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The Wall Street Journal: Chinese Spies Allegedly Hack Rolls Royce, Shell, Others

December 3, 2007, 4:55 pm
Posted by Ben Worthen

Rolls Royce and Royal Dutch Shell are among hundreds of companies that have reportedly been breached by state-sponsored Chinese hackers. Unlike most of the data breaches in the news, these hackers weren’t after customer or employee data: They stole companies’ intellectual property.

Last week we warned that state-sponsored cyber espionage was on the rise. (Yes, we told you so.) We said it was because companies “have intellectual property that could help a foreign government – be it military documents or information on financial markets and the latest tech products.” That’s exactly what happened here, according to the Times of London. In the case of Rolls Royce, the presumed target is information about the engines the company makes for many commercial and military aircrafts. In the case of Shell, the hackers were after confidential pricing information about the oil giant’s African operations. Both companies were warned about the breaches by the British security service MI5, which sent letters to 300 CEOs and security execs alerting them to similar breaches.

In the case of Rolls Royce, the Chinese allegedly used a kind of malicious code called a Trojan that a hacker secretly installs on someone’s computer. The Trojan looks for information and sends what it finds back to the hacker. With Shell, the Chinese government reportedly recruited Chinese nationals working for the company to steal the information. A spokesman for the Chinese embassy in London told the Times that he was unaware of the allegations and that the embassy hadn’t received any complaints from British law enforcement.

It’s pretty clear to us that the threat of a hacker stealing customer or employee data isn’t enough to convince most business leaders that they need to make data security a priority – how else to explain the fact that such incidents keep rising? And it’s possible they have a point: One recent study found that the average cost of a breach is $6.3 million, which is probably what good security would cost. There’s also not a lot of evidence that stock holders or customers will punish a company for a data breach.

Trade secrets – the crown jewels of any business – are probably worth a lot more than $6.3 million to most companies. Hopefully, the threat to this data will prompt businesses to tighten security.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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