Examples of how economic espionage can be conducted – leading to an “undetectable” loss of BILLIONS of shillings

Dear Listers,

Here’s a couple of examples of how economic espionage can be conducted, and result in massive financial losses, without detection: 

SCENARIO 1:
A vulnerability (e.g. at router or application level) could facilitate unauthorized access/interception/bugging (via mobile phone mic) of  communications / meetings involving CFOs and CEOs of targeted listed companies. The attacker would then gain access to valuable time sensitive information e.g. pending material announcements – which can be passed on wealthy (local or foreign) collaborators at the NSE, who would would then use it to trade short/long and make massive (illegal) profits – without anyone being the wiser. We’re talking the potential theft of BILLIONS in days/weeks. At best the regulators would be suspicious of foul play – but without proof they will not be able to do anything. This is probably happening already.

SCENARIO 2:
At international trade level, a state actor might collaborate with its indigenous export/import businesses to pass on sensitive insights about (impending or ongoing) local events/or circumstances in Kenya and their implications. Such insights can then be leveraged in different ways e.g. to influence policy in favor of unnecessary high-value procurement (leading to unnecessary debt burden) or to delay/or accelerate or sequence high-value trade transactions if, say, it is thought the imminent events could materially affect the local currency. Consider the impact on forex-sensitive events (e.g. disbursement of sovereign debt) or on sensitive commodity imports (e.g. fuel)?

DISCUSSION:
These kinds of breaches can remain undetected for *decades* (or forever) – costing our country billions (and potentially destroying local businesses by rendering them unable to compete effectively).

Meanwhile, we are thinking: “eh.. wololo.. these [insert group to be admired] are very brilliant and innovative business people.” Kuuumbe! Tunalipa school fees ya Ignorance Academy. 🙂

“Trust but verify” is the right motto if you care about global competitiveness.

We need a multi-pronged approach to data protection and privacy (i.e. technical, policy and legal frameworks). We have a tendency to rely on laws for everything – but when it comes to data, laws are woefully inadequate, because, unlike tangible property, theft of data (or valuable economic information, as per example above) is irreversible and often difficult – if not impossible – to detect or prove in court.

Our primary source of assurance when it comes to protecting sensitive data/information should be the development of robust *indigenous* technical capability to protect systems, networks and data holistically. 

We need active R&D to develop resilient indigenous architectures (both technical and organizational) that can withstand breaches and mitigate the impact of successful intrusions by design. This would then be backed by regulations as a supporting pillar (i.e. not the main thing).
Currently we are doing things in reverse and taking comfort in punitive laws, which only give us a false sense of security and won’t be of much help in the face of global actors. Classic case of: “when all you have is a hammer, every problem looks like a nail.”

Welcome to the 21st Century. As long as we don’t have a robust indigenous cyber-defense ability, we are just playing “kalongo” with our economy.
Good day,
Patrick.

Patrick A. M. Maina
[Cross-domain Innovator | Public Policy Analyst – Indigenous Innovations]
On Thursday, May 2, 2019, 5:53:58 PM GMT+3, Mwendwa Kivuva via kictanet <kictanet@lists.kictanet.or.ke> wrote:

We need a mind shift.
Using a Nationalistic approach, as Kenyans, we should not really care what international firms are doing unless they harm Kenya’s interests. What we should care more is, what is Kenya doing to be anywhere near what the big boys are doing.
I start here.First you imitate, then you innovate. – Miles Davis
1. Forbes – Why Imitation Bests Innovation. https://www.forbes.com/2010/05/11/china-america-innovation-leadership-mangement-imitation-book.html#56cf9305232d
2. From imitation to innovation: How China became a tech superpower. https://www.wired.co.uk/article/how-china-became-tech-superpower-took-over-the-west
From a Kenyan perspective, there is no reason we should protect international patents at the expense of a better life of the Kenyan people. We should also imitate, copy, and grow our local manufacturing industry to the extent that we can now innovate, and produce our own competitor to Huawei and ZTE.
But then, we are having foreigners build a railway for us, 120 years later since the first railway was laid by the imperialist using Indian coolies. It took only 5 years (1896-1901) to lay the railway on a grueling 1,060-kilometre on real African jungle with no roads, hospitals, markets, nothing. 
People who say it cannot be done should not interrupt those who are doing it. If we cannot create our own Huawei, let Huawei do what they do best, as we ogle, and envy those who are conquering the world.

