Politically charged web sites face frequent attacks

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Websites that publish controversial material are facing a barrage of politically-motivated computer attacks, say Harvard University researchers.

The researchers, who launched the survey after hearing complaints from website owners, identified almost 300 attempts to silence independent media and human rights websites over the past year.

"There is almost always a political component to these attacks," says Jillian York, one of the report's authors.

The researchers focused on distributed denial of service (DDoS) attacks, the technique that temporarily downed the Wikileaks website last month. DDoS attackers aim a flood of signals at a target website until the site, or the network that connects it to the internet, collapses under the strain of the incoming data.

Hundreds of attacks

The Wikileaks attacks were described at the time as a new and dangerous attempt to limit free speech. They are anything but new, according to the report. York and colleagues identified 140 attacks aimed at 280 media and human rights sites over the 12-month period ending in August of this year. They also surveyed the administrators of 45 media and human rights sites; 28 said they had been the target of a DDoS attack in the past year.

Targets include the protest site bauxitevietnam.info, which campaigns against a Chinese-backed project to mine bauxite in an environmentally sensitive part of Vietnam. It went down last January after tens of thousands of Vietnamese computer users were fooled into downloading software that aimed a flood of signals at the site.

Large scale problem

The Harvard team itself has been the victim of an attack. Their server also hosts the site of the Citizen Media Law Project, which supports online and citizen media. The site went down for two hours and remained unstable for a day at the end of August after being targeted by a network of 500 computers, says Hal Roberts, who also worked on the report. As with almost all other DDoS incidents, it is impossible to know who coordinated the attack.

The fact that attackers were able to force the law site offline illustrates the scale of the problem, adds Roberts. The site's server is overseen by two skilled administrators. For less well resourced sites, some of which are set up by volunteers using free-to-use software, the downtime can run to day or weeks. He and York suggest that media and human rights organisations run mirror sites at large blogging platforms, such as Blogger, which can withstand the traffic generated by most DDoS attacks.

Weapon or protest tool?

The Wikileaks attacks brought DDoS to the attention of the public, but security experts have long been aware of the problem. Gunter Ollmann of Damballa, a computer security firm based in Atlanta, Georgia, has blogged extensively on DDoS attacks and notes that as well as being used to silence critics, they are often used as a form of protest. Some commentators have described the attacks on PayPal and Mastercard, which took place after the companies severed links with Wikileaks, as virtual "sit-ins".

"DDoS tools and tactics are unfortunately a very common tactic, whether someone is trying to knock off the opposition within an online game, such as World of Warcraft, or extorting money from gambling sites in the lead up to a major sporting event," he says.

 by Jim Giles (NewScientist)
 

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Ernst & Young accused of hiding Lehman troubles

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A view of the Ernst & Young headquarters in New York December 20, 2010.

Credit: Reuters/Lucas Jackson

A view of the Ernst & Young headquarters in New York December 20, 2010.
Credit: Reuters/Lucas Jackson

By Grant McCool

NEW YORK (Reuters) - Accounting firm Ernst & Young was sued by New York prosecutors over allegations it helped to hide Lehman Brothers' financial problems, in the first major government legal action stemming from the Wall Street company's 2008 downfall.

The civil fraud case contends that Ernst & Young stood by while Lehman used accounting gimmickry to mask its shaky finances. The lawsuit says Lehman ran "a massive accounting fraud," but it did not name as defendants any former top executives at the investment bank whose September 2008 collapse helped spark the global financial crisis.

The lawsuit seeks more than $150 million in fees that Ernst & Young received from 2001 to 2008 as Lehman's outside auditor -- less than 1 percent of its global annual revenue -- plus other unspecified damages.

The lawsuit was filed by New York Attorney General Andrew Cuomo. People close to Cuomo said one factor in bringing the case was that he knows that the U.S. Securities and Exchange Commission already is investigating former Lehman chief Richard Fuld and other former top Lehman executives.

Cuomo "wants to go after the one party he knows isn't being sued," said John Coffee, a professor of corporate law at Columbia University.

In a statement on Tuesday, Ernst & Young said it intended to "vigorously defend" the lawsuit.

