 | February 4, 2013 |
| THIS WEEK | |
| Who better deserves to be richly rewarded for the risks they take on the job, the corporate and banking execs who gaze out the windows of comfortable suites high up in Manhattan’s skyscraper towers or the veteran window washers who dangle outside those windows in the bitter cold and searing heat? Those window washers, we know from a just-published New Yorker profile, face all sorts of dangers. The wind “blows capriciously” around tall buildings. Updrafts and cross-drafts can drive rain torrents every which way. The window washer survival rule of thumb: four stories. If you fall more, you die. And what risk do power suits face if something goes wrong? Well, JPMorgan chief Jamie Dimon lost his bank $6 billion. The price he paid? He had his annual pay cut — to $11.5 million. Lehman's Richard Fuld crashed his entire bank. He had to downsize to a plush new apartment where the living room only stretched 40 feet. But most execs don’t have to ever worry about sacrificing. They just rig the game so they never lose. More on their charades in this week’s Too Much. |
|
| GREED AT A GLANCE | |
| Defenders of our unequal social order are feeling a bit defensive these days — and taking solace from wherever they can find it. The folks at Fox News, for instance, are happily claiming that Downton Abbey, the hit public TV series devoted to life and labor at a 1920s British estate, is helping average Americans warm to rich people. Downton Abbey’s wealthy, says journalist Stuart Varney, come across as “nice” people who “create jobs for heaven's sake.” More good news for fans of aristocratic fortune: Technology is solving America's servant shortage! If you can’t find a Downton Abbey-style valet, the luxury Robb Report advises, you can now pick up a fully automated “gentleman’s closet,” complete with a Cognac-and-cigar bar and a golf simulator. Prices start at $2 million . . .  How well is the U.S. Treasury monitoring executive pay at the corporate and financial giants U.S. taxpayers have bailed out? Not so well at all, the special inspector general for the bailout reported last week. The three firms still under federal bailout watch last year — AIG, GM, and Ally Financial — passed along 18 requests to hike executive pay. Treasury approved all 18. Overall, notes special inspector general Christy Romero, 68 of the 69 execs Treasury tracked at the three companies took home over $1 million in compensation — and 16 pocketed over $5 million. The original bailout guidelines stipulated that executive pay at taxpayer-rescued firms should not top $500,000 “except for good cause.” |
Quote of the Week “We need to get serious about the problems of wealth inequality, and the possibilities for its amelioration, or the gorilla will take over the entire room.” |
| PETULANT PLUTOCRAT OF THE WEEK | |
 |
|
| IMAGES OF INEQUALITY | |
 Larry Chait, for the Billboard Project |
Web Gem New Bottom Line/ The online home of a national campaign aiming to restructure Wall Street and “advance a vision for how our economy can better serve the many rather than the few.” |
| PROGRESS AND PROMISE | |
 |
Take Action Want to deny your shopping dollars to U.S. corporations that avoid their taxes? BizzVizz, a new iPhone app, lets users snap a picture of a brand logo and get tax and other facts about the major corporation behind it. |
| inequality by the numbers | |
|
|
Stat of the Week Nearly half of America's households, reports the Corporation for Enterprise Development, now rate as “liquid asset poor.” These 43.9 percent — 132.1 million people overall — don’t have enough savings to cover “basic expenses” for three months should paychecks suddenly stop. America’s 400 Forbes richest, by contrast, hold assets that average $4.2 billion each, enough to cover what might be termed “lavish expenses” — of $1 million per month — for 350 years. |
| IN FOCUS | |
| If This California Mansion Could Speak . . . . . . we would have a fascinating, first-hand history of the roller-coaster first century of federal income taxation The modern federal income tax turns 100 this year. In Washington, D.C. this week, a distinguished panel of tax experts and historians will be marking the occasion with a special symposium. More such 100th anniversary events are coming. All will no doubt make an important scholarly contribution. But if we really want to understand just what the federal income tax has accomplished — and failed to accomplish — over the course of the last 100 years, the best place to start just might be a majestic century-old mansion that overlooks Santa Barbara in Southern California. This mansion and the federal income tax both entered the world the same year, 1913. The manse reflected the prodigious wealth of America's original Gilded Age plutocracy. The income tax represented an attempt to shrink that plutocracy down to democratic size. That attempt succeeded, but only for a time.
