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Chinese hackers developed pipeline into US computers

Eluded detection last year as they shifted strategy

NEW YORK — For more than five years, US intelligence agencies followed several groups of Chinese hackers who were systematically draining information from defense contractors, energy firms, and electronics makers, their targets shifting to fit Beijing’s latest economic priorities.

But last summer, officials lost the trail as some of the hackers changed focus again, burrowing deep into US government computer systems that contain vast troves of personnel data, according to US officials briefed on a federal investigation into the attack, and private security experts.

Undetected for nearly a year, the Chinese intruders executed a sophisticated attack that gave them “administrator privileges” into the computer networks at the Office of Personnel Management, mimicking the credentials of people who run the agency’s systems, two senior administration officials said.

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The hackers began siphoning out a rush of data after constructing what amounted to an electronic pipeline that led back to China, investigators told Congress last week in classified briefings.

Much of the personnel data had been kept in the lightly protected systems of the Interior Department because it had cheap storage space available.

The hackers’ ultimate target: the 1 million or so federal employees and contractors who have filled out a form SF-86, which details personal, financial, and medical histories, in seeking a security clearance.

“This was classic espionage, just on a scale we’ve never seen before from a traditional adversary,” one senior administration official said. “And it’s not a satisfactory answer to say, ‘We found it and stopped it,’ when we should have seen it coming years ago.”

The administration is urgently working to determine what other agencies are storing similarly sensitive information with weak protections.

Officials would not identify their top concerns, but an audit issued early last year, before the Chinese attacks, harshly criticized lax security at the Internal Revenue Service, the Nuclear Regulatory Commission, the Energy Department, the Securities and Exchange Commission, and the Department of Homeland Security, which has responsibility for securing the nation’s critical networks.

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At the Nuclear Regulatory Commission, details about crucial components were left on unsecured network drives, and the agency lost track of laptops with critical data.

Computers at the IRS allowed employees to use weak passwords like “password.” One report detailed 7,329 “potential vulnerabilities” from software patches not being installed.

At an Aspen Institute event Tuesday in Washington, Lisa Monaco, President Obama’s homeland security adviser, blamed out-of-date “legacy systems” that have not been updated for a modern, networked world where remote access is routine. The systems are not continuously monitored to know who is online, and what kind of data they are shipping out.

In congressional testimony and in interviews, officials investigating the breach at the personnel office have struggled to explain why the defenses were so poor for so long.

Last week, the office’s director, Katherine Archuleta, faced two hours of questioning at a congressional hearing. She was unable to say why the agency did not follow through on inspector general reports, dating to 2010, that found severe security lapses and recommended shutting down systems with security clearance data.

When she failed to explain why much of the system’s information was not encrypted — something that is standard today on iPhones, for example
— Representative Stephen F. Lynch, a Massachusetts Democrat who usually backs Obama’s initiatives, spoke out.

“I wish that you were as strenuous and hard-working at keeping information out of the hands of hackers,” he said, “as you are keeping information out of the hands of Congress and federal employees.”

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Federal and private investigators piecing together the attacks now say they believe the same groups responsible for the attacks on the personnel office and the contractor had previously intruded on computer networks at health insurance companies, notably Anthem Inc. and Premera Blue Cross.

What those attacks had in common was the theft of millions of pieces of valuable personal data — including Social Security numbers — that have never shown up on black markets, where such information can fetch a high price. That could be an indicator of state sponsorship, according to James A. Lewis, a cybersecurity expert at the Center for Strategic and International Studies think tank in Washington.

While Obama publicly named North Korea as the country that attacked Sony Pictures Entertainment last year, he and his aides have described the Chinese hackers in the government records case only to Congress in classified hearings.

Blaming the Chinese in public could affect cooperation on limiting the Iranian nuclear program and tensions with China’s Asian neighbors. But the subject is bound to come up this week when senior Chinese officials meet in Washington for an annual strategic and economic dialogue.