China Cloud Hopper hacking hit several tech firms, including major Huawei competitor




Hacked by suspected Chinese cyber spies five times from 2014 to 2017, security staff at Swedish telecoms equipment giant Ericsson had taken to naming their response efforts after different types of wine.

Pinot Noir began in September 2016. After successfully repelling a wave of attacks a year earlier, Ericsson discovered the intruders were back. And this time, the company’s cybersecurity team could see exactly how they got in: through a connection to information-technology services supplier Hewlett Packard Enterprise.

U.S. prosecutors say reams of hackers connected to the Chinese Ministry of State Security had penetrated HPE’s cloud computing service and used it as a launch pad to attack customers, plundering reams of corporate and government secrets for years in what they say was an effort to boost Chinese economic interests.

The hacking campaign, known as Cloud Hopper, was the subject of a U.S. indictment in December that accused two Chinese nationals of identity theft and fraud. Prosecutors described an elaborate operation that victimized multiple Western companies but stopped short of naming them. A Reuters report at the time identified two: Hewlett Packard Enterprise and IBM.

Yet the campaign ensnared at least six more major technology firms, touching five of the world’s 10 biggest tech service providers.

The U.S. Justice Department has charged two Chinese citizens with carrying out an extensive hacking campaign to steal corporate data and commercial secrets from entities in 12 countries, including Canada. 2:56

Also compromised by Cloud Hopper, Reuters has found: Fujitsu, Tata Consultancy Services, NTT Data, Dimension Data, Computer Sciences Corporation and DXC Technology. HPE spun off its services arm in a merger with Computer Sciences Corporation in 2017 to create DXC.

Waves of hacking victims emanate from those firms: their clients. 

Ericsson, which has been racing against China’s Huawei Technologies to build infrastructure for 5G networks expected to underpin future hyper-connected societies, confronted persistent and pervasive hacking, said people with knowledge of the matter.

Logs were modified and some files were deleted. The uninvited guests rummaged through internal systems, searching for documents containing certain strings of characters. Some of the malware found on Ericsson servers was signed with digital certificates stolen from big technology companies, making it look like the code was legitimate so it would go unnoticed.

Like many Cloud Hopper victims, Ericsson could not always tell what data was being targeted. Sometimes the attackers appeared to seek out project management information, such as schedules and time frames. 

Other targets include travel reservation system Sabre and the largest shipbuilder for the U.S. Navy.

‘Hard to defend against’

The companies were battling a skilled adversary, said Rob Joyce, a senior adviser to the U.S. National Security Agency (NSA). The hacking was “high leverage and hard to defend against,” he said.

Reuters was unable to determine the full extent of the damage done by the campaign, and many victims are unsure of exactly what information was stolen.

Much of Cloud Hopper’s activity has been deliberately kept from public view, often at the urging of corporate victims.

For those that thought the cloud was a panacea, I would say you haven’t been paying attention.– Mike Rogers, former NSA director

In an effort to keep information under wraps, security staff at the affected service providers were often barred from speaking even to other employees not specifically added to the inquiries.

The Cloud Hopper attacks carry worrying lessons for government officials and technology companies struggling to manage security threats. Chinese hackers were able to continue the attacks in the face of a counter-offensive by top security specialists and despite a 2015 U.S.-China pact to refrain from economic espionage.

Canada is under pressure to ban Huawei from supplying technology to build the country’s 5G wireless network, a move that allies like Germany and Australia have already undertaken. We talk to a panel of experts to discuss the security risks, and the politics. 19:46

The corporate and government response to the attacks was undermined as service providers withheld information from hacked clients, out of concern over legal liability and bad publicity, records and interviews show. That failure, intelligence officials say, calls into question Western institutions’ ability to share information in the way needed to defend against elaborate cyber invasions. 

The campaign also highlights the security vulnerabilities inherent in cloud computing, an increasingly popular practice in which companies contract with outside vendors for remote computer services and data storage.

“For those that thought the cloud was a panacea, I would say you haven’t been paying attention,” said Mike Rogers, former director of the NSA.

Reuters interviewed 30 people involved in the Cloud Hopper investigations, including Western government officials, current and former company executives and private security researchers. Reporters also reviewed hundreds of pages of internal company documents, court filings and corporate intelligence briefings.

A building registered to Huaying Haitai Science and Technology Development Co., second from left, is shown in Tianjin, China. The company is the alleged employer of two Chinese nationals indicted by the United States on hacking charges. (Thomas Peter/Reuters)

NTT Data, Dimension Data, Tata Consultancy Services, Fujitsu and IBM declined to comment. IBM has previously said it has no evidence sensitive corporate data was compromised by the attacks.

Ericsson said it does not comment on specific cybersecurity incidents.

“Our priority is always to ensure that our customers are protected,” a spokesperson said. “While there have been attacks on our enterprise network, we have found no evidence in any of our extensive investigations that Ericsson’s infrastructure has ever been used as part of a successful attack on one of our customers.”

HPE said it “worked diligently” to minimize the attack and that the company is “vigilant in our efforts to protect against the evolving threats of cybercrimes committed by state actors.”

A spokesperson for DXC, the services arm spun off by HPE in 2017, said the company put “robust security measures in place” to protect itself and customers. “Since the inception of DXC Technology, neither the company nor any DXC customer whose environment is under our control have experienced a material impact caused by APT10 or any other threat actor,” the spokesperson said.

The Chinese government has denied all accusations of involvement in hacking. The Chinese Foreign Ministry said Beijing opposed cyber-enabled industrial espionage. “The Chinese government has never in any form participated in or supported any person to carry out the theft of commercial secrets,” it said in a statement to Reuters.

The U.S. Justice Department has called the Chinese denials “ritualistic and bogus.”

