FBI Director Threat Assessment to Senate Committee

210 Billion Attacks in Q2 2018

Report Highlights Include:

  • Analysis of 151 million global cybercrime attacks and 1.6 billion bot attacks
  • 72 percent growth in mobile transactions year-on-year
  • One third of all attacks now targeting mobile
Related reading: Terrorists likely to attack U.S. with drones, says FBI director

Related reading: FBI director says bureau is investigating 5,000 terrorism cases across the world

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Threats to the Homeland

Good morning Chairman Johnson, Ranking Member McCaskill, and members of the committee. Thank you for the opportunity to appear before you today to discuss the current threats to the United States homeland. Our nation continues to face a multitude of serious and evolving threats ranging from homegrown violent extremists (HVEs) to cyber criminals to hostile foreign intelligence services and operatives. Keeping pace with these threats is a significant challenge for the FBI. Our adversaries—terrorists, foreign intelligence services, and criminals—take advantage of modern technology to hide their communications; recruit followers; and plan and encourage espionage, cyber attacks, or terrorism to disperse information on different methods to attack the U.S. homeland, and to facilitate other illegal activities. As these threats evolve, we must adapt and confront these challenges, relying heavily on the strength of our federal, state, local, and international partnerships.

Counterterrorism

The threat posed by terrorism—both international terrorism (IT) and domestic terrorism (DT)—has evolved significantly since 9/11. Preventing terrorist attacks remains the FBI’s top priority. We face persistent threats to the homeland and to U.S. interests abroad from HVEs, domestic terrorists, and foreign terrorist organizations (FTOs). The IT threat to the U.S. has expanded from sophisticated, externally directed FTO plots to include individual attacks carried out by HVEs who are inspired by designated terrorist organizations. We remain concerned that groups such as the Islamic State of Iraq and ash-Sham (ISIS) and al Qaeda have the intent to carry out large-scale attacks in the U.S.

The FBI assesses HVEs are the greatest terrorism threat to the homeland. These individuals are global jihad-inspired individuals who are in the U.S., have been radicalized primarily in the U.S., and are not receiving individualized direction from FTOs. We, along with our law enforcement partners, face significant challenges in identifying and disrupting HVEs. This is due, in part, to their lack of a direct connection with an FTO, an ability to rapidly mobilize, and the use of encrypted communications.

In recent years, prolific use of social media by FTOs has greatly increased their ability to disseminate their messages. We have also been confronting a surge in terrorist propaganda and training available via the Internet and social media. Due to online recruitment and indoctrination, FTOs are no longer dependent on finding ways to get terrorist operatives into the United States to recruit and carry out acts of terrorism. Terrorists in ungoverned spaces—both physical and cyber—readily disseminate propaganda and training materials to attract easily influenced individuals around the world to their cause. They motivate these individuals to act at home or encourage them to travel. This is a significant transformation from the terrorist threat our nation faced a decade ago.

Despite significant losses of territory, ISIS remains relentless and ruthless in its campaign of violence against the West and has aggressively promoted its hateful message, attracting like-minded extremists. Unlike other groups, ISIS has constructed a narrative that touches on all facets of life, from family life to providing career opportunities to creating a sense of community. The message is not tailored solely to those who overtly express signs of radicalization. It is seen by many who click through the Internet every day, receive social media notifications, and participate in social networks. Ultimately, many of the individuals drawn to ISIS seek a sense of belonging. Echoing other terrorist groups, ISIS has advocated for lone offender attacks in Western countries. Recent ISIS videos and propaganda have specifically advocated for attacks against soldiers, law enforcement, and intelligence community personnel.

Many foreign terrorist organizations use various digital communication platforms to reach individuals they believe may be susceptible and sympathetic to extremist messages. However, no group has been as successful at drawing people into its perverse ideology as ISIS, who has proven dangerously competent at employing such tools. ISIS uses high-quality, traditional media platforms, as well as widespread social media campaigns to propagate its extremist ideology. With the broad distribution of social media, terrorists can spot, assess, recruit, and radicalize vulnerable persons of all ages in the U.S. either to travel or to conduct an attack on the homeland. Through the Internet, terrorists overseas now have direct access to our local communities to target and recruit our citizens and spread the message of radicalization faster than was imagined just a few years ago.

The threats posed by foreign fighters, including those recruited from the U.S., are very dynamic. We will continue working to identify individuals who seek to join the ranks of foreign fighters traveling in support of ISIS, those foreign fighters who may attempt to return to the United States, and HVEs who may aspire to attack the United States from within.

ISIS is not the only terrorist group of concern. Al Qaeda maintains its desire for large-scale spectacular attacks. However, continued counterterrorism pressure has degraded the group, and in the near term al Qaeda is more likely to focus on supporting small-scale, readily achievable attacks against U.S. and allied interests in the Afghanistan/Pakistan region. Simultaneously, over the last year, propaganda from al Qaeda leaders seeks to inspire individuals to conduct their own attacks in the U.S. and the West.

In addition to FTOs, domestic extremist movements collectively pose a steady threat of violence and economic harm to the United States. Trends within individual movements may shift, but the underlying drivers for domestic extremism—such as perceptions of government or law enforcement overreach, socio-political conditions, and reactions to legislative actions—remain constant. The FBI is most concerned about lone offender attacks, primarily shootings, as they have served as the dominant mode for lethal domestic extremist violence. We anticipate law enforcement, racial minorities, and the U.S. government will continue to be significant targets for many domestic extremist movements.

