China did Not Hack OPM, Operative Just Signed In

Posted on June 17, 2015June 17, 2015 by Denise Simon

Per ARS Technica: Not only were the database records of POM not encrypted, it simply did not matter. At least 14 million personnel files have been compromised and protecting social security numbers by encryption did not mater.

But even if the systems had been encrypted, it likely wouldn’t have mattered. Department of Homeland Security Assistant Secretary for Cybersecurity Dr. Andy Ozment testified that encryption would “not have helped in this case” because the attackers had gained valid user credentials to the systems that they attacked—likely through social engineering. And because of the lack of multifactor authentication on these systems, the attackers would have been able to use those credentials at will to access systems from within and potentially even from outside the network.

House Oversight Chairman Jason Chaffetz (R-Utah) told Archuleta and OPM Chief Information Officer Donna Seymour, “You failed utterly and totally.” He referred to OPM’s own inspector general reports and hammered Seymour in particular for the 11 major systems out of 47 that had not been properly certified as secure—which were not contractor systems but systems operated by OPM’s own IT department. “They were in your office, which is a horrible example to be setting,” Chaffetz told Seymour. In total, 65 percent of OPM’s data was stored on those uncertified systems.’

Even more chilling, a person or team just found a way to sign in as a root user.

Some of the contractors that have helped OPM with managing internal data have had security issues of their own—including potentially giving foreign governments direct access to data long before the recent reported breaches. A consultant who did some work with a company contracted by OPM to manage personnel records for a number of agencies told Ars that he found the Unix systems administrator for the project “was in Argentina and his co-worker was physically located in the [People’s Republic of China]. Both had direct access to every row of data in every database: they were root. Another team that worked with these databases had at its head two team members with PRC passports. I know that because I challenged them personally and revoked their privileges. From my perspective, OPM compromised this information more than three years ago and my take on the current breach is ‘so what’s new?'”

Given the scope and duration of the data breaches, it may be impossible for the US government to get a handle on the exact extent of the damage done just by the latest attack on OPM’s systems. If anything is clear, it is that the aging infrastructure of many civilian agencies in Washington magnify the problems the government faces in securing its networks, and OPM’s data breach may just be the biggest one that the government knows about to date.

Future consequences of lack of security of data systems is blackmail

Reuters: The same hackers breached several health insurance companies last summer and made off with the medical records of 11 million people, including members of Blue Cross/Blue Shield’s District of Columbia affiliate CareFirst.

Media pundits spent all week talking about how Deep Panda could compile all this information to craft a potential blackmail database on U.S. operatives for its patron, presumably China. But that’s ridiculous. Beijing is smarter than that.

Espionage is a long game, not a race, and countries are patient. Blackmail is a quick, brutal method of acquiring information in the short term.

It typically begins when foreign agents play on a target’s existing weakness — a penchant for gambling, for example, or deviant sexual behavior — enticing the target to indulge in it and then threatening exposure.

That’s a lot of work for a short-term gain. Blackmail targets are almost always found out, or turn on their blackmailers or end their lives. No, a better use for that database is as a reference to create the background for the perfect mole. Many additional details found here.

An additional security concern of real proporations is this cyber intrusion has affected Hill and Congressional staff.

In Part from the Hill: Officials had initially said the breach only encompassed 4.2 million federal employees, all within the executive branch. But the discovery of a second breach that compromised security clearance data has many expecting the breach to eventually expose up to 14 million people.

According to an email sent to House staff members shortly before midnight Tuesday and obtained by The Hill, many of them are at risk.

“It now appears likely that the service records of current House employees employed previously by ANY federal government entity (including the House, if an individual left the House and later returned to a House position) may have been compromised,” said the email said, sent by House Chief Administrative Officer Ed Cassidy.

When staffers leave Capitol Hill, or any federal agency, their retirement records are forwarded to the OPM.

“In addition, the background investigation files of individuals holding security clearances (whether currently active or not) may have been exposed,” the email added.

Senate staffers received a similar email from the Senate Sergeant at Arms several hours earlier on Tuesday, according to multiple reports.

WalMart has a Secret Global Operation

Posted on June 17, 2015June 17, 2015 by Denise Simon

In 2013, WalMart announced an ‘All American’ objective….yet there are other truths.

