Business / Tech | FOCUS

A peek at the West's failed fight against China's 'Cloud Hopper' hackers

by Jack Stubbs, Joseph Menn and Christopher Bing

Reuters

Hacked by suspected Chinese cyberspies five times from 2014 to 2017, security staffers at the Swedish telecommunications equipment giant Ericsson took to naming their response efforts after different types of wine.

“Pinot Noir” began in September 2016. After repelling attacks a year earlier, Ericsson discovered the intruders were back. 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.

Teams 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 U.S. prosecutors 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 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 (HPE) and IBM.

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

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

Waves of hacking victims — their clients — emanate from those six plus HPE and IBM. Ericsson, which competes with Chinese firms in the strategically critical mobile telecoms business, is one. Others include travel reservation system Sabre, the American leader in managing plane bookings, and the largest shipbuilder for the U.S. Navy, Huntington Ingalls Industries, which builds America’s nuclear submarines.

“This was the theft of industrial or commercial secrets for the purpose of advancing an economy,” said former Australian National CyberSecurity Adviser Alastair MacGibbon.

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.

Yet the Cloud Hopper attacks carry worrying lessons for government officials and technology companies struggling to manage security threats. Chinese hackers, including a group known as APT10, were able to continue the attacks in the face of a counteroffensive by top security specialists and despite a 2015 U.S.-China pact to refrain from economic espionage.

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 cyberinvasions. Even now, many victims may not be aware they were hit.

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 U.S. National Security Agency.

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 internal company documents, court filings and corporate intelligence briefings.

A spokesman for DXC said the company put “robust security measures in place” to protect itself and customers.

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.

The Chinese government has denied all accusations of involvement in hacking.

Break-ins and evictions

For security staffers at Hewlett Packard Enterprise, 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, Hewlett Packard, didn’t even know it had been hacked. It first found malicious code stored on a company server in 2012. The company called in outside experts, who found infections dating to at least 2010.

Hewlett Packard security staffers fought back, tracking the intruders, shoring up defenses and executing a carefully planned expulsion to simultaneously knock out all of the hackers’ known footholds. 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.

The hackers knew exactly where to retrieve the most sensitive data and littered their code with expletives and taunts. One hacking tool contained the message “FUCK ANY AV” — referencing their victims’ reliance on anti-virus software. The name of a malicious domain used in the wider campaign appeared to mock U.S. intelligence: “nsa.mefound.com.”

Then things got worse, documents show.

After a 2015 tip-off from the FBI 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 DXC had been compromised.

An internal chart helped top brass keep track of investigations code-named for customers. “Rubus” dealt with Finnish conglomerate Valmet. “Silver Scale” was Brazilian mining giant Vale. “Greenxmass” was Swedish manufacturer SKF and “Oculus” covered Ericsson. Projects “Kronos” and “Echo” related to former Swiss biotech firm Syngenta, which was taken over by state-owned Chinese chemical conglomerate ChemChina in 2017 — during the same period as the HPE investigation into Chinese attacks on its network.

A spokesman for SKF said: “Our investigations into the breach have not found that any commercially sensitive information was accessed.”

‘Drunken burglars’

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

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.

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.

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

“The Chinese government uses its own intelligence services to conduct this activity and refuses to cooperate with any investigation into thefts of intellectual property emanating from its companies or its citizens,” DOJ Assistant Attorney General John Demers said.

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 that acted as a bridge to client systems.

After the attackers “hopped” from a service provider’s network into a client system, their behavior varied, which suggests the attacks were conducted by multiple teams with different skill levels and tasks, say those aware of the operation. Some intruders resembled “drunken burglars,” said one source, getting lost in the labyrinth of corporate systems and appearing to grab files at random.

Hotels and submarines

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

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 gold mine of information, investigators said, if China was able to track where corporate executives or U.S. government officials were traveling. 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.”

Uninvited guests

The threat also reached into the U.S. defense 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 staffers, Huntington Ingalls executives voiced concern the hackers could have accessed data from its biggest operation, the Newport News, Virginia, shipyard where it builds nuclear-powered submarines, said a person familiar with the discussions. It is not clear whether any data was stolen.

Another target was Ericsson, which has been racing against China’s Huawei Technologies to build infrastructure for 5G networks expected to underpin future hyper-connected societies. The hacking at Ericsson was persistent and pervasive, 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. Another time they went after product manuals, some of which were already publicly available.

“The reality is that most organizations are facing cybersecurity challenges on a daily basis, including Ericsson,” Chief Security Officer Paer Gunnarsson said in a statement, declining to discuss specific incidents. “In our industry, and across industries, we would all benefit from a higher degree of transparency on these issues.”

In December 2018, after struggling to contain the threat for years, the U.S. government named the hackers from APT10 (Advanced Persistent Threat 10) as agents of China’s Ministry of State Security. The public attribution garnered widespread international support: Germany, New Zealand, Canada, Britain, Australia and other allies all issued statements backing the U.S. allegations against China.

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