As the threat to harm the U.S. and our interests evolves, we must adapt and confront these challenges, relying heavily on the strength of our federal, state, local, and international partnerships. The FBI uses all lawful investigative techniques and methods to combat these terrorist threats to the United States. Along with our domestic and foreign partners, we collect and analyze intelligence concerning the ongoing threat posed by foreign terrorist organizations and homegrown violent extremists. We continue to encourage information sharing, which is evidenced through our partnerships with many federal, state, local, and tribal agencies assigned to Joint Terrorism Task Forces around the country. The FBI continues to strive to work and share information more efficiently, and to pursue a variety of lawful methods to stay ahead of threats to the homeland.

Intelligence

Incorporating intelligence in all we do remains a critical strategic pillar of the FBI strategy. The constant evolution of the FBI’s intelligence program will help us address the ever-changing threat environment. We must constantly update our intelligence apparatus to improve the way we collect, use, and share intelligence to better understand and defeat our adversaries. We cannot be content only to work the matters directly in front of us. We must also look beyond the horizon to understand the threats we face at home and abroad, and how those threats may be connected. We must also ensure we are providing our partners, whether in the public or private sectors, with actionable, relevant intelligence to help them address their own unique threats.

To that end, The FBI gathers intelligence, pursuant to legal authorities, to help us understand and prioritize identified threats, to reveal the gaps in what we know about these threats, and to fill those gaps. We do this for national security and criminal threats, on both national and local field office levels. We then compare the national and local perspectives to organize threats into priorities for each of the FBI’s 56 field offices. By categorizing threats in this way, we place the greatest focus on the gravest threats we face. This gives us a better assessment of what the dangers are, what is being done about them, and where we should prioritize our resources.

Given the fast pace of technological evolution, we must also focus on ensuring our information technology capabilities allow us to collect and assess information as quickly and thoroughly as possible. We must continue to deploy superior technological capabilities and solutions for large data sets, such as those derived from digital media.

Integrating intelligence and operations is part of the broader intelligence transformation the FBI has undertaken in the last decade to improve our understanding and mitigation of threats. Over the past few years, we have taken several steps to improve this integration. The FBI’s Intelligence Branch, created in August 2014, provides strategic direction and oversight of the FBI’s intelligence program and is responsible for intelligence strategy, resources, policies, and operations. Our special agents and intelligence analysts train together at the FBI Academy, where they engage in joint training exercises and take core courses together, prior to their field deployments. As a result, they are better prepared to integrate their skill sets in the field. To build on the Quantico-based training, the FBI now offers significant follow-on training courses that integrate special agents, intelligence analysts, staff operations specialists, and language analysts. Additionally, our training forums for executives and front-line supervisors continue to ensure our leaders are informed about our latest intelligence capabilities and allow them to share best practices for achieving intelligence integration.

Counterintelligence

The nation faces a rising threat, both traditional and asymmetric, from hostile foreign intelligence services and their proxies. Traditional espionage, often characterized by career foreign intelligence officers acting as diplomats or ordinary citizens, and asymmetric espionage, often carried out by students, researchers, or business people operating front companies, are prevalent. Foreign intelligence services not only seek our nation’s state and military secrets, but they also target commercial trade secrets, research and development, and intellectual property, as well as insider information from the federal government, U.S. corporations, and American universities. Foreign intelligence services and other state-directed actors continue to employ more creative and more sophisticated methods to steal innovative technology, critical research and development data, and intellectual property in an effort to erode America’s economic leading edge. These illicit activities pose a significant threat to national security and continue to be a priority and focus of the FBI.

Our counterintelligence efforts are also aimed at the growing scope of the insider threat—that is, when trusted employees and contractors use their legitimate access to steal secrets for personal benefit or to benefit a company or another country. This threat has been exacerbated in recent years as businesses have become more global and increasingly exposed to foreign intelligence organizations. We are also investigating media leaks, when federal employees and contractors violate the law and betray the nation’s trust by selectively leaking classified information, sometimes mixed with disinformation, to manipulate the public and advance their personal agendas.

In addition to the insider threat, the FBI has focused on a coordinated approach across divisions that leverages both our classic counterespionage tradecraft and our technical expertise to more effectively identify, pursue, and defeat hostile state actors using cyber means to penetrate or disrupt U.S. government entities or economic interests.

We have also continued our engagement with the private sector and academia on the threat of economic espionage and technology transfer. We have addressed national business and academic groups, met with individual companies and university leaders, worked with sector-specific groups, and encouraged all field offices to maintain close, ongoing liaison with entities across the country that have valuable technology, data, or other assets.

Cyber

Virtually every national security and criminal threat the FBI faces is cyber-based or technologically facilitated. We face sophisticated cyber threats from foreign intelligence agencies, hackers for hire, organized crime syndicates, and terrorists. These threat actors constantly seek to access and steal our nation’s classified information, trade secrets, technology, and ideas—all of which are of great importance to U.S. national and economic security. They seek to strike our critical infrastructure and to harm our economy.

As the committee is well aware, the frequency and impact of cyber attacks on our nation’s private sector and government networks have increased dramatically in the past decade and are expected to continue to grow. We continue to see an increase in the scale and scope of reporting on malicious cyber activity, which can be measured by the amount of corporate data stolen or deleted, personally identifiable information compromised, or remediation costs incurred by U.S. victims. Within the FBI, we are focused on the most dangerous malicious cyber activity: high-level intrusions by state-sponsored hackers and global organized crime syndicates, and other technically sophisticated attacks.