Frederick Forrest Peabody would be pleased. A century ago, Peabody rated as one of America’s richest corporate execs. The company he ran manufactured Arrow shirts, and Arrow had become one of America’s most recognizable brand names. The rewards from this recognition? Immense. In 1909, Peabody's company would declare a 300 percent dividend. America's captains of industry faced no taxes back then on dividends or any of their other earnings, and Peabody took full advantage of his rapidly expanding fortune. In 1906, for a sunny getaway from his upstate New York business base, he bought 40 ocean-view hilltop acres in Santa Barbara and a few years later dotted his new acreage with 7,000 eucalyptus trees. In 1913, Peabody would begin building the home of his dreams amid the eucalyptus, a palace he would call Solana, Spanish for sunny place. Money would be no object. He filled the over 20,000 square-foot edifice with only the finest of finishings, from hand-carved mahogany to 17th century French oak paneling. Money would be no object because Peabody didn’t have to worry about sharing any of his money with Uncle Sam. The new federal income tax enacted in 1913, right after the ratification of a constitutional amendment that opened the way to income taxation, would prove no more than a minor inconvenience. Progressive lawmakers in Congress had pushed for a steeply graduated tax that subjected income in the highest income brackets to rates as high as 68 percent. The legislation finally adopted set that top rate at just 7 percent. This top rate would bounce up during World War I but then sink to 25 percent in the 1920s. By that time, Frederick Forrest Peabody had stepped down from his captain-of-industry perch and settled into a comfortable life as a country squire. In 1919, he would move full-time to Santa Barbara from New York and entertain as many as 150 guests at a time within his opulent Solana space. Solana, even so, would not prove satisfying enough for Peabody. He divorced, picked up a trophy wife in 1920, and then honeymooned at a 4,500-acre ranch he had bought the year before near a hot springs resort in central California. Peabody would continue his extravagant spending ways as the low-tax 1920s wore on. In 1926, his outlays for landscaping would win Solana a stop on the annual tour of the posh Garden Club of America. Peabody would not live to host another tour. He died in 1927, late in his 60s. His widow carried on at Solana. But her plutocratic world was changing, and the federal income tax was rushing that change along. In the 1930s, under the pressure of growing mass movements for economic justice, tax rates on America’s highest incomes would begin to rise. By 1944, the tax rate on income over $200,000 had soared to 94 percent. The top federal income tax rate would hover near that level for the next 20 years. Some of America’s rich, mainly the nation’s oilmen, had depletion allowances and other loopholes that shielded them from any significant tax squeeze. But the rich overall felt a real tax bite. By 1958, the year Peabody’s widow died, the nation’s top 0.1 percent had seen their share of national income shrink by two-thirds. In America’s new tax-the-rich environment of the mid 20th century, manses like Solana, with their huge maintenance costs, had a hard time finding private buyers able to afford their pleasures. Great palaces of America’s plutocracy would soon, in the years after WW II, be turned into suburban subdivisions. Solana, for its part, would sell in 1959 for just $283,000, a fraction of the estate’s former value. The buyer: the Center for the Study of Democratic Institutions, a nonprofit led by former University of Chicago president Robert Hutchins. The robust debates that took place at his Center, Hutchins announced, would serve as an “early warning system” for American democracy. But Hutchins and his fellow deep thinkers never saw the danger to democracy that could come from a re-emergent plutocracy. The nation, they believed, had leveled plutocracy forever. Stiff taxes on the rich, they assumed, had become a permanent fixture of American life. They would be wrong. By the mid 1980s, the high tax rates on high incomes that helped make Frederick Peabody’s Solana such a hard sell in the 1950s had all faded away. With their disappearance, America’s plutocratic order would soon reappear. The nation’s top 0.1 percent, newly updated research from Berkeley economist Emmanuel Saez documents, collected 9.4 percent of the nation’s income in 2011, the most recent year with stats available, over triple the top 0.1 percent share in the late 1950s. This hefty top 0.1 percent share, Saez noted last month, “will likely surge” even more once the 2012 figures become available. In other words, the luxury realtors from Sotheby's now hawking Solana — for $57.5 million — don’t figure to be disappointed. |
New Wisdom Andrew Jackson, How more tax on the super rich will help ease income inequality, Globe and Mail, January 30, 2013. A Canadian analyst explains why higher taxes on the ultra rich amount to “a doubly effective tool.” John Judis, How income inequality could be slowing our recovery from the Great Recession, New Republic, January 30, 2013. In an economy that depends on consumer demand, a society whose wealth skews “wildly toward the wealthy” will not generate enough demand to boost the economy.
