Chinese: Why bother hacking the Pentagon, when you can infiltrate its security firm?

[Sirotnikov]

Selling National Security
China bids for firm that makes "intrusion prevention" technology for the Department of Defense.
by Irwin M. Stelzer
09/29/2007 12:00:00 AM


THE CHINESE ANNOUNCED on Saturday that they would be buying into the company that provides the Pentagon with technology to prevent cyber-attacks--of the sort the Chinese launched a few weeks ago. Why worry? We are all free traders now, according the president and his secretary of the Treasury--all except misguided Democrats, trade unions, displaced workers, and those who worry about our national security.

True, free trade is great--when dealing with other parties who are in it for the same thing--to make money. But that ain't the name of the game these days. Now we have a company that must answer to the Chinese government picking up a piece of an American company, 3Com, that--get this--makes "intrusion prevention" technology that helps the Defense Department, among other clients, protect itself from hackers.

True, the Chinese company, Huawei Technologies, will be a minority shareholder. But it--and one must assume any Chinese government official who asks for Huawei's cooperation--will have access to the books, financial records and any other company documents that they might find useful. Remember: The Pentagon is convinced that the Chinese Peoples' Liberation Army hackers were the perpetrators of a massive cyber-attack on it just a few weeks ago.

So never mind that Bryan Whitman, a Pentagon spokesman, told the Financial Times that he is "not aware of any concern" over the acquisition. Or that there is big money in this for 3Com shareholders, who are being offered a 44 percent premium over the share price set in the market--which only proves how really, really
interested in 3Com's technology Huawei and its partner, Bain Capital, are.

Or that the Committee on Foreign Investment (Cifus) will review the deal. It is already leaking that it would be satisfied if the deal is drawn so that Huawei agrees, cross its heart and hope to die, to limit its access to certain technologies. And rest assured that Cifus will hear soothing words from Citibank, UBS, HSBC, and ABN Amro, who are putting the debt financing package together--oh yes, along with Bank of China.

One can only hope that Treasury Secretary Hank Paulson reads up on his Adam Smith, no protectionist he. Smith warned that when national security is at stake, free trade takes a distant second place as a national priority. The great Scot is, as usual, as relevant to our day as he was when he wrote The Wealth of Nations 230 years ago.

Great move there by the US

[Patroklos]

I want you to think about this really hard, and then tell me what the big deal is besides the semantics.

[Sirotnikov]

Chinese would like to hack the pentagon.

Pentagon uses security technology by company X

A chinese company buys stock which will possibly allow it inside info on technology or even as little as financial info, such as names and dates of new deals / strategies that company X takes with regard to its security technology.

The chinese government is very likely to infiltrate (if it hasn't already) company X.

[Japher]

uhm... if the Chinese wanted info on the technology why not just plant a spy or 4,000 to infiltrate the company? No need to buy stock.

[Asmodean]

I honestly don't see a problem here. I'm sure the Pentagon's data would be equally (in)secure, whether this acquisition went ahead or not.

Asmodean

[Pekka]

I don't see a problem here either, at least not new problems. Chinese could have infiltrated these companies already. Ownership doesn't change anything.

Security companies have many kinds of clients who are kind of opposite of each other.... so basically this isn't a new situation. Pentagon isn't less safe after this.

[Sirotnikov]

uhm... if the Chinese wanted info on the technology why not just plant a spy or 4,000 to infiltrate the company? No need to buy stock.

I don't see a problem here either, at least not new problems. Chinese could have infiltrated these companies already. Ownership doesn't change anything.

infiltration via acquisition is legal.
sending spies is illegal and harder (you have to find traitors).

Security companies have many kinds of clients who are kind of opposite of each other.... so basically this isn't a new situation. Pentagon isn't less safe after this.

But there's a difference between client and owner.
Would you trust a security company in which your greatest nemesis has oversight?

[Sirotnikov]

Many HUMINT operations today are masked as legitimat financial business propositions.

Now, obviously, a 3Com employee would be non-responsive or even suspicious to an approach by a chinese guy.

After that move however, any chinese spy can come up to a 3Com employee and say "Hey, I have a friend who works with your company. Your technology is very interesting. Tell me more."

[Pekka]

Wow, you think Chinese spy would not sleep his nights well knowing he broke the NDA? Information wise, this is not a new problem. It still is a problem, but that problem is 3Com insider threat. I deal with insider threats. You need help? You can start by paying me.

Even if they'd be the owners, they still won't be able to gather meaningful information that they wouldn't already have or couldn't come by easily.

And do you think when it comes to critical infrastructures, that the technology is just bought and not checked first as to how they work? Please... There is no significant benefit. There is a benefit, but it isn't significant.

Once they start modifying the products and adding some spy stuff into them, the only thing they have is what was bought and when. Not a big deal on this level.

[Pekka]

I mean that's like saying you can't by any hardware or stuff, since IBM and NSA have been married forever. And this is true, but so what? I mean if you're non-US nation that is.

Tech is checked, it's not like the people buying these are "umm what iz thiz component what it dooo?"

[Pekka]

I don't think anyone is suggesting that Pentagon should just forget about the move if it happens, but the topic is misleading. You are not actively stealing or breaking into Pentagon databases by buying some 3Com shares. Period. You still have to do the hacking part or infiltration INTO Pentagon, it still would be a 3rd party.

So no, it doesn't change the actual scheme

[Sirotnikov]

Originally posted by Pekka
Wow, you think Chinese spy would not sleep his nights well knowing he broke the NDA? Information wise, this is not a new problem. It still is a problem, but that problem is 3Com insider threat. I deal with insider threats. You need help? You can start by paying me.

Contrary to what you think, most spies don't think they are doing something wrong for most of their service.

And I doubt your technological skills are good for CI leaks.

Even if they'd be the owners, they still won't be able to gather meaningful information that they wouldn't already have or couldn't come by easily.

Not true.

Once they start modifying the products and adding some spy stuff into them, the only thing they have is what was bought and when. Not a big deal on this level.

They won't obviously use the company to run sigint operations.

But they can gather sigint-improvement intelligence based on the company's moves.

This company would supply the know how. The actual breach will come from another source.

[Sirotnikov]

I don't think anyone is suggesting that Pentagon should just forget about the move if it happens, but the topic is misleading. You are not actively stealing or breaking into Pentagon databases by buying some 3Com shares. Period. You still have to do the hacking part or infiltration INTO Pentagon, it still would be a 3rd party.

true.
but this gives you 70% of the preperation work you need.
and that is the most important part.

[Sirotnikov]

Originally posted by Pekka
I mean that's like saying you can't by any hardware or stuff, since IBM and NSA have been married forever. And this is true, but so what? I mean if you're non-US nation that is.

Tech is checked, it's not like the people buying these are "umm what iz thiz component what it dooo?"

Now, IBM hasn't planted any back doors, obviously.
But if someone were to hack an IBM system, and IBM engineer would be of much service to the hacking attempts.

The US airforce has set up a cyber command, and has "drafted" the lead engineers from US communications companies.
(I can find the article on wired)

Guess how quickly will all that inside-information will have to be translated to actionable information for the NSA / CyberWarfare Command?

And yes - any person that buys US hardware is much more vulnerable to US sneaking.

[Pekka]

edit: instead of letting what I just posted be here I realized I have no need or desire to defend my position on what constitutes as an insider threat and how it is dealt with.