ASIO has created a unit to combat cyber spying, in the latest move by government to protect Australia’s online networks.
Known as the cyber espionage branch, it was formed in the past nine months and is believed to be under the control of ASIO’s counter-espionage and interference division.
The unit’s existence is expected to be announced by Attorney-General Robert McClelland in a speech tonight at Canberra’s National Security College.
”ASIO is … working to guard against foreign interference and espionage,” Mr McClelland will say, according to a copy of the speech provided to this website.
”This co-operation is crucial, especially to countering the threat posed by those using the internet as a modern espionage tool.”
NEW YORK – A one-time billionaire hedge fund founder tapped longtime friends who worked for public companies for secrets to earn tens of millions of dollars in illegal profits, a prosecutor told a jury Wednesday at what the government has described as the biggest hedge fund insider trading trial ever.
“Greed and corruption. That’s what this case is all about,” Assistant U.S. Attorney Jonathan Streeter told the jury in Manhattan at the start of his opening statement.
Raj Rajaratnam traded on secret information “again and again and again” between 2003 and 2009 as he operated a family of hedge funds at his New York-based hedge fund, Galleon Group LLC, Streeter said.
The trial comes more than a year after prosecutors announced that they had raised the stakes in their effort to root out corruption on Wall Street by using wiretaps for the first time on a wide scale to eavesdrop on the private conversations of insiders at public companies and at hedge funds. Too often, they said, those calls revealed insider information being passed around casually.
Rajaratnam has pleaded not guilty to securities fraud and conspiracy to commit securities fraud. The Galleon founder, who has been free on $100 million bail since his October 2008 arrest, stood up briefly as his name was mentioned when jurors entered the room for opening statements.
Defense lawyer John Dowd told the jury “the evidence will show the government has it wrong. And the government has it wrong because it believed the word of unbelievable people.”
He said the government “ignored the public record and failed to do its homework.”
Streeter told jurors they would hear Rajaratnam on secretly recorded phone calls talking about insider deals and even revealing an effort to cover them up afterwards by disguising what was known about public companies.
The prosecutor said one of those calls was with fellow employees a day after he learned in October 2008 from a board member at Goldman Sachs that the firm was going to lose money for the first time in its history as a public company.
“I heard yesterday from somebody who’s on the board of Goldman Sachs that they’re going to lose $2 a share,” Streeter said Rajaratnam told employees on the call.
The prosecutor said Wall Street had it “exactly wrong” at the time, expecting Goldman Sachs to earn a profit amidst the worst of the economic crisis.
Streeter said Rajaratnam saved millions of dollars by selling all his Goldman stock. A month earlier, he had earned close to $1 million when the same Goldman board member, Rajat Gupta, told him that Goldman had received an offer from Warren Buffett’s Berkshire Hathaway to invest $5 billion in the banking giant, Streeter said.
Gupta has not been charged criminally but has been charged civilly by the Securities and Exchange Commission.
Streeter said the jury would hear from several of the 19 people who have pleaded guilty in the probe, which resulted in more than two dozen arrests. He said they would also view phone and trading records.
This starts off as one of those quintessential American success stories. It finishes with a criminal conviction. In between is not merely a story but a life — which may well end in prison.
A Quarter of a Century on the Job
In the 1960s, Wen Chyu Liu, aka David W. Liou, came to the United States from China as a graduate student. In 1965, Liu started working as a research scientist at Dow Chemical Company’s Plaquemine, La., facility.  At Plaquemine, Liou worked on various aspects of the development and manufacture of Dow elastomers, including Tyrin CPE.
Dow is a leading producer of chlorinated polyethylene (CPE), an elastomeric polymer. Dow’s Tyrin CPE is used in a number of worldwid applications, such as automotive and industrial hoses, electrical cable jackets and vinyl siding.
By 1992, after more than a quarter of a century in Dow’s employ, Liou resigned. This should have been a time for sitting back, taking it easy, and enjoying the fruits of a lifetime of hard work. Instead, the government alleges that Liou embarked upon a second career that would take him down a very dark and twisted road.Â
Indictment
On March 24, 2005, a federal grand jury indicted Liou on 15 counts that charged him with conspiracy, receipt and possession of stolen trade secrets, wire fraud, illegal monetary transactions, and perjury. On August 22, 2006, Liou was arrested in Seattle, WA on an intercontinental flight from Taipei, Taiwan. If fully convicted on all counts, he faced up to 300 years in prison, and nearly $10 million in fines or twice his gross gain (whichever is greater).