The Firedoglake Book Salon is hosting an online chat this Sunday, February 10, with Too Much editor Sam Pizzigati on his new book, The Rich Don't Always Win. The time: 5 p.m., EST. The moderator: John Cavanagh, director of the Washington, D.C.-based Institute for Policy Studies. |
| new and notable | |
| The Games Top Executives Play — and Fix Ella Hale and Ryan Hyde, In a Rebounding Market, Fortune 500 Companies Granting Fewer Shares and More LTI Value, Towers Watson Executive Compensation Bulletin, January 29, 2013. Advising corporations on executive compensation has become a lucrative sideline for corporate consulting firms. These firms like to claim they’re helping corporations match up “pay with performance.” But the entire CEO pay-setting process actually serves to make “performance” as irrelevant as possible. Sometimes the consulting companies inadvertently spill the beans about the charades they're playing. This new Executive Compensation Bulletin from the consultants at Towers Watson does just that. In 2009, the bulletin details, Fortune 500 companies saw “a spike” in the number of stock option awards going to top execs. Options give their recipients the right to buy company shares several years down the road at today’s share price. What made options so attractive in 2009? That year saw the worst of the Great Recession. Corporate shares were trading at their lowest levels in ages. These shares, of course, figured to increase enormously in value over the next few years, as the overall stock market recovered, and, indeed, the stock market has recovered. Those CEOs who received big option grants in 2009 can now buy their company’s shares at 2009 prices, then turn around and sell them at today's hugely rebounded 2013 stock market level. Automatic windfall! With the stock market now back up, of course, new stock options rewards no longer make for sure windfalls down the road. An option to buy shares in 2018 at 2013 prices might not be worth anything. The stock market has already regained all the Great Recession lost ground. Overall share prices might now stagnate over the next few years — or even trend lower. How is the CEO compensation community responding to this new stock market uncertainty? Corporations are shifting CEO rewards from stock options to just plain stock, shares that executives will automatically own in a few years — without paying anything — so long as they remain on the job. Executives, once they gain title to these “restricted” shares, can sell them and pocket the proceeds as pure personal profit. So even if their company share price drops from $20 to $15 between now and then, they can still walk away with a $15 per share profit. More windfall! Fortune 500 companies, Towers Watson reports, are now giving out 72 percent more restricted share rewards to their execs than five years ago. The number of stock option grants is now running 33 percent lower than five years ago. And people wonder why CEO pay is rising endlessly upward. | |
Journalist Matt Taibbi assesses the Obama Administration’s approach to holding banks accountable for their behavior, and early indications are not promising. Taibbi tells Bill that fearing another economic calamity is no excuse for turning a blind eye to shockingly unethical decisions and management.
Full transcript appears below the video:
BILL MOYERS: It’s time to talk with journalist Matt Taibbi. You’ve seen him on our broadcast before. A contributing editor at “Rolling Stone,” he’s been tracking the high crimes and misdemeanors of Wall Street and Washington for years.
You're working on a story right now that'll come out in a couple of weeks on the HSBC settlement. That's the, tell me about that, why it interests you.
MATT TAIBBI: Well, the HSBC settlement was a really shocking kind of new low in the history of the too big to fail issue. HSBC was a serial offender on the money laundering score. They had been twice given formal cease and desist orders by the government. One dating back as far as 2003, another one in 2010 for inadequately policing the accounts in their system. They laundered over $800 million for cartels in Colombia.
BILL MOYERS: Drug cartels?