Botnets used by cyber criminals are one example of this trend and have been responsible for billions of dollars in damages over the past several years. The widespread availability of malicious software (malware) that can create botnets allows individuals to leverage the combined bandwidth of thousands, if not millions, of compromised computers, servers, or network-ready devices to conduct attacks. Cyber threat actors have also increasingly conducted ransomware attacks against U.S. systems by encrypting data and rendering systems unusable, thereby victimizing individuals, businesses, and even public health providers.

Cyber threats are not only increasing in scope and scale, but are also becoming increasingly difficult to investigate. Cyber criminals often operate through online forums, selling illicit goods and services, including tools that can be used to facilitate cyber attacks. These criminals have also increased the sophistication of their schemes, which are more difficult to detect and more resilient. Additionally, many cyber actors are based abroad or obfuscate their identities by using foreign infrastructure, making coordination with international law enforcement partners essential.

The FBI is engaged in a myriad of efforts to combat cyber threats, from improving threat identification and information sharing inside and outside of government, to developing and retaining new talent, to examining the way we operate to disrupt and defeat these threats. We take all potential threats to public and private sector systems seriously and will continue to investigate and hold accountable those who pose a threat in cyberspace.

Going Dark

“Going Dark” describes circumstances where law enforcement is unable to obtain critical information in an intelligible and usable form (or at all), despite having a court order authorizing the government’s access to that information. As a technical matter, this challenge extends across several products and platforms, whether it involves “data at rest,” such as on a physical device, or “data in motion,” as with real-time electronic communications.

Going Dark remains a serious problem for the FBI across our investigative areas, from counterterrorism to child exploitation, gangs, drug traffickers, and white-collar crimes. The inability to access evidence or intelligence despite the lawful authority to do so significantly impacts the FBI’s ability to identify, investigate, prosecute, or otherwise deter criminals, terrorists, and other offenders.

Our federal, state, local, and international law enforcement partners face similar challenges in maintaining access to electronic evidence despite having legal authorization to do so. Indeed, within the last few months, the nation’s sheriffs called for “the U.S. Congress to exercise leadership in the nation’s public safety interest” to address the Going Dark challenge. Several of our closest law enforcement and intelligence partners (the United Kingdom, Canada, Australia, and New Zealand) similarly described this as a “pressing international concern that requires urgent, sustained attention and informed discussion.”

The FBI recognizes the complexity of the issue, but we believe there is a tremendous opportunity for responsible stakeholders to work together to find sustainable solutions that preserve cybersecurity and promote public safety.

Weapons of Mass Destruction

The FBI, along with its U.S. government partners, is committed to countering the weapons of mass destruction (WMD) threat (e.g., chemical, biological, radiological, nuclear, and explosives) by preventing terrorist groups and lone offenders from acquiring these materials either domestically or internationally through preventing nation state proliferation of WMD sensitive technologies and expertise.

Domestically, the FBI’s counter-WMD threat program, in collaboration with our U.S. government partners, prepares for and responds to WMD threats (e.g., investigate, detect, search, locate, diagnose, stabilize, and render safe WMD threats). Internationally, the FBI, in cooperation with our U.S. partners, provides investigative and technical assistance as well as capacity-building programs to enhance our foreign partners’ ability to detect, investigate, and prosecute WMD threats.

Countering Unmanned Aircraft Systems (UAS)

The threat from unmanned aircraft systems in the U.S. is steadily escalating. While we are working with FAA and other agencies to safely integrate UAS into the national airspace system, the FBI assesses with high confidence that terrorists overseas will continue to use small UAS to advance nefarious activities and exploit physical protective measures. While there has been no successful malicious use of UAS by terrorists in the United States to date, terrorist groups could easily export their battlefield experiences to use weaponized UAS outside the conflict zone. We have seen repeated and dedicated efforts to use UAS as weapons, not only by terrorist organizations, such as ISIS and al Qaeda, but also by transnational criminal organizations such as MS-13 and Mexican drug cartels, which may encourage use of this technique in the U.S. to conduct attacks. The FBI assesses that, given their retail availability, lack of verified identification requirement to procure, general ease of use, and prior use overseas, UAS will be used to facilitate an attack in the United States against a vulnerable target, such as a mass gathering. This risk has only increased in light of the publicity associated with the apparent attempted assassination of Venezuelan President Maduro using explosives-laden UAS.

The FBI recently disrupted a plan in the United States to use drones to attack the Pentagon and the Capitol building. On November 1, 2012, Rezwan Ferdaus was sentenced to 17 years in federal prison for attempting to conduct a terrorist attack and providing support to al Qaeda. Ferdaus, who held a degree in physics, obtained multiple jet-powered, remote-controlled model aircraft capable of flying 100 miles per hour. He planned to fill the aircraft with explosives and crash them into the Pentagon and the Capitol using a GPS system in each aircraft. Fortunately, the FBI interrupted the plot after learning of it and deploying an undercover agent.

Last week, thanks in large part to the outstanding leadership of this Committee, the FBI and DOJ received new authorities to deal with the UAS threat in the FAA Reauthorization Act of 2018. That legislation enables the FBI to counter UAS threats while safeguarding privacy and promoting the safety and efficiency of the national airspace system. The FBI is grateful to the chairman, the ranking member, and other members of this committee for championing this critical authority.

