{"id":6603,"date":"2022-07-08T18:38:00","date_gmt":"2022-07-08T18:38:00","guid":{"rendered":"https:\/\/blackopspartners.com\/?p=6603"},"modified":"2022-07-11T18:40:34","modified_gmt":"2022-07-11T18:40:34","slug":"fbi-directors-remarks-to-business-leaders-in-london","status":"publish","type":"post","link":"https:\/\/blackopspartners.com\/fbi-directors-remarks-to-business-leaders-in-london\/","title":{"rendered":"FBI Director’s Remarks to Business Leaders in London\u00a0"},"content":{"rendered":"\n

From FBI.gov<\/a>. <\/strong>Remarks prepared for delivery.<\/em> <\/p>\n\n\n\n

Thank you, Ken. It\u2019s an honor to be here this week, talking about common threats our nations face, and the superb cooperation between our two agencies<\/p>\n\n\n\n

The FBI has no closer partner than MI5. We work together on almost every mission our agencies confront\u2014from countering terrorism to cybertheft and transnational repression to espionage.<\/p>\n\n\n\n

Now, you\u2019ll notice that there\u2019s a common thread running through all the challenges we tackle together, which is that they\u2019re all hard. <\/p>\n\n\n\n

Our world is certainly filled with enduring, difficult challenges. Not least, Russia\u2019s invasion of Ukraine and their ruthless killing of civilians and destruction of homes and infrastructure.<\/p>\n\n\n\n

As laser-focused as both our agencies are on the Russia threat, though, I want to talk today about another complex, enduring, and pervasive danger to the kinds of innovative businesses we have here in the audience.<\/p>\n\n\n\n

We consistently see that it\u2019s the Chinese government that poses the biggest long-term threat to our economic and national security, and by \u201cour,\u201d I mean both of our nations, along with our allies in Europe and elsewhere.<\/p>\n\n\n\n

And I want to be clear that it\u2019s the Chinese government and the Chinese Communist Party that pose the threat we\u2019re focused on countering. Not the Chinese people, and certainly not Chinese immigrants in our countries\u2014who are themselves frequently victims of the Chinese government\u2019s lawless aggression.<\/p>\n\n\n\n

Now, we understand the appeal of doing business in and with China. Before returning to public service, I spent 12 years in the private sector, advising and representing some of the world\u2019s leading companies. And at the FBI, we\u2019re engaged with businesses of all sizes and stripes every day, so we understand the perspective of firms looking to the China market, as they try to find and keep a competitive edge.<\/p>\n\n\n\n

But the point I want to leave you with today is that the Chinese government poses an even more serious threat to Western businesses than even many sophisticated businesspeople realize. So, I want to encourage you to take the long view as you gauge that threat and as you plan to meet it.<\/p>\n\n\n\n

I\u2019ll start with what this danger looks like. The Chinese government is set on stealing your technology\u2014whatever it is that makes your industry tick\u2014and using it to undercut your business and dominate your market. And they\u2019re set on using every tool at their disposal to do it.<\/p>\n\n\n\n

For one, they use intelligence officers to target valuable private sector information\u2014multiplying their efforts by working extensively through scores of \u201cco-optees,\u201d people who aren\u2019t technically Chinese government officials but assist in intelligence operations, spotting and assessing sources to recruit, providing cover and communications, and helping steal secrets in other ways.<\/p>\n\n\n\n

We\u2019ve seen the regional bureaus of China\u2019s MSS\u2014their Ministry of State Security\u2014key in specifically on the innovation of certain Western companies it wants to ransack. And I\u2019m talking about companies everywhere from big cities to small towns\u2014from Fortune 100s to start-ups, folks that focus on everything from aviation, to AI, to pharma. We\u2019ve even caught people affiliated with Chinese companies out in the U.S. heartland, sneaking into fields to dig up proprietary, genetically modified seeds, which would have cost them nearly a decade and billions in research to develop themselves.<\/p>\n\n\n\n

And those efforts pale in comparison to their lavishly resourced hacking program that\u2019s bigger than that of every other major country combined.<\/p>\n\n\n\n

The Chinese Government sees cyber as the pathway to cheat and steal on a massive scale. <\/p>\n\n\n\n