MATT TAIBBI: Drug cartels in Colombia and Mexico. They laundered money for terrorist connected banks in the Middle East. Russian gangsters. Literally, you know, I talked to one prosecutor who's, like, "They broke basically every law in the book and they did business with every kind of criminal you can possibly imagine. And they got a complete and total walk." I mean, they had to pay a fine.
BILL MOYERS: $1.9 billion, a lot of money.
MATT TAIBBI: It's a lot of money. But it's five weeks of revenue for the bank, to put that in perspective. And no individual had to suffer any consequences at all. There were no criminal charges no individual fines, which was incredible. Incredible.
BILL MOYERS: Lenny Breuer also forced the Swiss bank UBS, as you know, to pay a big fine in the LIBOR, the price fixing conspiracy. And that outraged you as well, didn't it?
MATT TAIBBI: This is the, I think the biggest financial scandal of all time. It was a price fixing scandal where, essentially, some of the world's biggest banks got together and they conspired illegally to artificially rig the global interest rates which are based upon this London inner bank offered rate, which is a rate that measures how much it costs for banks to lend money to each other.
This LIBOR rate affects the prices of hundreds of trillions of dollars of financial products. And it goes from everything from credit cards to mortgages to municipal bonds. Basically everything in the world the price is, you know, is somehow connected to LIBOR. And these guys were monkeying around with this for individual profit. And they got, again, a complete and total walk on this. There were no criminal charges, which is just unbelievable.
BILL MOYERS: Did you see the Frontline documentary “The Untouchables?”
MATT TAIBBI: I did.
BILL MOYERS: Then you're familiar with Lanny Breuer's testimony.
MARTIN SMITH in Frontline: The Untouchables: You made a reference to losing sleep at night worrying about what a lawsuit might result in at a large financial institution. Is that really the job of a prosecutor to worry about anything other than simply pursuing justice?
LENNY BREUER in Frontline: The Untouchables: I think I am pursuing justice and I think the entire responsibility of the department is to pursue justice, but in any given case ... prosecutors around the country being responsible should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case there’s some huge economic effect. If it creates a ripple effect so that suddenly counter-parties and other financial institutions or other companies that had nothing to do with this are affected badly, it’s a factor we need to know and understand.
MATT TAIBBI: Think about what he's saying. He's essentially saying that some individuals are so systemically important, that they can't be arrested and put in jail. Now, it's only a few steps forward to the corollary to that, which is if some people are too systemically important to arrest, other people may safely be arrested. So we're creating a class of people who are arrestable and another class of people who are not arrestable, which is crazy. It's a crazy thing for the assistant attorney general to say, to admit out loud that he's dividing Americans up into these two classes. There's no reason they couldn't have taken a number of individuals from some of these companies and put them on trial.
Historically, we've always done this. Even under the Bush administration, if you go back just ten years, you know, WorldCom, Enron, you know, Adelphia. We took the leading individuals of these companies and we put them on trial to make an example out of them. And this is exactly what we're not doing in this case. Those companies were systemically important then. I don't see why they can't do the same thing now.
BILL MOYERS: You were shocked when you heard that President Obama had named Mary Jo White to lead the Securities and Exchange Commission. And you wrote that she was a partner in a law firm that represented a lot of these big banks. You know, Bank of America, Goldman Sachs, Chase, AIG, Morgan Stanley.
You said, "She dropped out and made the move a lot of regulators make, leaving government to make bucket loads of money, working for the people she used to police." And I gather your great concern is that you don't want to see the country's top financial cop being indebted to the people who created the bank role?
MATT TAIBBI: Right. Yeah, absolutely. I mean, it's just simple common sense. I mean, you're sitting on $10 million, $15 million, however much money she made working there at Debevoise and Plimpton when she was a partner and you owe that money to this specific group of clients and now you're in charge of policing them, just psychologically think of that. It doesn't really work, you know? It doesn't really work in terms of how aggressive a prosecutor should be, what his attitude towards the people he's supposed to be policing should be. It's just, the circumstances just aren't quite right. You'd much rather see a career civil servant in that in that situation.
BILL MOYERS: She was once a tough prosecutor. What's your beef?
