Chinese state-owned enterprises 'hired' military hacking unit

The DOJ's indictment describes how hackers transferred stolen data to Chinese enterprises

Huang Zhenyu, one of five men charged with infiltrating U.S. organizations, is accused of creating a secret database to hold stolen data for a state-owned enterprise in China.

Huang Zhenyu, one of five men charged with infiltrating U.S. organizations, is accused of creating a secret database to hold stolen data for a state-owned enterprise in China.

A U.S. criminal indictment against Chinese Army personnel over alleged hacking describes how stolen intellectual property was funneled to Chinese companies, an unresolved question for analysts.

In the first legal action of its kind, federal prosecutors charged five members of Chinese Army signals intelligence Unit 61398 with stealing nuclear, solar power and steel trade secrets from six U.S. organizations over eight years. China denies the accusations.

Unit 61398's activities have long been observed by computer security experts. It was publicly identified as "Advanced Persistent Threat 1" (APT1) in a February 2013 report from Mandiant, a company now owned by security firm FireEye, as one of many military-affiliated groups in China running sophisticated intrusion campaigns.

Although Mandiant revealed in great detail how the hackers operated, a mystery remained, said Richard Bejtlich, chief security strategist for FireEye and nonresident senior fellow at the Brookings Institution. How is the stolen intellectual property transferred to state-owned enterprises?

The third page of the indictment shows the U.S. Department of Justice may have figured it out.

"For example, one SOE [state-owned enterprise] involved in trade litigation against some of the American victims mentioned herein hired the unit, and one of the co-conspirators charged herein, to build a 'secret' database to hold 'corporate' intelligence," the indictment alleges.

That is "remarkable," Bejtlich said in a phone interview Monday. "That's like Alcoa hiring the NSA."

Bejtlich, a former U.S. Air Force intelligence officer, said analysts had theorized members of China's Communist Party who are on the boards of various companies had facilitated the transfers. The indictment would indicate a more business-like relationship.

"This is a new angle," Bejtlich said.

One of the men charged in the indictment, Huang Zhenyu, is alleged to have done programming work for what is identified as "state-owned enterprise 2" between 2006 and 2009.

Part of that work included "the creation of a 'secret' database for SOE-2 designed to hold 'corporate' intelligence about the iron and steel industries, including information about American companies," the indictment reads.

FireEye continues to track Unit 61398. After Mandiant issued its report, the unit laid low and discarded much of its command-and-control infrastructure, which was its network of hacked computers used to stage attacks, Bejtlich said.

By the end of last year, the group rebuilt its command-and-control infrastructure, staying somewhat quiet but still targeting U.S. companies with phishing emails, Bejtlich said.

"We have not seen the Chinese back down on any of this activity," he said. "And that's what kind of interesting -- will we see something like that now? I highly doubt it, but we will be watching."

Send news tips and comments to Follow me on Twitter: @jeremy_kirk

Join the CSO newsletter!

Error: Please check your email address.

Tags CriminalU.S. Department of Justicesecuritylegalmalwarecybercrime

More about AdvancedAlcoa AustraliaDepartment of JusticeFireEyeNSA

Show Comments

Featured Whitepapers

Editor's Recommendations

Solution Centres

Stories by Jeremy Kirk

Latest Videos

  • 150x50

    CSO Webinar: The Human Factor - Your people are your biggest security weakness

    ​Speakers: David Lacey, Researcher and former CISO Royal Mail David Turner - Global Risk Management Expert Mark Guntrip - Group Manager, Email Protection, Proofpoint

    Play Video

  • 150x50

    CSO Webinar: Current ransomware defences are failing – but machine learning can drive a more proactive solution

    Speakers • Ty Miller, Director, Threat Intelligence • Mark Gregory, Leader, Network Engineering Research Group, RMIT • Jeff Lanza, Retired FBI Agent (USA) • Andy Solterbeck, VP Asia Pacific, Cylance • David Braue, CSO MC/Moderator What to expect: ​Hear from industry experts on the local and global ransomware threat landscape. Explore a new approach to dealing with ransomware using machine-learning techniques and by thinking about the problem in a fundamentally different way. Apply techniques for gathering insight into ransomware behaviour and find out what elements must go into a truly effective ransomware defence. Get a first-hand look at how ransomware actually works in practice, and how machine-learning techniques can pick up on its activities long before your employees do.

    Play Video

  • 150x50

    CSO Webinar: Get real about metadata to avoid a false sense of security

    Speakers: • Anthony Caruana – CSO MC and moderator • Ian Farquhar, Worldwide Virtual Security Team Lead, Gigamon • John Lindsay, Former CTO, iiNet • Skeeve Stevens, Futurist, Future Sumo • David Vaile - Vice chair of APF, Co-Convenor of the Cyberspace Law And Policy Community, UNSW Law Faculty This webinar covers: - A 101 on metadata - what it is and how to use it - Insight into a typical attack, what happens and what we would find when looking into the metadata - How to collect metadata, use this to detect attacks and get greater insight into how you can use this to protect your organisation - Learn how much raw data and metadata to retain and how long for - Get a reality check on how you're using your metadata and if this is enough to secure your organisation

    Play Video

  • 150x50

    CSO Webinar: How banking trojans work and how you can stop them

    CSO Webinar: How banking trojans work and how you can stop them Featuring: • John Baird, Director of Global Technology Production, Deutsche Bank • Samantha Macleod, GM Cyber Security, ME Bank • Sherrod DeGrippo, Director of Emerging Threats, Proofpoint (USA)

    Play Video

  • 150x50

    IDG Live Webinar:The right collaboration strategy will help your business take flight

    Speakers - Mike Harris, Engineering Services Manager, Jetstar - Christopher Johnson, IT Director APAC, 20th Century Fox - Brent Maxwell, Director of Information Systems, THE ICONIC - IDG MC/Moderator Anthony Caruana

    Play Video

More videos

Blog Posts