Regards______________________
Mwendwa Kivuva, Nairobi, Kenya
www.linkedin.com/in/mwendwa-kivuva

On Thu, 2 May 2019 at 10:54, Adam Lane via kictanet <kictanet@lists.kictanet.or.ke> wrote:

Hi Ken

 

The report you reference is nothing about stealing technology and strategic information. Where do you get that from?

 

You may want to do some research into how much Chinese companies invest in R&D, and how much Chinese Government provides support for research with academics etc. Maybe in the past “China” had a reputation for copying, but now it has a reputation for cutting-edge research in many areas driven by a highly competitive domestic economy.

 

I can only speak on behalf of Huawei, but we invest around $15bn in R&D per year and were the world’s number one filer of international patents (not just China patents) to WIPO.

 

On the report you reference, yes, it is definitely worth reading that report published by the UK government. As the report says, “The oversight provided for in our mitigation strategy for Huawei’s presence in the UK is arguably the toughest and most rigorous in the world. This report does not, therefore, suggest that the UK networks are more vulnerable than last year.”

 

The 2019 HCSEC Oversight Board Report details some concerns about Huawei’s software engineering capabilities. We understand these concerns and take them very seriously. The issues identified in the 2019 HCSEC Oversight Board Report provide vital input for the ongoing transformation of our software engineering capabilities.

 

In November last year Huawei’s Board of Directors issued a resolution to carry out a company-wide transformation programme aimed at enhancing our software engineering capabilities, with an initial budget of US$2bn.

 

A high-level plan for the programme has been developed and we will continue to work with UK operators and the NCSC during its implementation to meet the requirements created as cloud, digitization, and software-defined everything become more prevalent. To ensure the ongoing security of global telecom networks, the industry, regulators, and governments need to work together on higher common standards for cybersecurity assurance and evaluation.

 

Further information:

– The mechanism of collaboration between Huawei and the UK government continues to work properly – the identification of the issues in the 2019 HCSEC Oversight Board Report is an indication of the HCSEC model working properly.
– The report states that “HCSEC continues to provide unique, world class cybersecurity expertise to assist the Government’s ongoing risk management programme around the use of Huawei equipment with the UK operators.”
– Over the past 30 years, Huawei products have served 3 billion people in more than 170 countries, these products have performed above the industry average in terms of system stability and reliability.
– On 27 December 2018, Huawei founder, Mr. Ren Zhengfei, issued an open letter to all employees, entitled Comprehensively Enhancing Software Engineering Capabilities and Practices to Build Trustworthy, Quality Products, to outline the transformation programme and the reasoning behind it.
– The level of assurance provided in this year’s report is essentially the same as it was in 2018. 
– The report states that “NCSC does not believe that the defects identified are a result of Chinese state interference.”
– The telecom industry requires unified standards for cybersecurity, which are necessary for its healthy development.

HCSEC OVERSIGHT BOARD REPORT 2019

 

 

www.huawei.com/en/facts/voices-of-huawei/statement-in-reaction-to-hesec-oversight-board-report-2019

 

 

 

From: ken Otieno Ogera [mailto:ogeraken@gmail.com]
Sent: Thursday, May 02, 2019 10:38 AM
To: KICTAnet ICT Policy Discussions <kictanet@lists.kictanet.or.ke>
Cc: Adam Lane <adam.lane@huawei.com>
Subject: Re: [kictanet] Vodafone denies Huawei Italy security risk

 

Keenly following. I have a report which I have attached on this matter. For China to grow , actually leapfrog, it has to steal technology and strategic information. China is looking for geopolitical dominance and needs data all over.

 

Regards,

Ken.

Huawei Cyber Security Evaluation…

 

 

On Tue, 30 Apr 2019 at 21:26, Adam Lane via kictanet <kictanet@lists.kictanet.or.ke> wrote:

Dear Patrick

Please note that Vodafone have responded to the inaccurate report from Bloomberg.  The report ishttps://www.bbc.com/news/business-48103430and copied below. You may also be interested in reading this report:https://www.zdnet.com/article/cisco-removed-its-seventh-backdoor-account-this-year-and-thats-a-good-thing/ explaining that Cisco has already found seven “backdoors” into its equipment just this year alone.