MATT TAIBBI: Well, you know, I have people who are telling me that I'm wrong about this, that Mary Jo White was an excellent prosecutor and she's a good choice. But, you know I've done stories in the past about an episode, you had an SEC investigator named Gary Aguirre who was pursing an insider trading case against the future CEO of Morgan Stanley. He asked for permission to interview that future CEO. His name was John Mack. It was denied. And it was because there was communication between Morgan Stanley's lawyer, who at the time was Mary Jo White and the higher ups at the SEC who included the director of enforcement, Linda Thomsen. Aguirre was later fired for complaining about having this investigation squelched.
BILL MOYERS: Blowing the whistle.
MATT TAIBBI: For blowing the whistle. But the SEC was later forced to pay a $750,000 wrongful termination suit to Aguirre in that case. But what's so interesting is that Aguirre's boss, the guy who killed that case went to work for Mary Jo White's firm nine months after the case died. And he got, you know, a multi-million dollar position. It's a classic example of how the revolving door works in Washington. You know, you have these regulators at the SEC. And they know that there's that job out there waiting for them. So how hard are they really going to regulate these companies when they know they can get that money?
But in Washington, you know, people kind of shake their heads at it because it's so common you know, that these people, they move from government back to, you know, these high priced legal defense firms that represent the banks. And then they go back to government again. And it's this sort of, this coterie of, you know, 100, 200 lawyers who really run this entire thing. And it's all the same people on both sides.
BILL MOYERS: Lanny Breuer was one of them. He was in a very prestigious Washington law firm. Jack Lew, the new incoming secretary of the Treasury if he gets approved, served three years at Citigroup. His record there, according to “The Wall Street Journal” was not very lustrous for a man who's about to take over the Treasury Department. But “The Wall Street Journal” suggests that he got his job, not because he had the experience, but because he was a crony of Robert Rubin.
MATT TAIBBI: Jack Lew served in the Clinton administration. I think he worked in the OMB in the, you know, Office of Management of the Budget. And he was one of the key players in helping pass the repeal of Glass-Steagall. And, you know, this is kind of the way it works. It's not a one to one, you know, obvious connection. But, you know, Glass-Steagall was repealed specifically to legalize the merger of Citi Group. And, you know, coincidentally Bob Rubin, who was the Treasury secretary and Jack Lew end up working at Citi Group five, ten years later. And they make enormous amounts of money. And then they go back to government. And again, this is just sort of this merry-go-round that everybody in Washington knows about. And that's the way it works.
BILL MOYERS: How do you explain President Obama's attitude in this? When he was running for president, he promised the close the revolving door. And he seemed genuinely shocked at the collapse of the financial system and the banks' role in it. But he also was raking in massive campaign contributions from these very people. Did those investments, did those contributions turn out to be good investments, or do you think he's just overwhelmed by the system that's controlled by these guys?
MATT TAIBBI: I think that they genuinely accept the explanation that they're probably hearing from all these people who run these Wall Street companies. You know, people like Bob Rubin and Larry Summers who are close confidants of the Obama administration are probably telling them, "Look, if we start prosecuting all kinds of people for you know, X, Y and Z, there's going to be major instability in the markets. People are going to flee America. They're going to withdraw capital from the American financial system. It'll be a disaster. Jobs will be lost." But it's just not an acceptable it's explanation. I think they're--
BILL MOYERS: Why?
MATT TAIBBI: Well, just because the rule of law isn't really the rule of law if it doesn't apply equally to everybody. I mean, if you're going to put somebody in jail for having a joint in his pocket, you can't let higher ranking HSBC officials off for laundering $800 million for the worst drug dealers in the entire world. People who are suspected, not only of dealing drugs, but of thousands of murders. I mean, this is an incredible dichotomy. And eventually, you know, it eats away at the very fabric of society when some people go to jail and some people don't go to jail.
BILL MOYERS: But do you ever have the sense that those guys are, you know, are and their lawyers are up there laughing at all of us on their way to the bank, no pun intended? I mean, the fact of the matter is they are immune. There was a story in “The Washington Post” the other day by Howard Schneider and Danielle Douglas. With the lead, "Five years after the collapse of Lehman Brothers, a global push to tighten financial regulation around the world has slowed in the face of attempted recovery, which the banks helped bring on. "And a tough industry lobby effort. Big banks, insurers and other financial giants remain intact and arguably too big to fail." I mean, nothing really has changed.