Wal-Mart Stores Inc will buy an additional $50 billion in U.S.-made goods over the next decade in areas like sporting goods and high-end appliances in what the world’s largest retailer called a bid to help boost the U.S. economy. Wal-Mart, the largest private employer in the United States, also said on Tuesday it plans to hire 100,000 newly discharged veterans over the next five years, at a time when the U.S. unemployment rate is at 7.8 percent.

The moves are likely to receive a cool reception from critics, who claim Wal-Mart does not pay its workers enough and slam the retailer for selling too many goods made in lower-cost countries like China. The company is also under pressure over its sourcing practices, particularly after a deadly fire at a Bangladesh factory that made Wal-Mart clothes.

Then Walmart went all in with China.

But WalMart is fully offshore hiding monies for tax purposes…what would Barack Obama say?

Wal-Mart Has $76 Billion in Undisclosed Overseas Tax Havens

Wal-Mart Stores Inc. owns more than $76 billion of assets through a web of units in offshore tax havens around the world, though you wouldn’t know it from reading the giant retailer’s annual report. A new study has found Wal-Mart has at least 78 offshore subsidiaries and branches, more than 30 created since 2009 and none mentioned in U.S. securities filings. Overseas operations have helped the company cut more than $3.5 billion off its income tax bills in the past six years, its annual reports show. The study, researched by the United Food & Commercial Workers International Union and published Wednesday in a report by Americans for Tax Fairness, found 90 percent of Wal-Mart’s overseas assets are owned by subsidiaries in Luxembourg and the Netherlands, two of the most popular corporate tax havens.

Units in Luxembourg — where the company has no stores — reported $1.3 billion in profits between 2010 and 2013 and paid tax at a rate of less than 1 percent, according to the report. All of Wal-Mart’s roughly 3,500 stores in China, Central America, the U.K., Brazil, Japan, South Africa and Chile appear to be owned through units in tax havens such as the British Virgin Islands, Curacao and Luxembourg, according to the report from the advocacy group. The union conducted its research using publicly available documents filed in various countries by Wal-Mart and its subsidiaries. Randy Hargrove, a Wal-Mart spokesman, called the report incomplete and “designed to mislead” by its union authors. He said the company has “processes in place to comply with applicable SEC and IRS rules, as well as the tax laws of each country where we operate.”

Mailbox Subsidiaries

The union behind the study backs the Organization United for Respect at Wal-Mart, a group that campaigns for wage increases and more predictable schedules. Wal-Mart has historically resisted unions and discourages employees from joining them. The report comes a week after the Group of Twenty nations unveiled its latest effort to combat multinational corporate tax avoidance. The body wants companies to disclose to regulators where they book profits, employees and sales, so tax authorities can be aware of discrepancies between where corporations report income and where they have operations. Hargrove, the Wal-Mart spokesman, pointed to guidance issued by the SEC that permits companies to avoid disclosure of subsidiaries with significant “intercompany transactions.” He said Wal-Mart’s tax savings overseas was driven by lower rates in markets including Canada and the U.K.

‘Continuing Evidence’

Companies such as Google Inc., Apple Inc. and Starbucks Corp. have come under fire for avoiding billions of dollars of income taxes by attributing profits to mailbox subsidiaries in low-tax jurisdictions like Bermuda. The Group of Twenty has directed the Organization for Economic Cooperation and Development to develop plans to crack down on such strategies. The new Wal-Mart disclosures could expand the scope of international tax reform, which has often focused on technology companies that move profits offshore by assigning valuable patent rights to mailbox units. Bloomberg News reported last year that Inditex SA, the parent of Zara, the world’s biggest fashion retailer, cut its taxes by shifting billions of dollars of profits to a tiny Dutch unit. “This report is continuing evidence that everybody has been engaging in cross-border tax avoidance,” said Stephen E. Shay, a professor at Harvard Law School and former deputy assistant secretary for international tax affairs for the Obama Treasury Department.

