sold info to the Soviets to fund his expensive tastes. Take a look back at Canada’s other spies.
The Gouzenko Affair
Igor Gouzenko received intelligence training at the beginning of the Second World War, becoming a cipher clerk at the Soviet legation in Ottawa in 1943. Two years later, after he found out that he and his family were being sent to the USSR, he defected and went public with his knowledge of Soviet-operated spy networks on Canadian soil, armed with documents taken from the embassy to prove his assertions.
No one took Mr. Gouzenko seriously until a Soviet attempt to recapture him. Afterward, 12 suspects were arrested and put before a Royal Commission.
The commissioners, also using Mr. Gouzenko’s testimony and the documents he took, confirmed the existence of a spy ring in July of 1946, adding that the group targeted atomic secrets, among other goals.
Mr. Gouzenko was given a new identity. Even his death, which apparently occurred from natural causes, was kept secret.
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Explosive allegations of espionage that centre on a Canadian intelligence leak to Moscow have resulted in the expulsion of four Russian embassy staff members from their stations in Ottawa, CTV News has learned.
The expulsion of the Russian staff, who are alleged to have taken part in the scheme, reportedly occurred four days after Sub-Lt. Jeffrey Paul Delisle was arrested in Halifax.
Delisle, 40, is facing two charges under Canada’s Security of Information Act, and sources say that Russia was the nation involved.
CTV’s Ottawa Bureau Chief Robert Fife reported that four Russian embassy staff members were sent home as part of the growing fallout from the scandal, which was uncovered earlier this week.
Along with two unnamed embassy workers, Canada has sent Lt.-Col. Dmitry Fedorchatenko and Konstantin Kolpakov packing.
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On Jan. 19, 2012, Business Week reported that a Chinese citizen in the U.S. since 2000 on a work visa had pilfered software code from our country’s Federal Reserve and now faces legal action in U.S. vs. Zhang.
Bo Zhang, 32, a computer programmer hired to work on the highly confidential source code last year, claimed he took the code in order to hedge his bets if he fired from the Fed job.
“He asserted that he took it for private use and in order to ensure that it was available to him in the event that he lost his job [with the New York Fed],” according to prosecutors in the case.
Espionage motivates code theft at the Federal Reserve?
In the spy world, infiltrating high levels of other governments and gaining access to key confidential data is job one. In a world in which economic upheavals are an everyday language and knowing your enemies financial structures and money movements is just as crucial.
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The end of the Cold War combined with the advent of the Internet gave rise to an unprecedented wave of electronic espionage and crime. Michel Juneau-Katsuya witnessed first-hand the rise of cyber crime as a senior manager with the Canadian Security Intelligence Service (CSIS) at the time. In 2000, Mr. Juneau-Katsuya left public service to become founding chief executive of security consulting firm Northgate Group. He recently spoke with Financial Post technology reporter Jameson Berkow about the growing digital threat and how companies should respond. The following is an edited transcription of their conversation.
Q Was there any one event or experience that made you want to quit CSIS and strike out on your own?
A Back in the mid-1990s, I was the chief of the Asia-Pacific region for CSIS, so all operations from North Korea to Afghanistan were under my authority and I would see all the files passing by. At that period I saw a phenomenal amount of spy activities constantly increasing from 1995 and the early days after the collapse of the Soviet Union. I saw next to nothing was being done to try and warn the public and companies so I decided to get out and try to fill that vacuum. Nobody was talking to the private sector or helping it defend itself.
Q How can you quantify the digital threat Canada’s economy is facing?
A Easily. We have confirmed through studies that Canada, among the rest of the G8, is probably the country that is most spied on currently. We lose between $50-billion and $100-billion in Canada every year to economic espionage.
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A member of the Royal Canadian Navy has become the first person charged under the country’s post-9/11 secrets law for allegedly passing protected government information to an unknown foreign body.
Sub-Lt. Jeffrey Paul Delisle, 40, was charged Monday under the Security of Information Act, which came into effect in 2001. The navy intelligence officer is charged with communicating information that may “increase the capacity of a foreign entity or a terrorist group to harm Canadian interests.”
Before Monday, no one had ever been charged under the Security of Information Act, part of a sweeping package of anti-terrorism laws introduced in the wake of of the Sept. 11, 2001 terror attacks in the U.S.