MATT TAIBBI: No, no, definitely not. And in fact, if you want to look at it objectively, since 2008, you know, the companies that we're talking about have become bigger and more dangerous and more immune to prosecution than they were back then. And you might even say by a lot. I mean, you know, the first factor was that you had a series of mergers in 2008, which you know, made companies like Wells Fargo and JP Morgan Chase, you know, double in size.
Or they were much bigger than they were before. So therefore they're more dangerous. And so you have these companies, like Barclays, like Royal Bank of Scotland, like UBS, like HSBC, which are, you know, they can't be regulated. We can't get an accurate accounting of what's going on in their books. And apparently now we can't even criminally prosecute them for laundering money like HSBC does. I mean we just keep setting the bar lower and lower and lower. And it's getting scary I think.
BILL MOYERS: There's a new analysis out just the other day from the Economic Policy Institute that shows the super-rich have done well in the economic recovery, while almost everyone else has done badly. And the economist Robert Reich says, "We're back to the widening inequality we had before the big crash." Are the financial and political worlds just too intertwined and powerful for anything to change?
MATT TAIBBI: I mean, it's a concern, I would worry about. But it doesn't mean you can't, you know, try to stop the problem. I definitely think though that there is this connection now between political power and financial power that's just becoming more and more overt. I mean, what Lanny Breuer is saying in that video is these people who have an enormous amount of power, destructive financial power we can't prosecute them.
On the flip side what they're essentially saying is that people who don't have any money at all, it's politically safe to put them in jail. And so, you know, we're creating this kind of dual class. And it's a very upsetting and disturbing situation.
BILL MOYERS: Matt Taibbi, we'll be looking forward to your next expose in a couple of weeks. Thank you very much for being with us.
The Chinese group behind the targeted attack on the New York Times was laser focused on accessing the email of a reporter and the newspaper’s former Beijing bureau chief to the point that it used an inordinate number of custom malware samples to get the job done.
“In terms of statistics, 45 [custom malware samples] as a ratio to the number of computers involved, 53, is a high ratio,” said Richard Bejtlich, chief security officer of Mandiant, the forensics firm hired by the Times to investigate the targeted attack. “Usually, you’ll see one or two for the relatively small number of systems involved.”
Bejtlich said the attackers were focused on accessing the journalists’ emails in order to learn more about the sources used in a Times article published Oct. 25 delving into alleged corruption involving prime minister Wen Jiabao and the close-to $3 billion fortune he has amassed since taking power. China has been strident in using such intrusions to monitor coverage of the country by U.S. media; the Wall Street Journal reported today that it too has been targeted by attackers from China.
Editor's Pick
Using that much malware enabled the attackers to maintain persistence within the Times network and be able to react quickly as the Times’ IT department and incident response teams from Mandiant would cut off access from particular IP addresses.
“They may have put tools on [53 computers], but there were hundreds of other machines they had access to,” Bejtlich said. “The number of machines they accessed was low because they were focused on the two individuals here.”
The reporter, David Barboza, and Jim Yardley, former bureau chief in China, both had their corporate email accounts compromised. The attackers also stole every Times employees’ corporate password in an incursion that lasted more than four months.
Executive editor Jill Abramson said no emails or files from the Jiabao story were accessed, downloaded or copied. Also, no customer data was compromised, officials said, adding that the attackers have been removed from the corporate network. The Chinese denied involvement in the attacks, a Times article today said.
Mandiant, however, has extensive experience in dealing with APT-style incursions from China and quickly pinned characteristics emanating from this attack on a particular group it had seen before. The group developed, or commissioned the development of, tools that would access the two individuals’ email accounts, as well as malware purpose-built for persistence and proliferation within the Times network, Bejtlich said.
“There’s no evidence this extended beyond the Times’ infrastructure. The credentials they had access to were domain credentials like those used for Windows domain,” Bejtlich said when asked if any personal home computers were attacked. “Home computers would not be part of that domain.”