Hybrid-Loan Strategy

Nearly a decade ago, Wal-Mart ran into trouble over strategies to avoid U.S. state income taxes. It used a real estate investment trust to effectively pay rent to itself, generating big tax deductions, even though the rent payments never left the company. At least six states changed their tax laws after publicity about the tactics. Since then, Wal-Mart has stepped up its use of offshore tax havens. It has created 20 new subsidiaries in Luxembourg alone since 2009, according to the report. Wal-Mart employs a popular legal strategy in that country called a hybrid loan. It permits companies’ offshore units to take tax deductions for interest paid — typically on paper only — to their parents in the U.S. The parent, however, doesn’t include that interest as taxable income in the U.S. The OECD has called for an end to the tax benefits of such loans. Luxembourg generated headlines last year after the International Consortium of Investigative Journalists revealed its role in cutting the tax bills of hundreds of multinationals.

Union Funding

U.S. companies owe tax at a rate of 35 percent but can defer indefinitely the income taxes on profits attributed to overseas units. In 2011, Wal-Mart’s then-chief executive officer, Mike Duke, called in testimony before Congress for a system that would exempt from U.S. income tax the earnings that multinationals generate overseas. Wal-Mart’s accumulated offshore earnings have doubled to $23.3 billion in 2015 from $10.7 billion 2008. The company operates about 6,300 stores in 27 countries outside the U.S. and last fiscal year reported 28 percent of its sales abroad, or about $137 billion. Wal-Mart paid $6.2 billion in U.S. income tax last year, Hargrove, the company spokesman, said, or “nearly 2 percent of all corporate income tax collected by the U.S. Treasury.” Americans for Tax Fairness called on the European Union to open investigations into whether the Luxembourg tax benefits constitute illegal state aid. The EU has issued preliminary findings that this was indeed the case with companies using similar strategies in various countries, including as Starbucks in the Netherlands, Apple in Ireland and Fiat SpA in Luxembourg. The tax group receives most of its funding from foundations, including the Ford Foundation, Open Society Foundations, Bauman Foundations and Stoneman Family Foundation. It’s also funded by public-sector unions, including the American Federation of State, County and Municipal Employees and the National Education Association.

Russia China Pact with Snowden in the Middle

Posted on June 13, 2015June 13, 2015 by Denise Simon

Going beyond the major hack by China into the Office of Personnel Management that cultivated at least 14 million personnel files of government, intelligence and military, China is building a database of individuals in America. Would they share it with Russia? The wake of destruction is yet to be known and future predictions are impossible to imagine.

Russia is turning to China and likewise China is delighted for the relationship as proven by the Silk Road Economic objectives.

Putin’s vision of a ‘greater Europe’ from Lisbon to Vladivostok, made up of the European Union and the Russian-led Eurasian Economic Union, is being replaced by a ‘greater Asia’ from Shanghai to St. Petersburg.

China's silk road

In part:

The rupture between Russia and the West stemming from the 2014 crisis over Ukraine has wide-ranging geopolitical implications. Russia has reverted to its traditional position as a Eurasian power sitting between the East and the West, and it is tilting toward China in the face of political and economic pressure from the United States and Europe. This does not presage a new Sino-Russian bloc, but the epoch of post-communist Russia’s integration with the West is over. In the new epoch, Russia will seek to expand and deepen its relations with non-Western nations, focusing on Asia. Western leaders need to take this shift seriously.

Russia’s Pivot to Asia
Russia’s pivot to Asia predates the Ukraine crisis, but it has become more pronounced since then. This is in part because China is the largest economy outside of the coalition that has imposed sanctions on Russia as a result of the crisis.

What was originally Moscow’s “marriage of convenience” with Beijing has turned into a much closer partnership that includes cooperation on energy trade, infrastructure development, and defense.

Putin’s vision of a “greater Europe” from Lisbon to Vladivostok, made up of the European Union and the Russian-led Eurasian Economic Union, is being replaced by a “greater Asia” from Shanghai to St. Petersburg.

Russia is now more likely to back China in the steadily growing competition between Beijing and Washington, which will strengthen China’s hand.
Takeaways for Western Leaders
Russia’s confrontation with the United States will help mitigate Sino-Russian rivalries, mostly to China’s advantage. But this doesn’t mean Russia will be dominated by China—Moscow is likely to find a way to craft a special relationship with its partner.

With China’s economic might and Russia’s great-power expertise, the BRICS group (of which Russia is a part, along with Brazil, India, China, and South Africa) will increasingly challenge the G7 as a parallel center of global governance.