 

This is not a Huawei issue, or an espionage issue. It is a global ICT security issue that all companies are constantly struggling with. As you can read (or ask a technical expert), there are many bugs in many products (your apps on your phone are probably being updated on a weekly basis…) due to the nature of software development which are constantly being found and addressed; companies like Cisco and Huawei (along with customers like Vodafone) to the tests and find these (usually) before going to market (though sometimes afterwards) and address them urgently.

 

I am not sure how this issue of bugs in software relates to multinationals illegally collecting and selling business insights. I am sure the local companies have just as many bugs in their software too, and all of us need to collaborate to address them, improve software development standards, and raise the bar. This is not a policy issue, it is a technical issue.

You are certainly right that trust is good for business; unfortunately poor journalism such as that by Bloomberg which published before getting the “other side of the story” from Vodafone itself is not helping. I appreciate that you understand this, as you also referenced the ZDnet article which is much better reporting than Bloomberg, including

Instead, Huawei says it was “technical flaws in equipment” which were fixed.  “These were technical mistakes in our equipment, which were identified and corrected,” the spokesperson said. ‘The accepted definition of’ backdoors’ is deliberately built-in vulnerabilities that can be exploited — these were not such. They were mistakes which were put right.”

Regards

Adam

 

www.bbc.com/news/business-48103430

 

Vodafone denies Huawei Italy security risk

Vodafone has denied a report saying issues found in equipment supplied to it by Huawei in Italy in 2011 and 2012 could have allowed unauthorised access to its fixed-line network there.

 

A Bloomberg report said that Vodafone spotted security flaws in software that could have given Huawei unauthorised access to Italian homes and businesses.

The US refuses to use Huawei equipment for security reasons.

However, reports suggest the UK may let the firm help build its 5G network.

This is despite the US wanting the UK and its other allies in the “Five Eyes” intelligence grouping – Canada, Australia and New Zealand – to exclude the company.

Australia and New Zealand have already blocked telecoms companies from using Huawei equipment in 5G networks, while Canada is reviewing its relationship with the Chinese telecoms firm.

In a statement, Vodafone said: “The issues in Italy identified in the Bloomberg story were all resolved and date back to 2011 and 2012.

“The ‘backdoor’ that Bloomberg refers to is Telnet, which is a protocol that is commonly used by many vendors in the industry for performing diagnostic functions. It would not have been accessible from the internet.

“Bloomberg is incorrect in saying that this ‘could have given Huawei unauthorised access to the carrier’s fixed-line network in Italy’.

“In addition, we have no evidence of any unauthorised access. This was nothing more than a failure to remove a diagnostic function after development.

“The issues were identified by independent security testing, initiated by Vodafone as part of our routine security measures, and fixed at the time by Huawei.”

A Huawei spokesperson said: ‘We were made aware of historical vulnerabilities in 2011 and 2012 and they were addressed at the time.

“Software vulnerabilities are an industry-wide challenge. Like every ICT [information and communications technology] vendor, we have a well-established public notification and patching process, and when a vulnerability is identified, we work closely with our partners to take the appropriate corrective action.”

Several European telecoms operators are considering removing Huawei’s equipment from their networks.

But the firm’s cyber-security chief, John Suffolk, has described the firm as “the most open [and] transparent company in the world”.

In January, Vodafone “paused” the deployment of Huawei equipment in its core networks in Europe until Western governments resolved their security concerns about the company.

Huawei has been accused of being a potential security risk and of being controlled by the Chinese government – allegations it has always firmly denied.

With the introduction of the 5G network in the UK approaching, telecoms operators say the way it would work, in a highly integrated system alongside 4G, means that excluding Huawei is not realistic without significant cost and delay,

That would include potentially removing existing hardware, leading to the UK falling behind other countries.

The company is the world’s third-largest supplier of mobile phones, behind Samsung and Apple.