“It’s completely unprecedented, post-9/11,” said Wesley Wark, a national security expert from the University of Toronto.
The secrets law updated the Official Secrets Act, a law that was rushed into force on the eve of the Second World War. The updated law also broadened the definition of secret information from “classified information” to cover anything the government wished to protect from any foreign organization, government or group.
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The Justice Department on Wednesday honored some of its employees behind the complex legal efforts to keep America safe, but the public ceremony raised more questions about what they did than answered them.
Call it the Black-Ops Oscars, where more than 35 people were presented awards in just less than an hour.
“We’re sorry we can’t say more about it,” Assistant Attorney General Lisa Monaco said, as she recognized attorneys Benjamin Huebner and Joshua Raines for work they did on a “highly classified project affecting national security.”
“Given the nature of the work, I won’t be able to more fully and completely describe some of these accomplishments,” said Monaco who heads the Justice Department’s National Security Division, a section created in 2006 to combat terrorism and other national security threats.
The division employs 340 people with an $88 million budget. Because of the nature of the cases, attorneys often have to work with members of the intelligence community to come up with ways to present evidence at a trial without jeopardizing national security. And in many cases, attorneys have to find ways to prosecute a case without any sensitive intelligence information at all.
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China-based hackers for months have been targeting federal agencies and contractors through infected emails apparently to spy on the Pentagon’s drone strategy and other intelligence matters, according to Internet security researchers.
The reported espionage employed a tactic known as spear-phishing where infiltrators, operating under the guise of a legitimate sender, email specific victims a virus-laden file or link. In this case, the hackers used email addresses from military and other government organizations, Jaime Blasco, manager of AlienVault Labs, said Tuesday.
Some emails went to employees at U.S. military contractors, he said, but declined to discuss any information related to specific victims.
The lab traced samples of the malicious software to network addresses in China, AlienVault disclosed last month.
Blasco has since discovered from the same spies separate malware that is capable of overriding Pentagon smart card credentials, known as the Common Access Card, to get into protected resources, he said Tuesday. In addition, the intruders have been pursuing other government organizations with information of interest to Chinese intelligence operations — including the General Services Administration, the U.S. government’s buying arm, and the Central Tibetan Administration.
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Below are the eleven most popular news stories aggregated by PI Newswire in 2011 based on traffic and page views related to cybersecurity and cybercrime.
Cyber Espionage: The Stakes Are Raised
http://bit.ly/uyEXRb
Cost to the economy from cyber crime is $43.8 billion annually
http://bit.ly/rKlFNF
FBI details worst social networking cybercrime problems
http://bit.ly/uefpzC
Users’ Online Behavior Deeply Influence Cyber Attack Techniques
http://bit.ly/u6p8op
Man Faces Prison for Cyberstalking
http://bit.ly/veVL6b
Beware these 6 emerging cyber threats
http://bit.ly/vKn0uQ
NSA Breaks Ground on Cybersecurity Center
http://bit.ly/tUCvQF
Social networks are new target of cybercriminals
http://bit.ly/u5mMqZ
U.S. Gov’t Study: Over a Third of FBI Cyber-Crime Agents are Incompetent
http://bit.ly/tuds6i
FBI Says White Collar Cyber Crime Tops 300,000 in ’10
http://bit.ly/t7NU0F
Cybercrime: the biggest threat in policing history
http://bit.ly/tnOsyQ
“Chinese human-intelligence operations primarily rely on collecting a small amount of information from a large number of people”, said Peter Grier, “Spy case patterns the Chinese style of espionage”.
Although China has been suspected as having a long history of espionage in the U.S. in order to gain knowledge and insight about military and industrial secrets, in recent years the belief that the Chinese government is conducting espionage activities in other countries is becoming increasingly widespread.
According to an annual report made in 2009 to the U.S Congress by the China Economic and Security Review Commission, China’s espionage and cyber-attacks against the U.S. government and business organizations are now a major concern.
The commission’s vice chairman Larry Wortzel stated that, “In addition to harming U.S interests, Chinese human and cyber espionage activities provide China with a method for leaping forward in economical, technological, and military development.” (1)
Chinese Espionage Activities
In 2006 the Central Intelligence Agency (CIA) released an unclassified document on its website titled the “Report to Congress on Chinese Espionage Activities Against the Unites States”.