The Shanghai Cooperation Organization, due to include India and Pakistan this year, is on its way to becoming the principal development and security forum for continental Asia.

Through its enhanced relations with non-Western countries, Russia will actively promote a concept of world order that seeks to reduce U.S. global dominance and replace it with a broader great-power consensus. Much more detail here.

Enter Snowden

Confirmed: UK agents ‘moved over Snowden files’

Russia, China Decrypt Snowden Files

Russia and China have allegedly decrypted the top-secret cache of files stolen by whistleblower Edward Snowden, according to a report from The Sunday Times, to be published tomorrow.

The info has compelled British intelligence agency MI6 to withdraw some of its agents from active operations and other Western intelligence agencies are now actively involved in rescue operations. In a July 2013 email to a former U.S. Senator, Snowden stated that, “No intelligence service—not even our own—has the capacity to compromise the secrets I continue to protect. While it has not been reported in the media, one of my specializations was to teach our people at DIA how to keep such information from being compromised even in the highest threat counter-intelligence environments (i.e. China).” Many in the intelligence agencies at the time greeted this claim with scepticism. Now, one senior British official said Snowden had “blood on his hands,” but another said there’s yet no evidence anyone was harmed. Snowden eventually fled to Russia via Hong Kong after downloading some 1.7 million documents from U.S. government computers and leaking them to journalists out of a desire to protect “privacy and basic liberties.” The revelations of mass spying outraged populations and governments around the world, at least temporarily damaged relations, and eventually led to changes in the mass surveillance policies of the NSA and British GCHQ.

Iran Supplies Cash and Weapons to Taliban

Posted on June 12, 2015June 12, 2015 by Denise Simon

No one can say for sure if the Taliban in designated as a terror group by the United States, other countries or by the United Nations. We do know that the Obama regime has declared that hostilities with the Taliban has terminated. Depending on the day and per the White House, the Taliban has a slippery designation. All the while peace talks continue with the Taliban so, deferring to both Pakistan and Afghanistan appears to be unsettled as the peace envoys are hosted in China.

Iran reportedly stepping up shipments of arms, cash to Taliban

The Iranian government reportedly has stepped up shipments of weapons and money to the Taliban in Afghanistan in recent months.

According to The Wall Street Journal, which cited Afghan and Western officials in its report, Iran’s motivations for stepping up support for the militants are to prevent ISIS from gaining a foothold in Afghanistan and providing a check on U.S. influence ahead of the planned withdrawal of most American troops by the end of 2016.

The report quotes a Taliban fighter as saying that the militants receive weapons from smugglers paid by Iran’s government who traffic the contraband through the remote border region where Iran, Afghanistan, and Pakistan meet. Among the weapons Taliban units allegedly receive are mortars, machine guns, rifles, and rocket-propelled grenades.

Iran has repeatedly denied providing financial or military aid to the Taliban. No Iranian officials immediately commented on the Journal’s report.

Republican critics of ongoing negotiations between Western powers and Tehran over the future of Iran’s nuclear program say that Iran’s support for the Taliban, Hezbollah, and other militant groups in the Middle East would only increase thanks to the possibility of relief from sanctions have throttled the country’s economy.

“This is further evidence of the administration’s continued willful disregard for the facts on the ground in light of Iranian aggression in the region,” Sen. John McCain, R-Ariz., told the Journal.

According to the paper, a report compiled by the Pentagon in October of last year says that Iran’s elite Revolutionary Guard Corps have been delivering weapons to the Taliban since at least 2007. The relationship between Tehran and the Taliban solidified in the summer of 2013 when a Taliban delegation was invited to participate in a conference on Islam.

For the past two years, Afghan officials and the Taliban fighter tell the Journal, Iran has been operating training camps for Taliban inside its territory. At least four of the camps are currently operating.

In at least one case, Iran is even supplying fighters for the Taliban by turning to Afghan immigrants who fled to Iran to escape Afghanistan’s ongoing turmoil. One of them, the Taliban fighter quoted in the report, says he was approached by an Iranian intelligence officer after being detained for working as an illegal laborer.

“At the beginning Iran was supporting [the] Taliban financially,” a senior Afghan official tells the Journal. “But now they are training and equipping them, too.”

