Feds Say Chinese Military Hackers Damaged American Companies

05/19/2014 01:19 pm ET | Updated May 19, 2014

WASHINGTON -- The United States escalated a standoff with the Chinese government on Monday over the alleged use of hacking by military officials to give Chinese companies an advantage over American industries.

At a Justice Department press conference, officials announced the indictment of five members of the Chinese military on federal hacking charges. Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui are all officers in the Third Department of the Chinese People’s Liberation Army Unit 61398. A federal grand jury in the Western District of Pennsylvania indicted the five Chinese military officials on May 1, but the case was only unsealed on Monday.

It's unlikely that the Chinese military hackers will end up in a U.S. federal court. But the charges represented a significant action by the U.S. government, and in some ways an acknowledgement that diplomatic and public efforts to make the Chinese government hold them accountable had failed. Attorney General Eric Holder said the Obama administration "will not tolerate actions by any nation that seeks to illegally sabotage American companies and undermine the integrity of fair competition in the operation of the free market."

While Holder conceded that "all nations are engaged in intelligence gathering," he said what distinguishes this case is that it's about the Chinese government obtaining an economic advantage over American companies.

"It’s no secret that the Chinese government has blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries," Robert Anderson, executive assistant director of the FBI, said at the press conference. "Diplomatic efforts and public exposure have failed to curtail these activities. So we have taken the next step of securing an indictment of some of the most prolific hackers of the 3PLA."

FBI Director James Comey said the Chinese government "has blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries" for too long. David Hickton, U.S. Attorney for the Western District of Pennsylvania, called it "21st century burglary" and said the hacking had directly damaged American companies.

The charges stem from actions allegedly taken against six American entities in the nuclear power, metal and solar products industries. The defendants used screen names like "UglyGorilla" and "KandyGoo" when targeting the American companies from an office in Shanghai. One of the military officials, for example, sent a "spearphishing" message to an employee at U.S. Steel that was designed to trick the employee into allowing access to the computer. In another case, the defendants targeted the United Steelworkers union after its president issued a "call to action" against Chinese trade policies.

Sen. Sheldon Whitehouse (D-R.I.), a member of the Senate Judiciary Committee, praised the charges.

"Acts of cyber espionage against American businesses undermine our nation’s economic competitiveness and cost us jobs," Whitehouse said in a statement. "For far too long, China has stolen from American businesses and given our trade secrets to its own companies. Today’s indictment serves notice to cyber criminals and their foreign sponsors that there will be serious consequences for attacking companies in the United States."

Indictment of Chinese Military Hackers

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