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Chinese Target “Disgruntled” Employees in Critical American Corporations

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The Rising Threat of Chinese Espionage: A Call to Action for U.S. Corporations

Introduction

In an era marked by rapid technological advancements and global interconnectivity, the threat of espionage and cyberattacks has escalated to unprecedented levels. The United States, with its cutting-edge innovations and technological superiority, has become a prime target. Michael C. Casey, director of the National Counterintelligence and Security Center, recently highlighted a disturbing trend: Chinese spies are increasingly targeting disgruntled workers within U.S. corporations to steal valuable data and intellectual property. This article delves into Casey’s warnings, the implications for U.S. businesses, and the measures needed to counteract these threats.

The Growing Menace of Cyberattacks

At the CNBC CEO Council Summit, Casey emphasized the urgent need for the U.S. to prepare for an uptick in cyberattacks from various global threat actors, with China being the most prolific. “The U.S. and its companies need to prepare for the possibility of more cyberattacks from an increasing number of threat actors across the globe, and China is the biggest one,” he warned. He pointed out a staggering 100% increase in cyber incidents and ransomware demands, attributing much of this activity to Chinese operations. According to Casey, China views America’s technological edge as a prime target, continually succeeding in its efforts to steal valuable innovations and proprietary information.

Targeting the Disgruntled

One of the most concerning aspects of China’s strategy is its focus on recruiting disgruntled employees within U.S. corporations. Casey described these individuals as “human assets”—employees facing personal or financial difficulties who can be coerced into stealing data or intellectual property. “Among the threats that CEOs need to have on their radar when it comes to any IP threat is a rise in the use of what he called ‘human assets,’” Casey explained. This tactic poses a significant risk, as it leverages internal vulnerabilities to bypass external security measures.

The Insider Threat

Casey’s remarks at the summit highlighted a critical oversight among many U.S. companies: a lack of awareness and preparedness for insider threats. “I’m stunned by the number of companies that have no concept of their insider threat,” he stated. Many CEOs are unaware of the potential risks posed by their own employees, emphasizing the need for comprehensive insider threat programs. These programs should aim to identify employees at risk of becoming human assets and provide them with the necessary support to mitigate potential threats.

Addressing the Threat

To counteract these espionage efforts, Casey advocates for a layered defense strategy. CEOs must identify critical company secrets and determine who needs access to that information. “A CEO needs to really look at what secrets a company wants to protect and then who needs to have access to that information,” he advised. This approach requires a combination of technological defenses, such as advanced cybersecurity measures, and human-centric strategies, including employee support programs and regular security training.

Bridging the Public-Private Divide

Casey also underscored the importance of collaboration between the public and private sectors. He urged CEOs to establish relationships with local FBI representatives and share information about potential threats. “If you don’t know your local FBI representative, you’re doing something wrong,” he emphasized. This partnership can enhance the overall security posture of both individual companies and the nation as a whole.

A Global Perspective

While China remains the most aggressive actor, Casey acknowledged that other nations, including Russia, Iran, and North Korea, also pose significant espionage threats. Each of these countries employs different tactics, from stealing government secrets to targeting critical infrastructure. However, China’s focus on economic and technological supremacy makes it the most formidable adversary in the realm of corporate espionage.

The Dark Reality of Espionage

As the head of American counterintelligence, Mike Casey sees on a daily basis the scope of foreign spying operations, cyberattacks, and economic espionage against the United States. “The scale is impressive and terrifying,” said Casey, who stepped into his current job last year after working for more than two decades in Congress. He finished up his time on the Hill as the staff director for the Senate Intelligence Committee, so he already had a deep understanding of the array of threats facing the U.S.

The reality is stark and unsettling. “It’s not just the Russians stealing secrets from the State Department anymore,” Casey noted. “It’s everybody trying to steal all sorts of intellectual property, going after critical infrastructure. Just the list goes on and on.” For all the changes, one foreign adversary still stands out for the ambition and scale of its espionage efforts against the U.S.: the People’s Republic of China.

The Ambitious Goals of China

Casey explained that Beijing has studied American history and concluded that the U.S. achieved greatness, in part, by helping craft the world system that emerged from the ashes of World War II and the rules that govern it. “And they have a view of national greatness that essentially says, ‘If we can supplant the United States in key technology, both military and non-military, and help establish sort of the international regulatory scheme for all that, then we will become the preeminent player in the international area,'” he elaborated.

This interpretation influences how China’s intelligence officers operate and the kind of targets they go after in the U.S. “It’s not so much a guy in a black hat breaking into the plant and stealing the tank armor out the back,” Casey said. “It’s much more of a hacking operation or hiring a scientist.” He pointed to a recent Justice Department case charging a former Google engineer with stealing the building blocks of the company’s AI technology. The defendant, a Chinese national, was allegedly secretly working for two China-based technology companies at the same time that he was pilfering files from Google.

The Relentless Campaign

The case is just the latest in what American officials say is a relentless campaign by China to try to steal American trade secrets, cutting-edge research, and technology as well as intellectual property. U.S. officials and lawmakers have spent a lot of time in recent years meeting with American businesses and universities to try to keep them informed about what the government says are China’s efforts against them.

“The question then you got was, ‘Really, how bad is it? I’m not sure I believe you.’ The question now is, ‘What do I do?'” Casey reflected. “And that’s a fundamental change. I think the threat has been absorbed, and you’re much more in the practicalities of how do I deal with this as a private sector entity.”

Russia: A Different Kind of Threat

While China remains the most pressing concern, Casey also highlighted the ongoing threat posed by Russia. The Kremlin presents a different sort of threat, with Moscow not targeting U.S. economic secrets but instead seeking to steal state secrets. “They’re still much more in their classic model of government secrets, military secrets,” Casey explained. In 2018, the Trump administration expelled 60 Russian diplomats that the U.S. had identified as intelligence officers. The move was a response to a nerve agent attack in the United Kingdom against a retired Russian intelligence officer. Asked whether Russia has managed to rebuild its intelligence operations in the U.S. since then, Casey replied with “a qualified somewhat, yes.”

The Broader Implications

The implications of these espionage activities are far-reaching. Beyond the immediate financial losses and compromised intellectual property, there is the potential for severe disruptions to critical infrastructure. Casey warned that both China and Russia are already targeting essential U.S. systems, such as water supplies. CEOs must run worst-case scenario drills to prepare for the possibility of these systems being taken down. “Leaders need to know what they would do if the worst thing happens,” he advised.

It is imperative that U.S. companies stay ahead of the curve. This means not only investing in the latest cybersecurity technologies but also fostering a corporate culture that prioritizes security at every level. Regular training, clear communication channels, and a supportive work environment can all contribute to mitigating the risk of insider threats. In the face of such a pervasive and insidious threat, vigilance and preparedness are not just options—they are necessities. The battle against espionage is ongoing, and it is one that requires the collective effort of both the public and private sectors to ensure the continued security and prosperity of the United States.

ACZ Editor: It is axiomatic in the intelligence world that an insider is impossible to defend against. A disgruntled employee with access to a company’s valuable secrets is a ticket to complete compromise and loss of viability.

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