***

While the United States continues to advance talks with Iran, Iran betrays all pledges and integrity at the negotiation table. John Kerry and the White House are fine with that. Iran has not given up a single position or any true information as the West gives up ground each day, to what end is still not clear.

U.S. and Western diplomats say they are willing to accept a nuclear deal with Iran that doesn’t require Tehran to immediately disclose alleged work on atomic weapons prior to 2003, when the program first came to light.

After a November 2013 interim accord, the Obama administration said a comprehensive solution “would include resolution of questions concerning the possible military dimension of Iran’s nuclear program.”

But officials told the Associated Press those questions won’t be answered by the June 30 deadline for a final deal, echoing an assessment by the U.N. nuclear agency’s top official earlier this week. Nevertheless, the officials said an accord remains possible. One senior Western official on Thursday described diplomats as “more likely to get a deal than not” over the next three weeks.

Western intelligence agencies say they don’t know the extent of Iran’s alleged work on warheads, delivery systems and detonators before 2003, or if Iran persisted in covert efforts. An International Atomic Energy Agency (IAEA) investigation has been foiled for more than a decade by Iranian refusals to allow monitors to visit suspicious sites or interview individuals allegedly involved in secret weapons development.

Instead of resolving such questions this month, officials said the U.S. and its negotiating partners are working on a list of future commitments Iran must fulfill in an agreement setting decade-long curbs on Iran’s nuclear program in exchange for billions of dollars in sanctions relief.

The suspension of some sanctions would be tied to Iran finally answering all questions, giving world powers greater leverage, said the officials, who weren’t authorized to speak publicly on the private discussions and demanded anonymity.

The ‘Who’ Lobbying for the ObamaTrade Deal

Posted on June 11, 2015June 11, 2015 by Denise Simon

Hillary cant play the middle on the Trans-Pacific Partnership talks and deal, as John Podesta left the White House to work for Hillary’s campaign and yet he is a paid lobbyist for advancing the deal.

Bipartisan Agreement: Foreign Governments Pay Former Senate Leaders to Sell TPP

In a scene all too typical in present day Washington, the culmination of Trans-Pacific Partnership negotiations, along with the push for passage of related legislation such as Trade Promotion Authority (or Fast Track) have set off a lobbying frenzy.

While liberal organizations and members of Congress deride the TPP as the biggest boondoggle since NAFTA and President Obama defends it as “the most progressive trade treaty ever,” the influence peddlers who populate K Street see opportunity.

Policy makers aren’t simply facing a lobbying barrage from the typical slate of domestic interest groups. Foreign governments are running sophisticated operations to influence Congress and gather intelligence in Washington as the negotiations proceed.

This is now “par for the course,” according to Lydia Dennett, an investigator at the Project on Government Oversight [POGO], a nonprofit watchdog. “If a certain country wants trade legislation that will be beneficial to them they can hire an American lobbyist to get them the access the need.”

Leading the way among TPP nations seeking to sway American policy makers is Japan, which signed up former Democratic Leader Tom Daschle’s firm as well as well-connected public relations firm DCI.

We won’t know the full extent of Mr. Daschle or DCI’s work on behalf of Japan until their next series of Foreign Agent Registration Act [FARA] disclosure reports are filed with the Department of Justice in a few months.

One concern among good government advocates is that a lack of timely FARA reporting could obfuscate some of the lobbying going on at the behest of foreign clients. A 2014 report by POGO found that 46 percent of the reports were filed late. Enforcement is rare for these relatively minor infractions and the DOJ’s website states it “seeks to obtain voluntary compliance with the statute.” Ms. Dennett called on Congress to add civil penalties to the FARA Act that to encourage more aggressive enforcement of its statutes.

Common Cause, an open government advocacy organization, sounded similar alarms. “Our concern is in ensuring that the process is fully transparent and that the laws barring foreign nationals from contributing, donating or spending funds in connection with any federal, state, or local election in the United States, either directly or indirectly, are fully observed,” said Dale Eisman, the organization’s communications director.

While we don’t yet know the extent of Mr. Daschle or DCI’s work, filings from other firms working on behalf of Japan, paint a picture of the country’s efforts.

