U.S. Lobs Cyberspying Charges Against Five in Chinese Military

PITTSBURGH (CN) - The United States today unsealed a criminal indictment accusing five members of the Chinese military of spying on U.S. companies and stealing trade secrets.

Filed in the Western District of Pennsylvania, the indictment is the first of its kind against a state actor for this type of hacking, Attorney General Eric Holder said at a conference announcing the charges. China has long been suspected of leading cyberspying operations against U.S. companies and the government.

The defendants are Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui, who were officers in Unit 61398 of the Third Department of the Chinese People's Liberation Army (PLA).

Prosecutors say Wang, Sun and Wen "hacked or attempted to hack into U.S. entities," while Huang and Gu supported that conspiracy by managing the domain accounts and other infrastructure used for hacking.

The six American victims represent the U.S. nuclear power, metals and solar products industries, according to the indictment.

They are Westinghouse Electric Co.; U.S. subsidiaries of SolarWorld AG, United States Steel Corp.; Allegheny Technologies Inc.; the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union; and Alcoa Inc.

Prosecutors say the hacking and theft sought information that would be useful to competing companies in China, including state-owned enterprises.

"In some cases, it alleges, the conspirators stole trade secrets that would have been particularly beneficial to Chinese companies at the time they were stolen," the Justice Department said in a statement. "In other cases, it alleges, the conspirators also stole sensitive, internal communications that would provide a competitor, or an adversary in litigation, with insight into the strategy and vulnerabilities of the American entity."

Prosecutors filed 31 counts including computer hacking and economic espionage against the defendants, covering the last eight years.

The indictment is sure to complicate diplomatic relations between the two countries. China has indignantly, but not convincingly, denied past accusations of cyberspying.

Holder called the range of trade secrets and other sensitive business information stolen in this case "significant."

"When a foreign nation uses military or intelligence resources and tools against an American executive or corporation to obtain trade secrets or sensitive business information for the benefit of its state-owned companies, we must say, 'enough is enough,'" Holder's statement continues.

"The indictment makes clear that state actors who engage in economic espionage, even over the Internet from faraway offices in Shanghai, will be exposed for their criminal conduct and sought for apprehension and prosecution in an American court of law," he added.

Assistant Attorney General for National Security John Carlin meanwhile gave some examples of the alleged theft at issue.

"Right about the time SolarWorld was rapidly losing its market share to Chinese competitors that were pricing exports well below costs, these hackers were stealing cost, pricing, and strategy information from SolarWorld's computers," Carlin said at the conference.

"And while Westinghouse was negotiating with a Chinese state-owned enterprise over the construction of nuclear power plants, the hackers stole trade secret designs for components of those plants."

FBI Director James Comey noted that China's conduct is nothing new.

"For too long, the Chinese government has blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries," Comey said in a statement. "The indictment announced today is an important step. But there are many more victims, and there is much more to be done. With our unique criminal and national security authorities, we will continue to use all legal tools at our disposal to counter cyber espionage from all sources." U.S. Attorney David Hickton for the Western District of Pennsylvania also spoke.

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