Last spring, for instance, Microsoft disclosed some previously unknown vulnerabilities targeting Microsoft Exchange Server software. Chinese hackers had leveraged these vulnerabilities to install more than 10,000 webshells, or backdoors, on U.S. networks, giving them persistent access to data on those systems. That\u2019s just one example of the Chinese government finding and exploiting vulnerabilities, albeit a big one.<\/p>\n\n\n\n

But over the last few years, we\u2019ve seen Chinese state-sponsored hackers relentlessly looking for ways to compromise unpatched network devices and infrastructure. And Chinese hackers are consistently evolving and adapting their tactics to bypass defenses. They even monitor network defender accounts and then modify their campaign as needed to remain undetected. They merge their customized hacking toolset with publicly available tools native to the network environment\u2014to obscure their activity by blending into the \u201cnoise\u201d and normal activity of a network<\/p>\n\n\n\n

The point being, they\u2019re not just big. They\u2019re also effective.<\/p>\n\n\n\n

But in addition to traditional and cyber-enabled thievery, there are even more insidious tactics they\u2019ll use to essentially walk through your front door\u2014and then rob you. The Chinese government likes to do this by making investments and creating partnerships that position their proxies to steal valuable technology.<\/p>\n\n\n\n

To start with, a whole lot of Chinese companies are owned by the Chinese government\u2014effectively the Chinese Communist Party. And often that ownership is indirect and not advertised. And those that aren\u2019t owned outright are effectively beholden to the government all the same, as Chinese companies of any size are required to host a Communist Party cell to keep them in line.<\/p>\n\n\n\n

So, when you deal with a Chinese company, know you\u2019re also dealing with the Chinese government\u2014that is, the MSS and the PLA\u2014too, almost like silent partners.<\/p>\n\n\n\n

But the problem is bigger than that China often disguises its hand in order to obtain influence and access where companies don\u2019t suspect it. <\/p>\n\n\n\n

Outside of China, their government uses elaborate shell games to disguise its efforts from foreign companies and from government investment-screening programs like CFIUS, America\u2019s Committee on Foreign Investment in the U.S.<\/p>\n\n\n\n

For example, they\u2019re taking advantage of unusual corporate forms like SPACs, or Special Purpose Acquisition Companies, and buying corporate shares with overweight voting rights that let their owners exert control over a company out of proportion with the actual size of their stake in it.<\/p>\n\n\n\n

The Chinese government has also shut off much of the data that used to enable effective due diligence, making it much harder for a non- Chinese company to discern if the company it\u2019s dealing with is, say, a subsidiary of a Chinese state-owned enterprise.<\/p>\n\n\n\n

We\u2019re working with MI5 and other partners to identify these types of hidden investments. In the U.S., we\u2019ve identified and pulled into our CFIUS screening hundreds of concerning transactions that participants failed to notify us about. Within China, you\u2019ve got all those same problems\u2014and then some.<\/p>\n\n\n\n

You probably all know that the Chinese government requires U.S. and U.K. companies to partner with Chinese businesses, partners that often turn into competitors. But they\u2019re also legislating and regulating their way into your IP and your data.<\/p>\n\n\n\n

Since 2015, they have passed a series of laws that eat away at the rights and security of companies operating in China. For example, a 2017 law requires that if the Chinese government designates a company as \u201ccritical infrastructure,\u201d that company must store its data in China\u2014where, of course, their government has easier access to it.<\/p>\n\n\n\n

Another 2017 law would allow them to force Chinese employees in China to assist in Chinese intelligence operations. And a series of laws passed in 2021 centralizes control of data collected in China and gives their government access to and control of that data.<\/p>\n\n\n\n

Other new laws give the Chinese government the ability to punish companies operating in China that assist in implementing international sanctions, putting those businesses between a rock and hard place. And one requires companies with China-based equities to report cyber vulnerabilities in their systems, giving Chinese authorities the opportunity to exploit those vulnerabilities before they\u2019re publicly known.<\/p>\n\n\n\n

If their government could be trusted with that kind of information, that\u2019d be one thing, but we\u2019ve seen the Chinese government take advantage of its laws and regulations to steal intellectual property and data<\/p>\n\n\n\n

In 2020, for example, we learned that a number of U.S. companies operating in China were being targeted through Chinese government- mandated tax software. To comply with Chinese law, these businesses had to use certain government-sanctioned software. The U.S. companies then discovered that malware was delivered into their networks through this same software. So, by complying with Chinese laws for conducting business in China, they ended up unwittingly installing backdoors into their systems that enabled hackers\u2019 access into what should have been private networks.<\/p>\n\n\n\n