Undetected intrusions for 2 years

For security staff at HPE, the Ericsson situation was just one dark cloud in a gathering storm, according to internal documents and 10 people with knowledge of the matter.

For years, the company’s predecessor, technology giant Hewlett Packard, didn’t even know it had been hacked. It first found malicious code stored on a company server in 2012. Outside experts called in found infections dating to at least January 2010.

Hewlett Packard security staff fought back, tracking intruders and shoring up defences, but the attackers returned, beginning a cycle that continued for at least five years.

The intruders stayed a step ahead. They would grab reams of data before planned eviction efforts by HP engineers. Repeatedly, they took whole directories of credentials, a brazen act netting them the ability to impersonate hundreds of employees.

Signs for Hewlett Packard Enterprise cover the facade of the New York Stock Exchange. The information-technology services supplier’s problems with breaches spilled over into several firms and industries. (Brendan McDermid/Reuters)

The hackers knew exactly where to retrieve the most sensitive data and littered their code with expletives and taunts.

Then things got worse, documents show.

After a 2015 tip-off from the U.S. Federal Bureau of Investigation about infected computers communicating with an external server, HPE combined three probes it had underway into one effort called Tripleplay. Up to 122 HPE-managed systems and 102 systems designated to be spun out into the new DXC operation had been compromised, a late 2016 presentation to executives showed.

An internal chart from mid-2017 helped top brass keep track of investigations code-named for customers. For example, projects Kronos and Echo related to former Swiss biotech firm Syngenta, which was taken over by state-owned Chinese chemicals conglomerate ChemChina in 2017, during the same period as the HPE investigation into Chinese attacks on its network.

According to Western officials, the attackers were multiple Chinese government-backed hacking groups. The most feared was known as APT10 and directed by the Ministry of State Security, U.S. prosecutors say. National security experts say the Chinese intelligence service is comparable to the U.S. Central Intelligence Agency, capable of pursuing both electronic and human spying operations.

This week saw a third Canadian detained in China, as well as hacking charges levelled by the United States government against two Chinese nationals. How will Canada be affected by this escalation of tensions between the U.S. and China? We talk to the former head of CSIS, Ward Elcock. 10:00

Two of APT10’s alleged members, Zhu Hua and Zhang Shilong, were indicted in December by the United States on charges of conspiracy to commit computer intrusions, wire fraud and aggravated identity theft. In the unlikely event they are ever extradited and convicted, the two men would face up to 27 years in an American jail.

Reuters was unable to reach Zhu, Zhang or lawyers representing the men for comment. 

APT10 often attacked a service provider’s system by spear-phishing – sending company employees emails designed to trick them into revealing their passwords or installing malware. Once through the door, the hackers moved through the company’s systems searching for customer data and, most importantly, the “jump servers” — computers on the network which acted as a bridge to client systems.

After the attackers hopped from a service provider’s network into a client system, their behaviour varied, which suggests the attacks were conducted by multiple teams with different skill levels and tasks, say those aware of the operation.

It’s impossible to say how many companies were breached through the service provider that originated as part of Hewlett Packard then became HPE and is now known as DXC.

Hotel chains, U.S. military affected

The HPE operation had hundreds of customers. Armed with stolen corporate credentials, the attackers could do almost anything the service providers could. Many of the compromised machines served multiple HPE customers, documents show.

One nightmare situation involved client Sabre Corp., which provides reservation systems for tens of thousands of hotels around the world. It also has a comprehensive system for booking air travel, working with hundreds of airlines and 1,500 airports.

A thorough penetration at Sabre could have exposed a goldmine of information, investigators said, if China was able to track where corporate executives or U.S. government officials were travelling. That would open the door to in-person approaches, physical surveillance or attempts at installing digital tracking tools on their devices.

In 2015, investigators found that at least four HP machines dedicated to Sabre were tunneling large amounts of data to an external server. The Sabre breach was long-running and intractable, said two former HPE employees.

HP management only grudgingly allowed its own defenders the investigation access they needed, and cautioned against telling Sabre everything, the former employees said. “Limiting knowledge to the customer was key,” one said. “It was incredibly frustrating. We had all these skills and capabilities to bring to bear, and we were just not allowed to do that.”

Huntington Ingalls feared hackers accessed data from its biggest operation, the Newport News shipyard where it builds nuclear-powered subs. It’s not clear if data was stolen.  (John Whalen/U.S. Navy/Huntington Ingalls/Reuters)

A Sabre spokesperson said an investigation of the breach “concluded with the important finding that there was no loss of traveller data, including no unauthorized access to or acquisition of sensitive protected information, such as payment card data or personally identifiable information.”

The threat also reached into the U.S. defence industry.

In early 2017, HPE analysts saw evidence that Huntington Ingalls Industries, a significant client and the largest U.S. military shipbuilder, had been penetrated by the Chinese hackers, two sources said. Computer systems owned by a subsidiary of Huntington Ingalls were connecting to a foreign server controlled by APT10.

During a private briefing with HPE staff, Huntington Ingalls executives voiced concern the hackers could have accessed data from its biggest operation, the Newport News, Va., shipyard where it builds nuclear-powered submarines, said a person familiar with the discussions. It’s not clear whether any data was stolen.

Huntington Ingalls is “confident that there was no breach of any HII data” via DXC or HPE, a spokesperson said.

In 2016, HPE’s office of general counsel for global functions issued a memo about an investigation code-named White Wolf. “Preserving confidentiality of this project and associated activity is critical,” the memo warned.

The secrecy was not unique to HPE. Even when the government alerted technology service providers, the companies would not always pass on warnings to clients, Jeanette Manfra, a senior cybersecurity official with the U.S. Department of Homeland Security, told Reuters.

“We asked them to notify their customers,” Manfra said. “We can’t force their hand.”






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