For much of their direct lobbying Japan relies on Akin, Gump, Strauss Hauer & Feld, whom they paid $388,000 during the most recent six-month reporting period. In that time the firm’s lobbyists contacted Congressional offices at least sixty times and engaged in at least eight exchanges with the United States Trade Representative’s office specifically focused on the TPP, TPA, and related issues. Seventeen of those contacts were with one particular staffer, Kaitlin Sighinolfi, a trade policy advisor for Republican Louisiana Congressman Charles Boustany.

Mr. Boustany’s office did not respond to a request for comment on these contacts, but they are likely related to the desire of Louisiana farmers to lower tariff barriers, enabling them to export more of goods to Japan.

Japan’s team also includes Hogan Lovells, which was paid $216,895.29 during the last six-month reporting period. The firm’s FARA filing states that the law firm “advises and represents the foreign principal [Japan] on general diplomatic representation, laws, regulations, policies, proposed congressional measures, treaties and other international agreements, and actions by the U.S. Congress, Executive Branch, U.S. Government agencies and certain state and local governments.”

Prior to recruiting Mr. Daschle, the highest profile lobbyist on Japan’s team was Tony Podesta, brother of Hillary Clinton’s campaign chairman John Podesta. His firm, The Podesta Group, receives $15,000 per month to counsel Japan on U.S. policy.

Another TPP country, Vietnam, received more hands-on service from the Podesta Group—paying them $180,000 during the same six-month period. On Vietnam’s behalf, the firm made contact with government officials at least 90 times. They also engaged with media outlets ranging from The New York Times to the Food Network on behalf of Japan.

Working at the behest of foreign governments is a lucrative practice area for the Podesta Group which billed a total of $2,096,666.05 to more than nine overseas governments, including Azerbaijan, India, Iraq, Korea, Somalia, and Hong Kong during the last six month of 2014.

Japan’s aggressive lobbying efforts in Washington are part of an overall increase in foreign nations seeking to purchase influence in Washington. According to Frank Samolis, co-chair of the international trade group at DC behemoth Squire Patton Boggs, there has been a measurable “uptick [in business under the Foreign Agent Registration Act] due to TPA and related bills in Congress.”

Mr. Samolis is a veteran of Capitol Hill trade fights. He previously worked on behalf of Korea, Columbia, and Peru during their trade negotiations with the United States. He now represents Temasek, Singapore’s Sovereign Wealth Fund, which paid his firm $132,055.72 during the last six-month filing period, as the country engaged in TPP talks.

SPB represents multiple foreign principals with an interest in the TPP including, China, which paid the firm $392,014.17 over the same period.

Mr. Samolis explained that when working on behalf of foreign powers, lobbyists “need to find a confluence with [United States government] interests wherever possible.”

“US policy makers understand that a client is foreign, so they are aware and need to be convinced how [the clients] interest comports with [United States government] objectives,” Samolis told me. “For that, we need to make a strong legal and policy case, backed up by the facts.”

Insiders like Mr. Samolis play another critical role. “At least half of my time is devoted to providing intel on US developments and likely future actions,” he stated.

This points to the reason Japan and other countries are eager to hire former senior members of Congress and well-connected insiders. The ability to glean information from former colleagues and contacts is just as important as their skill at influencing legislative and administrative outcomes. This expertise is particularly crucial during complex foreign negotiations requiring approval of a finicky and partisan Congress.

Mr. Samolis’ firm has a platoon of ex-lawmakers including former Senate Majority Leader Trent Lott, a Republican, along with former Louisiana Sen. John Breaux, a Democrat. Pocketing money from foreign governments seems to one of the few things both parties agree on.

With numerous trade treaties on the horizon, Mr. Samolis and his colleagues’ workload is only likely to increase because ultimately foreign governments spend significant amounts of money on lobbying and relate activists for the same reason that domestic corporations and other interest groups do. They know in Washington, DC influence can be bought.

*** The Unions are against the bill.

WASHINGTON – Union-backed Democrats launched a last-ditch effort Thursday to scuttle President Barack Obama’s trade agenda by sacrificing a favored program of their own that retrains workers displaced by international trade.

The retraining program is linked to the Democrats’ real target: legislation to help Obama advance multi-nation trade agreements. In hopes of bringing down the whole package, which they say imperils jobs at home, numerous House Democrats said they would vote Friday against the retraining measure.

There is bi-partisan legislators opposition on this authorization which is the first part of the vote. Read here to determine who stands where and why.