Lehman's bankruptcy occurred in the midst of a global financial crisis and was not caused by any accounting issues, the company said.

"Lehman's audited financial statements clearly portrayed Lehman as a highly leveraged entity operating in a risky and volatile industry," the accounting firm said.

Legal and accounting experts said earlier they expect that Ernst & Young will try to settle the case rather than engage in a long court fight.

"It tends to be lot less expensive for both parties to resolve it through settling and getting it behind them," said Bruce Pounder, an expert on accounting ethics and president of Leveraged Logic, an Asheville, North Carolina, firm that provides continuing education to accountants.

He said he does not see significant fallout for Ernst & Young in terms of its viability as an audit firm.

Ernst is the third-largest by revenue of the "Big Four" U.S. accounting firms, behind Deloitte and PwC.

Cuomo filed the lawsuit days before he is to leave office and become governor of the state in January. A spokesman for incoming attorney general Eric Schneiderman declined to comment.

REPO 105

Cuomo said in the civil complaint that for more than seven years leading up to Lehman's bankruptcy, the investment bank engaged in fraudulent accounting transactions that Ernst & Young explicitly approved. The case focuses on an accounting technique known as Repo 105, which temporarily removed as much as $50 billion in assets from the balance sheet in 2008.

"This practice was a house-of-cards business model designed to hide billions in liabilities in the years before Lehman collapsed," Cuomo said in a statement.

The lawsuit comes nine months after a court-appointed examiner in the Lehman bankruptcy concluded that Ernst & Young was "professionally negligent" in its audit duties.

The report by examiner Anton Valukas also said that Lehman could also have claims against Fuld and former chief financial officers Chris O'Meara, Erin Callan and Ian Lowitt for negligence or breach of fiduciary duty related to the use of Repo 105 transactions.

PAST CASES

The case, filed in New York state Supreme Court, is one of the biggest legal cases involving an accounting firm since Arthur Andersen was criminally indicted in 2002 over the Enron scandal.

The Ernst & Young case is a civil lawsuit, while Andersen was charged criminally and later convicted of obstruction of justice for its role in Enron's collapse.

The U.S. Supreme Court reversed the Arthur Andersen conviction in 2005, but the firm was virtually out of business by then -- and its reputation was shattered.

Andersen's demise reduced the number of big accounting firms that audit most large companies globally to just four, including Ernst & Young. Since then, prosecutors have been wary of charging entire firms with fraud because of worries that another audit firm collapse would harm the financial system.

In one major settlement, KPMG agreed in 2005 to pay $456 million to settle a federal investigation into questionable tax shelters, avoiding a potentially crippling criminal indictment. The firm agreed to make internal changes and to be overseen by an outside monitor temporarily as part of the pact.

In 1999, Ernst & Young agreed to pay $335 million to shareholders of Cendant Corp to settle a case stemming from an accounting scandal at the travel and real estate service company. Ernst & Young said at the time that it was misled by Cendant and had done nothing wrong.

London-based Ernst & Young employs about 140,000 people. It had revenue of $21.3 billion in the fiscal year ended June 30.

(Reporting by Grant McCool, Dena Aubin, Scot J. Paltrow and Dan Levine. Editing by John Wallace, Robert MacMillan and Matthew Lewis)

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FCC to approve Net neutrality rules Tuesday

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The Federal Communications Commission is set to vote on official Net neutrality rules tomorrow, which the agency claims will provide consumers, service providers, device makers, and application developers clear rules of the road for the Internet.

With the support of all three Democrats on the FCC, the regulation is set to pass. And the vote will mark the next step in what has been a politically charged debate between telephone and cable companies and consumer groups advocating for a free and open Internet.

The five-member commission, which is made up of three Democrats and two Republicans, has been working on developing these official rules of the road for more than a year. In September 2009, Chairman Julius Genachowski suggested adding to the original Internet Openness principles adopted by the commission under former Chairman Michael Powell.

The debate of what should be included in the new rules has raged ever since. Democratic supporters and consumer advocates along with some Internet companies have pushed for more stringent regulations. Meanwhile, Congressional Republicans and major telephone and cable companies have lobbied for lighter regulation.