The attacks ramped up with the Oct. 25 publication of the article; the Times said it was warned by Chinese government officials on Oct. 24 of consequences should the article be published.
The Times reached out to its carrier, AT&T, and asked to be alerted of suspicious activity on their computer network. On the 25th, AT&T said it was seeing activity that had similar characteristics to other attacks carried out by the Chinese government and military. Mandiant, which was hired Nov. 7, told the Times that compromised university computers in four states along with a handful of small business computers and ISPs were used to route the attacks to the newspaper.
As is the case with most targeted attacks, this one likely started with a spear-phishing email. Bejtlich said Mandiant has not been able to find a phishing email or site, though the company does suspect that was the initial infection vector. Likely, an employee was tricked into opening an infected attachment or click on a link to a malicious website that enabled the attackers to get onto the Times’ network with legitimate credentials. From there, investigators said, they were able to plant malware, including backdoors, which enabled the attackers to communicate with compromised computers.
Mandiant’s investigation concluded that the attackers were on the Times network for two weeks before finding the domain controller that managed corporate access to resources. Eventually they were able to crack Barboza’s email account and read messages and documents from the Times’ email server in an apparent attempt to get at the reporter’s sources, the article said.
Bejtlich said his company’s investigators were able to match the activity used in this attack to a particular group of Chinese attackers using a suite of indicators of compromise that Mandiant has built over the years.
“We identify systems with problems and collect forensic artifacts and match those with threat groups we’ve been tracking for years to see if they match,” he said. “We look for certain tools or command and control infrastructure that are earmarks used by certain groups. Then we’ll go through a second process to see if we can narrow that down.”
Mandiant labels APT groups with numbers, rather than use industry convention names such as Night Dragon. This particular group, APT 12, is very active and quietly targeting companies in the United States and Europe, unlike other groups that are loud and pervasive, and not necessarily as skilled such as the Comment Crew (APT 1).
“We see them targeting hundreds of organizations, but don’t attract attention or leave much of a footprint,” Bejtlich said. Such groups act on behalf of the Chinese government, which has targeted journalists in the past in an effort to understand how the country is perceived in the West and perhaps control the sources used by the media.
“The Chinese are desperate to know what others think of them first,” Bejtlich said. “They want to know what news organizations are reporting about them. They want to access the Gmail accounts of those who support dissidents. They’ve attacked think tanks because they want to know what the think tanks are recommending for policy.”
In the meantime, the Times was unique among organizations suffering targeted attacks in that it got out in front of the story with high-level details about the attack.
“I congratulate the Times for coming forward,” Bejtlich said. “It’s more important how you manage an intrusion. Let’s get to the point where it’s not shameful to have an intrusion. I would think twice about going after an adversary such as the Times because they might tell the world.”
Commenting on this Article will be automatically closed on May 1, 2013.
| This bird's got something to say. Photo: Franco Atirador |
Scientists have found that wild ravens make gestures, a feat even most primates can’t manage. What the birds are
saying, however, is anyone’s guess.
Pointing is one of the simplest ways to communicate. In humans, hand gestures are seen as baby-steps in learning language. To some extent, science has long ignored the possibility that the handless members of the animal kingdom could be gesturing, too.
But after two years observing ravens in the field, scientists from the Max Planck Institute for Ornithology have spotted ravens doing exactly that. They’ve reported their discovery in Nature Communications.
Raven gestures are targeted to members of the opposite sex and, like a well-timed wink, seem to be an effective way of getting attention. Specifically, the ravens use their beaks to point to or display nearby objects, including rocks, moss, or twigs.
In an odd twist on more common bird behavior like gift giving, these objects are inedible and once a raven’s caught his partner’s attention, the birds don’t actually do anything with the materials.
Scientists aren’t really sure what’s going on here. It could be a totally instinctive process, like a mating display, or it could be sophisticated symbolic signaling. Something like, “Did you remember to leave twigs on the nest today?”
Regardless, the attention to objects is one more clue into the world view of crows and ravens, and—given their impressive tool use abilities—it suggests that like humans, theirs is a material world.