Conclusion

Finally, the strength of any organization is its people. The threats we face as a nation have never been greater or more diverse and the expectations placed on the Bureau have never been higher. Our fellow citizens look to the FBI to protect the United States from all of those threats, and the men and women of the FBI continue to meet and exceed those expectations, every day. I want to thank them for their dedicated service.

Google Doc Notes Tech Media Censorship

The Good Censor – GOOGLE LEAK by on Scribd

   The other cyber war…censorship.

Primer:

Google should refuse to develop a censored search engine for China, Vice President Mike Pence said Thursday while criticizing the Communist regime.

“Google should immediately end development of the ‘Dragonfly’ app that will strengthen Communist Party censorship and compromise the privacy of Chinese customers,” Pence said at the Hudson Institute in Washington, D.C.

Pence’s recommendation came amid a broad criticism of China’s domestic repression and international aggression. But his turn towards Google attests to how U.S. leaders also see Beijing’s relationship with American institutions as a source of unwarranted strength for Chinese leaders, even as President Trump takes a more confrontational posture towards the rising Asian power. More here.

 

Summary background on the 85 page document authored by Google and published by Breitbart:

Leaked Google documents suggest the tech giant wants increased censorship of the internet and believes other internet firms should police debate online.

The 85-page paper, leaked by a Google employee, claims that cyber harassment, racism and people venting their frustrations are ‘eroding’ free speech online.

It says that the ability to post anonymously has ’empowered’ online commenters to express their views ‘recklessly’ and ‘with abandon’.

Censoring the internet could make comment sections safer and more civil for everyone, the report concludes.

The report reads: ‘When they’re angry, people vent their frustrations.

‘But whereas people used to tell friends and family about bad experiences, the internet now provides a limitless audience for our gripes.’

Anonymity of users is also earmarked as a potential danger online, claiming that people were more likely to share abhorrent or radical views due to the lack of accountability.

Racism, hate speech, trolling and harassment are also mentioned in the extensive report, which was leaked to Breitbart.

It adds: ‘Although people have long been racist, sexist and hateful in many other ways, they weren’t empowered by the internet to recklessly express their views with abandon.’

Groups which were once minority have been emboldened to discuss their radical views online as the internet provides them with a safe space to communicate, the report suggests.

In response to the leak, Google insisted the document was not company policy, though it admitted the research was something being considered by top bosses.

Internet rights advocates said that censoring online debate risks hampering free speech and creating an environment in which the views of some groups are not tolerated by big technology firms.

Of harassment, Google says: ‘From petty name-calling to more threatening behaviour, harassment is an unwelcome component of life online for all too many users.’

It goes on to suggest that Google should monitor the tone of what is said as opposed to the content, and that the firm should not adopt a political standpoint in arguments.

‘Shifting with the times’, depending on the mood around censorship, is also not ruled out.

***

Google intends to launch a controversial censored version of its Search app for China by July 2019.

‘Dragonfly’ is a rumoured effort inside Google to develop a search engine for China that would censor certain terms and news outlets, among other things.

Outside of high-profile leaks, few details have emerged on what the search engine entails as Google has kept tight-lipped on the project.

A former Google employee warned in August of the web giant’s ‘disturbing’ plans in a letter to the US’s senate’s commerce committee.

Jack Poulson said the proposed Dragonfly website was ‘tailored to the censorship and surveillance demands of the Chinese government’.

In his letter he also claimed that discussion of the plans among Google employees had been ‘increasingly stifled’.

Mr Poulson was a senior research scientist at Google until he resigned last month in protest at the Dragonfly proposals. Read more here from DailyMail.

Trump Admin Trying to Get a Cyber Doctrine

October is national cyber awareness month, frankly every month and every day should be an awareness day.

octo | Office of the Chief Technology Officer

So, back in late 2017, the House passed by a voice vote H.R. 3559 – Cybersecurity and Infrastructure Security Agency Act of 2017. As you may guess, it is stalled in the Senate.

Meanwhile, in an effort to mobilize and consolidate cyber operations for the United States, there is no consensus within Congress. Should every government agency has a cyber division? Should the United States be able to perform counter cyber attacks? What kind of a cyber attack on the United States constitutes an act of war?

Just last month, Politico published a piece stating in part:

Recent reports that Russia has been attempting to install malware in our electrical grid and that its hackers have infiltrated utility-control rooms across America should constitute a significant wakeup call. Our most critical infrastructure systems are vulnerable to malicious foreign cyberactivity and, despite considerable effort, the collective response has been inadequate. As Director of National Intelligence Dan Coats ominously warned, “The warning lights are blinking red.”

A successful attack on our critical infrastructure — power grids, water supplies, communications systems, transportation and financial networks — could be devastating. Each of these is vital to our economy, health and security. One recent study found that a single coordinated attack on the East Coast power grid could leave parts of the region without power for months, cause thousands of deaths due to the failure of health and safety systems, and cost the U.S. economy almost $250 billion. Cyberattacks could also undermine our elections, either by altering our voter registration rolls or by tampering with the voting systems or results themselves.

The op-ed was written by retired General and former CIA Director David Petraeus who is arguing: “Our grab-bag approach isn’t working. Gen. David Petraeus says it’s time to go big.”

