Chinese hackers crack database of federal workers, contractors

| Thursday, July 10, 2014, 10:45 p.m.

WASHINGTON — Authorities are investigating a breach of the computer networks of the Office of Personnel Management, which stores detailed data on as many as 5 million federal employees and contractors who hold sensitive security clearances.

Authorities have traced the intrusion to China, but it is not clear whether the hackers worked for the government, said a U.S. official who spoke on condition of anonymity to discuss an ongoing investigation.

So far, no personal data appear to have been stolen, according to OPM spokeswoman Nathaly Arriola. A U.S. official said the data is encrypted.

Arriola said that OPM and the Department of Homeland Security were alerted to the breach in mid-March through an automated monitoring system. The intrusion apparently was detected early enough that a DHS computer emergency-readiness team, working with the agency, was able to block the intruder and minimize the harm.

The Chinese military has waged a persistent, more than decade-long cyber campaign to steal many types of information — from military weapon designs to proprietary data on advanced technologies to insight into government policies — from the computer networks of the federal government and its contractors as well as from other Western governments and companies.

News of the breach, first reported by The New York Times, was disclosed as senior U.S. officials met in Beijing with their counterparts for the annual Strategic and Economic Dialogue. Secretary of State John Kerry said the dialogue had finished by the time he was notified of the report, but he said he raised the general issue of Chinese targeting of U.S. systems and was “very clear” that it was an area of concern.

Chinese officials steadfastly deny that Beijing hacks U.S. computers and have pointed to reports based on documents leaked by former National Security Agency contractor Edward Snowden that the United States has compromised the systems of a major Chinese telecommunications equipment company, Huawei.

Former U.S. officials said that if the intruders were successful in siphoning data from OPM, they would have gained access to a treasure trove of personal information that could enable more attacks. Experts say there are ways around encryption.

The agency operates a computerized program called e-QIP, which processes applications for security clearances, including top-secret and higher. Stored in the system are huge amounts of data, including applicants' financial histories and investment records, children's and relatives' names, foreign trips taken and contacts with foreign nationals, past residences, and names of neighbors and close friends such as college roommates and co-workers. Employees log in using their Social Security number.

“If the Chinese government got access to that type of data, it would be a significant breach because the data would allow them to have very detailed information about people who hold very sensitive clearances,” said Shawn Henry, a former executive assistant director of the FBI's Criminal, Cyber, Response and Services Branch.

The data could enable a hacker to craft more sophisticated efforts to send emails to government officials aimed at getting them to download malware by posing as people who know them — a technique known as “spearphishing,” said Henry, who is chief security officer at CrowdStrike, a cybersecurity firm. It could help them gain access to sensitive computer accounts and potentially conduct a physical attack or attempt extortion, he said.

The hacker could know virtually “every single person who is cleared in the U.S.,” said Jacob Olcott of Good Harbor Consulting, a cyber-risk management company, and a former counsel for the Senate Commerce committee. “So when they want access to the Energy Department program on such and such, they'll say, ‘Who do we know there? Let's send a spearphishing email to get access to their computer.' ”

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