Genachowski, who offered a preview of the plan earlier this month, has attempted to give each side a little of what it wants in the new rules, but neither camp has said they are completely satisfied. In fact, the two Democrats on the commission, Michael Copps and Mignon Clyburn, have been reluctant to go along with the chairman's plan because they believe it may be too favorable to major broadband providers. But FCC officials say the chairman has worked closely with these commissioners to satisfy their concerns. And now it looks as though the two Democrats will support the new rules, albeit somewhat reluctantly.

Clyburn released a statement today stating she will vote in favor of the new rules. Copps also said he'd vote for the rules, but in a statement today he noted that he believes things are missing from the order.

"While I cannot vote wholeheartedly to approve the item, I will not block it by voting against it. I instead plan to concur so that we may move forward," Copps said in a statement.

Meanwhile, Republican Commissioner Robert McDowell, who has long opposed Net neutrality regulation, said in an op-ed for The Wall Street Journal on Monday that the new rules are trying to fix a problem that doesn't exist.

"On this winter solstice, we will witness jaw-dropping interventionist chutzpah as the FCC bypasses branches of our government in the dogged pursuit of needless and harmful regulation," McDowell wrote. "The darkest day of the year may end up marking the beginning of a long winter's night for Internet freedom."
He went on to say:

"Nothing is broken and needs fixing, however. The Internet has been open and freedom-enhancing since it was spun off from a government research project in the early 1990s. Its nature as a diffuse and dynamic global network of networks defies top-down authority. Ample laws to protect consumers already exist. Furthermore, the Obama Justice Department and the European Commission both decided this year that Net neutrality regulation was unnecessary and might deter investment in next-generation Internet technology and infrastructure."

Senior representatives from the FCC held a press conference this afternoon to provide an overview of what the order will actually say. At a high level, there are three provisions that will become official FCC regulation.
The first rule is about transparency. Network operators of both fixed and wireless networks will be required to disclose to consumers, content providers, and device makers information that will be necessary for them to deploy services. In other words, if a broadband network operator is using network management techniques that affect an application or if a wireless broadband network provider doesn't allow a certain type of application, the service provider must provide information about the requirements for its network.

The second Net neutrality rule prohibits the blocking of traffic on the Internet. The rule applies to both fixed wireline broadband network operators, as well as to wireless providers. But the stipulations for each type of network are slightly different.

For wired networks, operators will not be allowed to block any lawful content, services, applications, or devices on their network. For wireless providers, the rule is somewhat limited and only prohibits the blocking of access to Web sites or applications that specifically compete with a carrier's telephony voice or video services.

The blocking rule for wireless and wireline networks also includes allowances for reasonable network management. This means that wireline and wireless broadband providers will be able to reasonably manage their networks during times of congestion to ensure every user can adequately access services.
And finally, the last rule applies only to fixed broadband providers. It prohibits fixed wireline broadband providers from unreasonably discriminating against traffic on their network.

Net neutrality zealots have already expressed dismay in Copps' support of the new rules.

"Internet users across America will have lost a hero if Commissioner Copps caves to pressure from big business and supports FCC Chairman Genachowski's fake Net neutrality rules--rules written by AT&T, Comcast, and Verizon, the very companies the public is depending on the FCC to regulate strongly," Jason Rosenbaum, the senior online campaigns director for the Progressive Change Campaign Committee, said in a statement.

But not everyone is upset that a compromise appears to have been reached.

Senator John Kerry (D-Mass.), released a statement today applauding the three Democratic commissioners for reaching a consensus on the rules.

"While he (Commissioner Copps) and Commissioner Clyburn, as well as many of the champions of network neutrality, including myself, would have supported a stricter order, I commend them for rising to the moment and making possible very meaningful progress to preserve the freedom to communicate and compete over the Internet," he said in the statement. "I also join them in commending Chairman Genachowski for his inclusive, thoughtful, and creative work in bringing parties together, airing all points of view, and finding a principled center."

The FCC meeting will be broadcast live starting at 10:30 a.m. ET.

Marguerite Reardon

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