Actually, I agree with General Petraeus on his position. Last month also, John Bolton on the White House National Security Council declared that the U.S. is going on the offensive. Yet in an interesting article, Forbes offers a point and counter-point to that argument.

Last week, President Trump spoke to world leaders about how China is interfering in U.S. elections via the cyber realm. While no evidence has been offered, that is not to say there is no evidence, it is a common tactic of China. Additionally, the United States is offering robust assistance to NATO allies.

Acting to counter Russia’s aggressive use of cyberattacks across Europe and around the world, the U.S. is expected to announce that, if asked, it will use its formidable cyberwarfare capabilities on NATO’s behalf, according to a senior U.S. official.

The announcement is expected in the coming days as U.S. Defense Secretary Jim Mattis attends a meeting of NATO defense ministers on Wednesday and Thursday.

Katie Wheelbarger, the principal deputy assistant defense secretary for international security affairs, said the U.S. is committing to use offensive and defensive cyber operations for NATO allies, but America will maintain control over its own personnel and capabilities.

The decision comes on the heels of the NATO summit in July, when members agreed to allow the alliance to use cyber capabilities that are provided voluntarily by allies to protect networks and respond to cyberattacks. It reflects growing concerns by the U.S. and its allies over Moscow’s use of cyber operations to influence elections in America and elsewhere.

“Russia is constantly pushing its cyber and information operations,” said Wheelbarger, adding that this is a way for the U.S. to show its continued commitment to NATO.

Wheelbarger told reporters traveling to NATO with Mattis that the move is a signal to other nations that NATO is prepared to counter cyberattacks waged against the alliance or its members.

Much like America’s nuclear capabilities, the formal declaration of cyber support can help serve as a military deterrent to other nations and adversaries.

The U.S. has, for some time, considered cyber as a warfighting domain, much like air, sea, space and ground operations. In recent weeks the Pentagon released a new cybersecurity strategy that maps out a more aggressive use of military cyber capabilities. And it specifically calls out Russia and China for their use of cyberattacks.

China, it said, has been “persistently” stealing data from the public and private sector to gain an economic advantage. And it said Russia has use cyber information operations to “influence our population and challenge our diplomatic processes.” U.S. officials have repeatedly accused Moscow of interfering in the 2016 elections, including through online social media.

“We will conduct cyberspace operations to collect intelligence and prepare military cyber capabilities to be used in the event of a crisis or conflict,” the new strategy states, adding that the U.S. is prepared to use cyberwarfare along with other military weapons against its enemies when needed, including to counter malicious cyber activities targeting the country. Read more here.

Not to be left out is North Korea.

The Department of Homeland Security, the Department of the Treasury, and the Federal Bureau of Investigation have identified malware and other indicators of compromise used by the North Korean government in an ATM cash-out scheme—referred to by the U.S. Government as “FASTCash.” The U.S. Government refers to malicious cyber activity by the North Korean government as HIDDEN COBRA.

For more information, see:

Yup, in closing…..we agree with General Petraeus….it is long overdue to go big and go NOW.

Senator Feinstein’s Loyalty to China First

Now, this is the woman that concocted the while Dr. Ford v. Brett Kavanaugh chaos event in Washington DC and refused to hand that pesky letter over to Chairman Grassley…

Personally, she should be brought up before the Senate Ethics Committee, it would be a gesture for sure but then we could have a Senate vote of no confidence in Di-Fi…another gesture, but tactics nonetheless.

Meanwhile:

Senator Cruz is not well liked by many Democrats in the Senate because he exposes them, that is if anyone is listening. It was not too long ago that Ben Shapiro published in his DailyWire that Senator Cruz proposed some legislation to rename a road and Feinstein earnestly objected. Hah, it is an interesting story found here.

Related reading: Chinese spy who defected tells all

Now, just before that, a scandal that went away real fast was that lil miss Dianne had an American aide working for the Chinese (read spy) on her payroll for years. BUT, that was not the first time the FBI came knocking on her door for much the same reason. Really you say? Yes….

Only back in 1997 as explained by the LATimes: federal investigators have detected that the Chinese government might attempt to seek favor with Feinstein. Last year, she was one of six members of Congress who received warnings from the FBI that China might try to improperly influence them through illegal campaign contributions.

The article has another interesting paragraph: At the same time, far from the spotlight, Feinstein’s husband, Richard C. Blum, has expanded his private business interests in China–to the point that his firm is now a prominent investor inside the communist nation.

For years, Feinstein and Blum have insisted that they maintained a solid “firewall” between her role as an influential foreign policy player and his career as a private investor overseas.

But such closely coinciding interests are highly unusual for major figures in public life in Washington. And now, as controversy heats up over improper foreign influence in the U.S. political process, the effectiveness of the firewall between those interests could be called into question.

Firewall eh?

SAN FRANCISCO SHANGHAI SISTER CITIES photo

Well there is this other thing in California called the ‘California Asia Business Council’. See Di-Fi’s husband in the photo?