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The security industry expects the number of cyber-espionage attacks to increase in 2012 and the malware used for this purpose to become increasingly sophisticated.
In the past two years there has been a surge in the number of malware-based attacks that resulted in sensitive data being stolen from government agencies, defense contractors, Fortune 500 companies, human rights organizations and other institutions. (See also “How to Remove Malware From Your Windows PC.”)
“I absolutely expect this trend to continue through 2012 and beyond,” said Rik Ferguson, director of security research and communication at security firm Trend Micro. “Espionage activities have, for hundreds of years, taken advantage of cutting-edge technologies to carry out covert operations; 2011 was not the beginning of Internet-facilitated espionage, nor will it be the end,” he added.
Threats like Stuxnet, which is credited with setting back Iran’s nuclear program by several years, or its successor, Duqu, have shocked the security industry with their level of sophistication. Experts believe that they are only the beginning and that more highly advanced malware will be launched in 2012.
“It is quite possible that we will see another of these threats in the near future,” said Gerry Egan, director of security response at Symantec. Duqu was used to gather design documents from companies that manufacture industrial control systems and could be a precursor to future Stuxnet-like industrial sabotage attacks, Egan explained.
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The new year is likely to bring a distinct shift in U.S. national security priorities, as the Obama Administration and Congress sharpen their response to China’s continuous assault on U.S. information networks. Although intelligence-community analysts believe the most sophisticated intrusions are being executed by a relatively small number of agents linked to the general staff of China’s Peoples Liberation Army, the damage they are inflicting on U.S. security and economic competitiveness is judged to be extensive.
Thus far, China’s cyber campaign consists mainly of espionage aimed at stealing military secrets and intellectual property. However, Gen. Keith Alexander, head of the Pentagon’s joint Cyber Command established to counter such campaigns, said in November that, “We see a disturbing track from exploitation to disruption to destruction.” Alexander wasn’t talking just about the Chinese, but there’s little doubt among intelligence analysts that Beijing is the biggest and most persistent perpetrator of cyber crimes.
The question is what to do about it. To date, U.S. cyber efforts have been focused mainly on defensive measures, seeking to repel network intruders in a fashion that Alexander likens to the famously failed Maginot Line. The National Security Agency and other U.S. security organizations are known to have developed their own network-attack capabilities, but former White House cyber-security advisor Richard Clarke has warned that it would be dangerous for the U.S. to step up its own campaign against Chinese networks while U.S. safeguards against retaliation are so weak.
Under the leadership of a few forward-thinking policymakers such as former Deputy Secretary of Defense William Lynn, the Department of Defense and intelligence community have greatly strengthened their information defenses and begun helping industry to protect critical infrastructure. But insiders say the asymmetries between U.S. and Chinese society make it hard to cope with China’s cyber onslaught. Not only is America a much more open and porous place, but U.S. agencies and private companies have a lot more information that’s worth stealing.
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Analysis Cybercrooks and patriotic state-backed hackers in China are collaborating to create an even more potent security threat, according to researchers.
Profit-motivated crooks are trading compromised access to foreign governments’ computers, which they are unable to monitise, for exploits with state-sponsored hackers. This trade is facilitated by information broker middlemen, according to Moustafa Mahmoud, president of The Middle East Tiger Team.
Mahmoud has made an extensive study of the Chinese digital underground that partially draws on material not available to the general public, such as books published by the US Army’s Foreign Military Studies Office, to compile a history of hacking in China. His work goes a long way to explain the threat of cyber-espionage from China that has bubbled up towards the top of the political agenda over recent months.
The first Chinese hacking group was founded in 1997 but disbanded in 2000 after a financial row between some of its principal players led to a lawsuit. At its peak the organisation had about 3,000 members, according to Mahmoud. The motives of this so-called Red Hacker group were patriotic, defending motherland China against its enemies.
The hacking the US Embassy and the White House over the accidental bombing of the Chinese Embassy in Belgrade back in 1999 brought many flag-waving Chinese hackers together to, as they saw it, defend the honour of the motherland and fight imperialism in cyberspace.
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