According to the indictment, Liou conspired with at least four current and former employees of Dow’s facilities in Plaquemine and Stade, Germany, who had worked in Tyrin CPE production. This conspiracy’s goal was to misappropriate trade secrets in an effort to develop and market CPE process design packages to various Chinese companies.  As part of the enterprise, Liou traveled extensively throughout China to market the stolen information, and he paid current and former Dow employees for Dow’s CPE-related material and information.  In one instance, Liou bribed a then-employee at the Plaquemine facility with $50,000 in cash to provide Dow’s process manual and other CPE-related information.
Perjury
When eventually confronted during a deposition as part of a Dow federal civil suit against him, Liou falsely denied under oath that he made arrangements for a co-conspirator to travel to China to meet with representatives of a Chinese company interested in designing and building a new CPE plant. Thereafter, federal criminal charges ensued.
Conviction
On February 7, 2011, after a three-week trial, a federal jury in Baton Rouge, La. convicted Liou, 74, of one count of conspiracy to commit trade secret theft and one count of perjury in connection with his theft  trade secrets from Dow Chemical Company and selling them to companies in the People’s Republic of China. He now faces a maximum of 10 years in prison on the conspiracy to commit trade secrets theft charge, and a maximum of five years in prison on the perjury charge.  Each count also carries a maximum fine of $250,000.
Advocacy group Free Press is alleging that a Californian company has been helping the Egyptian government inspect the contents of email, Twitter and Facebook messages.
IP network traffic intelligence company Narus – owned by Boeing –Â counts Telecom Egypt amongst its customers. And Free Press claims that it’s been using Deep Packet Inspection (DPI) to help the government eavesdrop on communications and even track cellphone users via GPS coordinates and SMS messaging.
Using DPI, it’s possible to reconstruct emails and attachments, see what web pages a user has clicked on and reconstruct voice-over-IP phone calls.
“What we are seeing in Egypt is a frightening example of how the power of technology can be abused,” says Free Press campaign director Timothy Karr.
“Commercial operators trafficking in Deep Packet Inspection technology to violate internet users’ privacy is bad enough; in government hands, that same invasion of privacy can quickly lead to stark human rights violations.”
Narus’ NarusInsight system is used by the US National Security Agency for surveillance of internet communications. And Free Press is calling for the US Congress to establish transparent standards for the use of DPI technology in order to preserve human rights.
“The harm to democracy and the power to control the internet are so disturbing that the threshold for the global trafficking in DPI must be set very high,” says Karr.
The US Federal Bureau of Investigation is probing a series of cyber-espionage attacks on at least five major oil, gas and petrochemical companies by hackers based in China.
The attacks, which began more than a year ago and are continuing, have succeeded in capturing sensitive financial information, including plans for bidding on drilling rights in specific fields, and production information, such as the configuration of equipment.
Such data would be worthless to most people but highly valuable to competitors in the industry, suggesting an economic motive for the intruders. The penetration followed a similar pattern at all of the targets identified so far and appeared to have been conducted by a group of a dozen or fewer people working from about 9am to 5pm Beijing time during the week.
“These were company worker bees, not freestyle hackers”, said Dmitri Alperovitch, a researcher at Intel (NASDAQ: INTC – news) -owned antivirus firm McAfee (NYSE: MFE – news) and a contributor to a white paper on the campaign being published on Thursday.
Mr Alperovitch said he and his colleagues had briefed the FBI and that the agency was investigating.
“We are aware of the threat to the oil and gas industry” from cyber-espionage, said FBI spokeswoman Jenny Shearer, adding that she could not confirm or deny specific inquiries.
The National Cyber-Forensics Training Alliance, a US non-profit that works with private companies as well as law enforcement and academia, has also been researching the case, and group chief executive Rob Plesco said it was the first that he knew of against the oil and gas industry.
Mr Plesco praised McAfee for going public with a description of the attacks on its clients, since targeted companies themselves rarely confess to such breaches and they can serve as an effective warning.
According to the white paper and Mr Alperovitch, the attacks began with an assault on the companies’ external websites using a common technique known as ‘SQL injection’, named after holes in the Structured Query Language used to communicate with databases. Hacking tools readily available on underground forums in China were then used to gain access inside the company’s servers, and automated cracking techniques gave the intruders user names and passwords.
The hackers then installed software to control the compromised machines and sent off e-mails and targeted documents to internet addresses in China.
They used previously known software flaws and did not go to great lengths to cover their tracks, the researchers found.
Such attacks are commonplace in many industries, investigators and law enforcement officials say, but are rarely divulged or explained.