Asia Night 203 back row in the middle

Recipients of Cal-Asia’s prestigious New Silk Road Award include: Ms. Weili Dai, President and Co-founder of Marvell Technology Group; Dr. Chong Moon Lee, Founder, Diamond Multimedia; The Asia Foundation (presented to Dr. David Arnold, President); Alexander D. Calhoun, Senior Counsel, Squire Sanders & Dempsey; Daniel K. H. Chao, Chairman of Bechtel Greater China (retired); John S. Chen, Chairman, CEO, and President of Sybase; Hon. Dianne Feinstein, US Senator; Dr. Ta-Lin Hsu founder and chairman of H&Q Asia Pacific; C. Richard Kramlich, chairman and co-founder of New Enterprise Associates; G. Paul Matthews, Founder, Matthews International Capital Management; Dr. William F. Miller, SRI International, Stanford, and Silicon Valley visionary; Hon. George P. Shultz, Former Secretary of State; Washington SyCip, Founder of SGV & Co. and “Asia’s Wise Business Owl”;   Amb. Linda Tsao Yang, former US Director, Asian Development Bank.

(Senator Feinstein got an award….firewall?)

 

Cal-Asia’s Mission
…is to promote commerce between the U.S. and Asia. We are proud to have received two awards for our efforts from the US Department of Commerce.

Other Cal-Asia News

–Foreign Direct Investment in ASEAN
–APEC Meetings for 2015 started in January in Hanoi and will culminate with the Manila summit. Meeting locations and dates: APEC Events Calendar. General info on APEC outcomes, plans: http://www.apec.org/

EXIM BANKReport to the U.S. Congress on the Export-Import Bank of the United States and global export credit competition, 2014
–OECD list of export credit agencies
Asian ExIm Banks

Ah, but there is more:

SAN FRANCISCO, May 4, 2017 — Richard C. Blum, founder and chairman of Blum Capital Partners, delivers remarks at Asia Society Northern California’s Fourteenth Annual Dinner.

Going back to 2009 and swell company here at this event:

April 23, 2009 – Blum Center Groundbreaking with Vice President Al Gore. (Peg Skorpinski)The groundbreaking ceremony for the new home of the Blum Center will take place on Thursday, April 23 at 1:30 pm PST – with Center Founder and UC Regents Chair Richard C. Blum joined by Former Vice President Al Gore, UC Berkeley Chancellor Robert Birgeneau, College of Engineering Dean S. Shankar Sastry, and University of California President Mark Yudof. The ceremony will be followed by a reception where faculty and students will present a wide range of innovations aimed at making lasting change for the nearly three billion people that live on less than two dollars a day.

That Center is for developing countries like China….really? Yup…interesting, there are more friends…

Four years ago, Mr. Blum founded the Global Economy and Development Center at The Brookings Institution and the Brookings Blum Roundtable Conference, to develop policy research and new strategies to alleviate poverty. He is also a trustee and a member of the executive committee of The Carter Center, founded by former President Jimmy Carter, and serves on the boards of William J. Clinton Foundation and The Wilderness Society.

More?

Feinstein and Shanghai Mayor Jiang Zemin reportedly visited each other regularly in the 1980s, with Jiang once spending Thanksgiving in San Francisco with Feinstein and her husband. Jiang supposedly danced with Feinstein during one such visit, which surely must have been a propaganda coup for the CCP a la Ted Kennedy and the Soviets.

The Federalist has an interesting summary, yet this stuck out:

In a June 2010 interview with the Wall Street Journal covering a trip to China in which she met with old pals Jiang and former premier Zhu Rongji, Feinstein seemed to further downplay and even alibi the Tiananmen Square massacre:

I think that was a great setback for China in the view of the world. And I think China has also – as we would – learned lessons from it.

It just so happens I was here after that and talked to Jiang Zemin and learned that at the time China had no local police. It was just the PLA [People’s Liberation Army]. And no local police that had crowd control. So, hence the tanks.

Clearly none of that made good sense. But that’s the past. One learns from the past. You don’t repeat it. I think China has learned a lesson.

That year, Feinstein also challenged the Obama administration’s $6.4 billion arms sale to Taiwan, calling it a “substantial irritant” to U.S.-China relations. Be sure and read all of Ben Weingarten’s piece here.

Equifax had Evidence of Chinese Espionage Before the Hack

Fascinating that there is always more to the story. Remember, this was/is confidential and personal data. Further, Alibaba is a Chinese international holding company that is a counterpart to Amazon and specializes in artificial intelligence based in Hangzhou, China.

The General Accounting Office issued a report on Equifax. The GAO analysis detailed the steps Atlanta-based Equifax has taken since the breach to prevent similar attacks in the future. Last year, hackers had found a vulnerability in Equifax servers that gave them access to customer login credentials.

The report said the hackers hid in Equifax’s system for more than two months and mined data for credit card numbers, drivers licenses and social security numbers. The breach led the agency to make $200 million in security upgrades.

WSJ: Two years before Equifax Inc. stunned the world with the announcement it had been hacked, the credit-reporting company believed it was the victim of another theft, only this time at the hands of Chinese spies, according to people familiar with the matter.

In the previously undisclosed incident, security officials feared that former employees had removed thousands of pages of proprietary information before leaving and heading to jobs in China. Materials included code for planned new products, human-resources files and manuals.

Equifax went to the Federal Bureau of Investigation and the Central Intelligence Agency. Investigators from the company and the FBI came to view events at Equifax as potentially a huge theft of data—not of consumers’ personal data, as happened with the subsequent 2017 hacking of Equifax’s files, but of confidential business information.

Equifax security officials briefed the then-chief executive, Richard Smith, at a fall 2015 meeting, spreading high stacks of paper across the length of the boardroom table. The voluminous printouts represented what they feared was stolen. Adding to suspicions, the Chinese government had recently asked eight companies to help it build a national credit-reporting system.