This is all just a small sampling, and I could go on.<\/p>\n\n\n\n

What makes the Chinese government\u2019s strategy so insidious is the way it exploits multiple avenues at once: They identify key technologies needed to dominate markets, like the ones they highlight in their \u201cMade in China 2025\u201d plan. Then, they throw every tool in their arsenal at stealing those technologies\u2014causing deep, job-destroying damage across a wide range of industries, like when they tried to steal cutting edge jet engine technology, recruiting an insider at GE\u2019s joint venture partner to enable access by hackers back in China.<\/p>\n\n\n\n

Or in another example, combining human spying with hacking in a joint effort to try to steal COVID research from one of our universities.<\/p>\n\n\n\n

So it\u2019s long been clear that the danger China poses to businesses is complex and challenging.<\/p>\n\n\n\n

Where we see some companies stumble is in thinking that by attending to one, or a couple, of these dangers, they\u2019ve got the whole Chinese government danger covered\u2014when really, China just pivots to the remaining door left unattended.<\/p>\n\n\n\n

But the danger China poses to companies isn\u2019t just complex. It\u2019s also getting worse.<\/p>\n\n\n\n

That\u2019s in part because, as you all know, there\u2019s been a lot of discussion about the potential that China may try to forcibly takeover Taiwan. Were that to happen, it would represent one of the most horrific business disruptions the world has ever seen. More on that in a minute.<\/p>\n\n\n\n

But it\u2019s also because the Chinese government is using intimidation and repression to shape the world to be more accommodating to China\u2019s campaign of theft.<\/p>\n\n\n\n

Examples of the intimidation the Chinese government wields to bend people, companies, and governments to its will could keep us here all day.<\/p>\n\n\n\n

But to take just one example, this spring, the Chinese government went so far as directly interfering in a Congressional election in New York, because they did not want the candidate\u2014a Tiananmen Square protester and critic of the Chinese government\u2014to be elected.<\/p>\n\n\n\n

A former Chinese intelligence officer hired a private investigator to dig up derogatory information and derail the candidate\u2019s campaign. When they couldn\u2019t find anything, they decided to manufacture a controversy using a sex worker. And when that didn\u2019t work out, they even suggested using violence, such as arranging for the candidate to be struck by a vehicle and making it look like an accident.<\/p>\n\n\n\n

The Chinese government\u2019s crackdown on dissidents crosses borders all over the world, including here in the U.K. In the U.S., they\u2019ve gone after Chinese-national college students for participating in pro-democracy rallies at U.S. universities or even just for expressing themselves in class.<\/p>\n\n\n\n

The FBI battles the Chinese government\u2019s transnational repression because it\u2019s an evil in its own right and an assault on the freedoms of an open society.<\/p>\n\n\n\n

The FBI and MI5 are united in this fight\u2014from our leadership teams down to our case agents and officers. But this audience should bear in mind that China\u2019s repression is also a means to an end\u2014and we counter it for that reason, too.<\/p>\n\n\n\n

Repression is part of how the Chinese government tries to shape the world in its favor, making the world more pliable and susceptible to its nefarious campaign to steal our data and innovation. That connection\u2014between the Chinese government\u2019s ugly repression and its strategic economic goals\u2014is too little recognized. So, I want to take a few minutes to focus on it.<\/p>\n\n\n\n

The Chinese government is trying to shape the world by interfering in our politics (and those of our allies, I should add), like the Congressional example I just mentioned. In other instances, using GPS trackers and other technical surveillance against activists inside the U.S. speaking out against the Chinese government. Even covertly and deceptively running a purported pro-democracy organization to collect information on Americans opposed to them.<\/p>\n\n\n\n

But they try to shape the world by going after companies, too\u2014sometimes just for being associated with people Beijing wants to silence.<\/p>\n\n\n\n

Like when, after one U.S.-based employee of a major hotel chain \u201cliked\u201d a social media post by a Tibetan separatist group, the Chinese government made that U.S. hotel chain shut down all of its Chinese websites and applications for a solid week.<\/p>\n\n\n\n

Or when an executive with one NBA basketball team appeared to tweet in support of Hong Kong democracy protests, the Chinese government banned all NBA broadcasts in China for an entire year.<\/p>\n\n\n\n

Part of that effort is strong-arming companies to do Beijing\u2019s bidding and actually help it undermine our political and judicial processes.<\/p>\n\n\n\n

