From: jya@pipeline.com (John Young)
Date: Mon, 3 Jun 1996 09:50:24 +0800
To: cypherpunks@toad.com
Subject: Class III InfoWar: TST Article
Message-ID: <199606022238.WAA16332@pipe2.t1.usa.pipeline.com>
MIME-Version: 1.0
Content-Type: text/plain


This is the article Winn Schwartau cited to last night: 
 
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   The Sunday Times (London), June 2, 1996, pp. 1, 24. 
 
 
   City surrenders to L400m gangs [Insight column] 
 
 
   City of London financial institutions have paid huge sums 
   to international gangs of sophisticated "cyber terrorists" 
   who have amassed up to L400m worldwide by threatening to 
   wipe out computer systems. 
 
   Banks, broking firms and investment houses in America have 
   also secretly paid ransom to prevent costly computer 
   meltdown and a collapse in confidence among their 
   customers, according to sources in Whitehall and 
   Washington. 
 
   An Insight investigation has established that British and 
   American agencies are examining more than 40 "attacks" on 
   financial institutions in London and New York since 1993. 
 
   Victims have paid up to L13m a time after the blackmailers 
   demonstrated their ability to bnng trading to a halt using 
   advanced "information warfare" techniques learnt from the 
   military. 
 
   According to the American National Security Agency (NSA), 
   they have penetrated computer systems using "logic bombs" 
   (coded devices that can be remotely detonated), 
   electromagnetic pulses and "high emission radio frequency 
   guns", which blow a devastating electronic "wind" through 
   a computer system. 
 
   They have also left encrypted threats at the highest 
   security levels, reading: "Now do you believe we can 
   destroy your computers?" 
 
   The authorities have been unable to stem the attacks, which 
   are thought to onginate from the United States. In most 
   cases, victim banks have failed to notify the police. "They 
   have given in to blackmail rather than risk a collapse in 
   confidence in their security systems," said a security 
   director at one blue-chip merchant bank in the City. 
 
   A senior detective in the City of London police said: "We 
   are aware of the extortion methods, but the banking 
   community has ways of dealing with it and rarely reports to 
   the police." 
 
   European and American police forces have set up special 
   units to tackle the cyber criminals, who, Ministry of 
   Defence sources believe, have netted between L200m and 
   L400m globally over the past three years. But law 
   enforcement agencies complain that senior financiers have 
   closed ranks and are hindering inquiries. 
 
   Experts in the field of information warfare met in Brussels 
   last month to discuss defensive measures. Representatives 
   included Captain Patrick Tyrrell, assistant director of 
   computer information strategy at the Ministry of Defence; 
   General James McCarthy, professor of national security at 
   the US Air Force Academy; General Jean Pichot-Duclos, 
   director of the economic intelligence department of the 
   French Defence Council, and senior figures from the 
   civilian computer industries. 
 
   A separate closed meeting involving representatives from 
   Whitehall and the intelligence community was held to 
   analyse the 40 attacks on British and American financial 
   centres since 1993. A further secret seminar took place in 
   Washington this weekend. 
 
   Kroll Associates, the international investigating firm, 
   confirmed last week that it had acted for financial 
   institutions that have been blackmailed. "One of the 
   problems we face is that the potential embarrassment from 
   loss of face is very senous," said a spokesman in New York. 
   Kroll had evidence that firms in London and New York had 
   been targeted. "The problem for law enforcement is that the 
   crime is carried out globally, but law enforcement stops at 
   the frontier," he said. 
 
   Yesterday a Bank of England spokesman acknowleged the 
   threat from the extortionists: "We are aware of this. It 
   does exist. It is extortion and fraud." But the spokesman 
   also insisted: "It is not the biggest issue in the banking 
   market." 
 
   Scotland Yard is now taking part in a Europe-wide 
   initiative to catch the cyber criminals and has appointed 
   a senior detective from its computer crime unit to take 
   part in an operation codenamed Lathe Gambit. Such is the 
   secrecy that few details about the inquiry have emerged. 
 
   In America, the FBI has set up three separate units to 
   investigate computer extortion. 
 
   The NSA believes there are four cyber gangs and has 
   evidence that at least one is based in Russia. The agency 
   is now examining four examples of blackmail said to have 
   occurred in London: 
 
   + January 6, 1993: Trading halted at a broking house after 
   blackmail threat and computer crash. Ransom of L10m paid to 
   account in Zurich. 
 
   + January 14, 1993: a blue-chip bank paid L12.5m after 
   blackmail threats. 
 
   + January 29, 1993: a broking house paid L10m in ransom 
   after similar threats. 
 
   + March 17, 1995: a defence firm paid L10m in ransom. 
 
   In all four incidents, the gangs made threats to senior 
   directors and demonstrated that they had the capacity to 
   crash a computer system. Each victim conceded to the 
   blackmailers' demands within hours and tranferred the money 
   to offshore bank accounts, from which it was removed by the 
   gangs within minutes. 
 
   The techniques have varied. In London, criminals posing as 
   marketing firms have gained detailed knowledge of a 
   target's system by interviewing the heads of information 
   technology departments. In some cases, they have even 
   issued questionnaires to unsuspecting officials. Armed with 
   this information, they have been able to breach security 
   and leave encrypted messages warning of their capability. 
 
   The gangs are believed to have gained expertise in 
   information warfare techniques from the American military, 
   which is developing "weapons" that can disable or destroy 
   computer hardware. Some are also known to have infiltrated 
   banks simply by placing saboteurs on their payroll as 
   temporary staff. 
 
   Little is yet known about the identities of the gangs but, 
   according to the NSA, America is the main source of the 
   attacks. It believes that at least one other group 
   originates from Russia and has followed the movement of 
   money to the former Soviet states. 
 
   A spokesman for the Metropoiitan poiice said: "There is 
   potential for extortion from those purporting to know how 
   to damage computer systems. 
 
   "The computer crime unit liaises where necessary with its 
   Euro counterparts to discuss cross-frontier crimes." 
 
   One merchant bank director said yesterday: "You will never 
   get a financial institution to admit it has an extortion 
   policy, let alone that it has paid money to blackmailers." 
 
   ----- 
 
   Additional reporting: Peter Warren 
 
   [End]