At one point, Equifax grew so worried it began building a way to monitor the computer activity of all of its ethnic-Chinese employees, according to people familiar with the investigation. The resource-heavy project, which raised legal concerns internally, was short-lived.

Some investigators believed Equifax’s intense focus on the matter contributed to a delay in the company’s understanding the extent of the 2017 hack of consumers’ information, an event that hammered Equifax’s stock, cost some executives their jobs, including Mr. Smith, and damaged the company’s reputation.

Ultimately, the previously undisclosed investigation undertaken by the FBI stalled. The FBI wanted to pursue a criminal case, believing the theft of trade secrets costs the U.S. hundreds of billions of dollars a year, with China the leading offender, said people familiar with the investigation. Equifax began to worry about legal exposure and how onerous the inquiry could become, according to these people, and eventually reduced its cooperation with law enforcement.

That left many of the questions raised by the investigation, both about Equifax and about China, unresolved.

This account of the events at Equifax is based on people familiar with the investigation.

Equifax, in a written statement, said it became aware in 2015 of “efforts by a former employee to obtain company information, and launched an internal investigation into his activities.” The company “brought the investigation to the attention of U.S. law enforcement authorities and cooperated with the federal agencies,” Equifax said.

“Although this individual had improperly obtained proprietary Equifax information,” the statement said, “the information we determined was accessed was general in nature and not material or harmful to Equifax, consumers or our business clients.” Equifax said the company has “no evidence to suggest that consumer data or other personal information was compromised, or that this individual targeted this type of information.”

Equifax didn’t address in its statement whether it thought other employees were involved. A person familiar with the company’s thinking disputed the notion that Equifax reduced its cooperation with law enforcement in a probe it had itself triggered.

Representatives of the FBI and CIA declined to comment. The Chinese Embassy in Washington didn’t respond to requests for comment.

One of the former employees Equifax and the FBI investigated in connection with a possible business-information theft was Daniel Zou, who worked in Toronto. The company he joined in China was Ant Financial, a fast-growing financial-technology affiliate of Alibaba Group Holding Ltd. , founded by billionaire Jack Ma.

Both Ant and Mr. Zou denied any involvement in taking proprietary Equifax data. Alibaba referred questions to Ant.

Ant, based in Hangzhou, China, said it “has never used Equifax code, scripts or algorithms in the development of its own products and services.”

Mr. Zou, in a sworn statement provided by his lawyer, said, “I deny that I worked with or consulted with a network of Equifax colleagues to steal Equifax code for Ant Financial or that I provided any such code to Ant Financial.”

Interviewed by The Wall Street Journal in Washington, Mr. Zou, a 35-year-old Chinese-born Canadian citizen who graduated from the University of Toronto, repeated his denial and said that learning from the Journal of Equifax’s suspicions had been “a nightmare.”

Those suspicions arose in 2015, a few months after Mr. Zou left his job as an Equifax product manager to join Ant’s new credit-scoring business, which is known as Sesame Credit in English. Ant was among the companies asked by China’s central bank to develop credit-scoring services. Sesame launched its service in January 2015, several months before Mr. Zou came aboard.

Equifax’s data-loss prevention system, which guards against sensitive information leaving the corporate network, flagged the activities of Mr. Zou, according to people familiar with the investigation. The system alerted that an employee might have taken data off the network, and initially registered it as benign, they said.

Mr. Zou said in his interview with the Journal that, according to his understanding of how the system works, it would warn the person removing the data on the spot. He said he never received such a warning. Equifax declined to say whether that is how the system works or whether Mr. Zou received a warning.

At the same time, Equifax officials also had suspicions about a different employee, in another city. Equifax’s security chief, Susan Mauldin, approached the FBI with a question: What would it look like if we were being targeted by China?

FBI officials told her that in one common technique, a group makes plans to visit a company’s office to pitch a partnership, then at the last minute replaces delegation members with spies.

Around this time, a delegation from a Chinese business visited Equifax and swapped out some members at the last minute, fueling Equifax’s suspicions it was a target.

Company security officials decided to examine Mr. Zou’s computer activity. They discovered he had printed out thousands of pages of company information. The material related to the way credit scores are obtained, what different pieces of data mean and how to apply algorithms to assess troves of data, according to the people familiar with the investigation. They said some was information that could help explain products Equifax was working on.

At around the same time they were examining Mr. Zou’s systems, investigators discovered what they believed to be a major infiltration campaign. They found that other employees had sent code to their personal email accounts and uploaded it to software-development platforms others could access.

According to the people familiar with the probe, the investigators, by talking to Equifax employees and examining email accounts and LinkedIn messages sent to them, saw indications that recruiters purporting to represent Ant affiliate Alibaba had offered to triple salaries for certain ethnically Chinese Equifax employees—and provided instructions on specific Equifax information they should bring along if they jumped ship.

The investigators saw, as well, that Mr. Zou had searched the Equifax human-resources system to look up data analytics teams in the U.S. He had printed out contact information for many ethnic-Chinese employees, according to people familiar with the probe. They said some of those employees told colleagues they were later contacted by recruiters who claimed to be working on behalf of Alibaba.

The investigators found notes on Chinese messaging service WeChat in which another group of Equifax employees in North America, using their company-issued phones, arranged off-hours meetings to discuss work projects and left the company soon after, saying they were going to Ant or Sesame for big raises.