 

 

Senior Director, Public Affairs

Huawei Southern Africa

Mobile: +254-7909-85886 

Read Huawei Kenya’s First Ever Sustainability Reporthere

 

From: kictanet [mailto:kictanet-bounces+adam.lane=huawei.com@lists.kictanet.or.ke]On Behalf Of Patrick A. M. Maina via kictanet
Sent: Tuesday, April 30, 2019 8:59 PM
To: Adam Lane <adam.lane@huawei.com>
Cc: Patrick A. M. Maina <pmaina2000@yahoo.com>
Subject: [kictanet] [Economic Espionage Risks] Vodafone has ‘acknowledged’ that it Found Hidden Backdoors in Huawei Equipment (but says the issues were resolved).

 

Dear Listers,

 

These kinds of global reports should concern Kenyan business CEOs and Boards in all sectors (as well as economic / technology policymakers) – unless Kenya has little or no interest in competing regionally or internationally to generate new streams of foreign exchange; and even then, are we able to protect our local “home turf” competitive advantage, should multinational actors decide to illegally collect and sell (or leverage) unfairly acquired local business insights, in order to give affiliated new entrants unfair advantage over local enterprises?

 

These are legitimate and global policy concerns. If such things are happening in advanced, tech-savvy economies, what about here in Africa? Is the world having a party at our expense?

 

Trust is good for business – but its is not wise to trust blindly. If we refuse to learn from others, or from history, it will be difficult for us to hand over to our children/youth a future that proves that we played our part responsibly as present-day custodians.

 

We need to start thinking of our existence in less selfish terms: as a relay race, where it is our duty to ensure that we pass on a better future to our children/youth. Let’s wake each other up. We must start BELIEVING in ourselves and LOVING ourselves so that our children can believe in, and love themselves as well.

 

Excerpts below:

——————————-

 

Reported by Bloomberg today (30th April 2019):

 

“[Vodafone] identified hidden backdoors in the software that could have given Huawei unauthorized access to the carrier’s fixed-line network in Italy, a system that provides internet service to millions of homes and businesses, according to Vodafone’s security briefing documents from 2009 and 2011 seen by Bloomberg, as well as people involved in the situation.

 

Vodafone asked Huawei to remove backdoors in home internet routers in 2011 and received assurances from the supplier that the issues were fixed, butfurther testing revealed that the security vulnerabilities remained, the documents show.

 

Vodafone said Huawei thenrefused to fully remove the backdoor, citing a manufacturing requirement.

 

The April 2011 document was authored by its Chief Information Security Officer at the time, Bryan Littlefair. ‘What is of most concern here is that actions of Huawei in agreeing to remove the code, then trying to hide it, and now refusing to remove it as they need it to remain for ‘quality’ purposes,’ Littlefair wrote.

 

‘There’s no specific way to tell that something is a backdoor and most backdoors would be designed to look like a mistake,’ said Stefano Zanero, an Associate Professor of Computer Security at Politecnico di Milano University. ‘That said, the vulnerabilities described in the Vodafone reports from 2009 and 2011 have all the characteristics of backdoors: deniability, access and a tendency to be placed again in subsequent versions of the code,’ he said.

 

Vodafone also identified backdoors in parts of its fixed-access network known as optical service nodes, which are responsible for transporting internet traffic over optical fibers, and other parts called broadband network gateways, which handle subscriber authentication and access to the internet…

 

In Vodafone’s case, the risks included possible third-party access to a customer’s personal computer and home network, according to the internal documents.

 

However, Vodafone’s account of the issue was contested by people involved in the security discussions between the companies. [who allege that]Vulnerabilities in both the routers and the fixed access network remained beyond 2012 and were also present in Vodafone’s businesses in the U.K., Germany, Spain and Portugal. Vodafone stuck with Huawei because the services were competitively priced, they said.”

 

Links:

 

1. Vodafone found Hidden Backdoors in Huawei Equipment

www.bloomberg.com/news/articles/2019-04-30/vodafone-found-hidden-backdoors-in-huawei-equipment

 

2. Huawei denies existence of ‘backdoors’ in Vodafone networking equipment

www.zdnet.com/article/huawei-denies-existence-of-backdoors-in-vodafone-networking-equipment-brands-them-technical-flaws/

 

Best regards,

Patrick.

 

Patrick A. M. Maina

[Cross-domain Innovator | Public Policy Analyst – Indigenous Innovations]

 

 

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