Ant said Mr. Zou is the only former Equifax employee it has hired since it began collecting employment history information in 2011. Ant said Mr. Zou began at its credit-scoring business in May 2015. It listed a five-figure starting salary for Mr. Zou and said he wasn’t promised any large bonuses.

Ant said it didn’t “directly or indirectly through third-party recruiters” encourage job applicants to steal Equifax information. Ant prohibits employees and recruiters from requesting such activity, the company said, adding that third-party recruiters aren’t authorized to make job offers on its behalf.

Ant said it hadn’t been contacted by Equifax or any government investigators about such matters. After receiving an inquiry from the Journal about Mr. Zou, Ant said, it investigated his information-technology activities and found no evidence he had ever provided Ant with any Equifax code, scripts or algorithms.

Mr. Zou said he worked in marketing and didn’t have access to Equifax code, algorithms and other proprietary information; never took any to Ant; wasn’t asked to; and never encouraged others to.

“I deny that I searched an internal Equifax human resources database to recruit Equifax employees to join Ant Financial,” Mr. Zou said in the sworn declaration provided by a lawyer. “I further deny that I printed contact information for ethnic-Chinese Equifax employees as part of an effort to recruit such employees to join Ant Financial.”

In the Journal interview, Mr. Zou said, “I think [where] this might come from is that during my time at Equifax I had a habit of sending work-related documents to my own email so that I could work at home. If any of those contain [any] of what they call the alleged proprietary information, right after I left Equifax and before I went back to China, I deleted them all. And I did not share that with anybody.”

If investigators were alarmed by his email practices, Mr. Zou said, “I think that’s a huge misunderstanding.”

Mr. Zou also said he printed out employee contact information for projects that required him to work with global colleagues. “Equifax Canada did not want to reinvent the wheel from beginning,” he said, “so my job was to piggyback the success case” from the company’s U.S., U.K. and Latin American regions.

He said he disposed of all the documents before moving to China and joining Ant, and he denied targeting any ethnicity. “If you search a data analytics team, the likelihood is high that you will reach a Chinese employee,” he said.

Mr. Zou said he had never been contacted by Equifax or any government authorities about data theft, and learning he was suspected caused him “emotional turmoil.”

Although Equifax had gone to the FBI—and although the bureau was eager to pursue the matter—Equifax officials by the middle of 2016 had grown wary of providing more information to federal investigators.

Equifax worried that doing so could trigger requirements under securities law for disclosure of material information, said the people familiar with the investigation. They said Equifax also was concerned that handing over access to its entire network, including international operations, as the FBI had requested, could run afoul of obligations in some countries where Equifax operates.

Around the middle of 2016, Equifax told its internal investigators to comply with any potential subpoenas but to stop proactively providing information to law enforcement, said the people familiar with the investigation.

The person familiar with Equifax who disputed the notion the company directed employees to be uncooperative said: “As the investigation progressed, we did ask that requests for information be passed through our legal office to ensure we were adhering to standard legal protocols.”

Equifax continued to monitor certain employees through 2016 and 2017. It eventually confronted several ethnically Chinese employees over activities found in its investigation, who left before the company took further action, according to people familiar with the probe.

FBI officials in Atlanta got the impression from Equifax’s then-CEO, Mr. Smith, and legal staff that the company didn’t believe it generally had information valuable enough to be the target of a major Chinese campaign.

Mr. Smith told colleagues even if thieves had taken code, they didn’t have Equifax’s consumer data, which meant the theft wouldn’t pose a competitive threat. Moreover, Equifax didn’t see a material impact on current operations because the information that appeared to have been stolen related to products in development, not to existing ones.

The U.S. attorney’s office in Atlanta ultimately determined it didn’t have evidence the suspected thefts were directed by the Chinese government, a top priority for law enforcement. The prosecutors decided they wouldn’t pursue a case against any individual, since Equifax wasn’t eager to do so, and since what former employees were suspected of taking was corporate information, rather than anything directly affecting U.S. consumers.

The U.S. attorney’s office declined to comment.

Then, in September 2017, came blockbuster news from Equifax: the disclosure that a hacking of its files had exposed highly sensitive personal data on more than 140 million Americans.

Equifax had learned six months earlier, in March 2017, of a software vulnerability, but waited months to fully check its encrypted traffic to see whether it had been breached. Only in July 2017 did Equifax realize the hack had exposed personal information, including Social Security numbers and dates of birth, of nearly half the U.S. population.

This delay was partially due to Equifax’s failure to resolve a dispute between its technology and information-security staffs at a time when top security people were focused on possible infiltration from China, in the opinion of some of the people familiar with the investigation.

The person familiar with Equifax’s thinking said the hack involved both human error and technological failure, and Equifax has been forthcoming about the causes.

In the weeks following the disclosure of that giant 2017 breach, Mr. Smith resigned, as did Ms. Mauldin and Equifax’s chief information officer, David Webb. All either couldn’t be reached or didn’t respond to requests for comment.

In January 2018, Chinese officials rolled out a state-backed credit-scoring company and gave Ant Financial an 8% stake.

Mr. Zou has returned to Canada. Ant transferred him from Sesame Credit to its Alipay international business unit in Hangzhou in mid-2017. On June 1 of this year, he moved to Alipay Canada in Vancouver.