Like last November, when the Chinese Embassy warned U.S. companies that, if they want to keep doing business in China, they need to fight bills in our Congress that China doesn\u2019t like. That\u2019s not something listed in the brochure when you sign up to work with China. And you won\u2019t find those types of requirements\u2014or a warning that you\u2019re about to lose your I.P.\u2014in any contract you might sign.<\/p>\n\n\n\n

But if you\u2019re considering partnering with a Chinese-owned company, you should ask their Ministry of Commerce: Can they assure you that your employees won\u2019t be dragooned into working for their Ministry of State Security and against you? That you won\u2019t have to load their tax software or any other state-sanctioned software onto your systems? That your company won\u2019t be punished because of one of your employees\u2019 tweets?<\/p>\n\n\n\n

Their ministry\u2019s not going to give you a satisfactory answer\u2014at least not one that\u2019s not belied by the text of the laws on their books or by the way they\u2019ve actually been treating foreign companies operating there.<\/p>\n\n\n\n

All of that is to say\u2014China poses a far more complex and pervasive threat to businesses than even most sophisticated company leaders realize<\/p>\n\n\n\n

But as I said earlier, I\u2019m not here to tell you to avoid doing business in or with China altogether. Of course, sophisticated Western businesses have long found ways to succeed in tough environments. It\u2019s risk versus reward, with a premium on accurately assessing that risk.<\/p>\n\n\n\n

But I do have just a few suggestions for those who do plow ahead, because we\u2019re not in the business of just articulating problems. We\u2019re doing something about them, together\u2014with MI5, with the private sector itself, with other government partners. <\/p>\n\n\n\n

First, I would encourage everyone to work with the two agencies up here. We can arm you with intelligence that bears on just what it is you\u2019re facing.<\/p>\n\n\n\n

For example, when it comes to the cyber threat, everything from details about how Chinese government hackers are operating to what they\u2019re targeting.. And when incidents do occur, we can work together\u2014our agencies and you\u2014to degrade the threat.<\/p>\n\n\n\n

Our folks will race out to give you technical details that will help you lessen the effects of an attack. Together, we can also run joint, sequenced operations that disrupt Chinese government cyber attacks, like we did in that Microsoft Exchange example I noted earlier, working with the private sector, including Microsoft itself, and our government partners to slam shut those backdoors the Chinese government had installed on corporate networks across the U.S.<\/p>\n\n\n\n

And we can also help you to ascertain whether the cyber problem you\u2019ve encountered is actually part of a larger intelligence operation, whether the hackers you do see may be working with insiders, or in concert with other corporate threats, that you don\u2019t see.<\/p>\n\n\n\n

Finally, I\u2019d ask you to take the long view. <\/p>\n\n\n\n

I\u2019m thinking of the view that high-performing boards of directors bring to a company. Looking past the nearest earnings report, to maximizing the value of the company over the course of years, long after today\u2019s management team may have moved on. Consider that it may be a lot cheaper to preserve your intellectual property now than to lose your competitive advantage and have to build a new one down the road.<\/p>\n\n\n\n

I\u2019d encourage you to keep in mind the complexity of that threat to your innovation I just talked about\u2014how hard it is to recognize and close every avenue. Maintaining a technological edge may do more to increase a company\u2019s value than would partnering with a Chinese company to sell into that huge Chinese market, only to find the Chinese government, and your \u201cpartner,\u201d stealing and copying your innovation, setting up a Chinese competitor, backed by its government, that is soon undercutting you\u2014not just in China, but everywhere.<\/p>\n\n\n\n

Now, when it comes to the threat against Taiwan I mentioned a minute ago, I\u2019m confident in saying that China is drawing all sorts of lessons from what\u2019s happening with Russia and its invasion of Ukraine\u2014and you should, too.<\/p>\n\n\n\n

We\u2019ve seen China looking for ways to insulate their economy against potential sanctions, trying to cushion themselves from harm if they do anything to draw the ire of the international community. In our world, we call that kind of behavior a clue<\/p>\n\n\n\n

But it\u2019s not just Russia that\u2019s hurt by what\u2019s happened to their economy today as a result of sanctions and disruptions. There were a lot of Western companies that had their fingers still in that door when it slammed shut. <\/p>\n\n\n\n

Even a few weeks ago, a Yale study reported in the Wall Street Journal assessed that Western businesses had already lost $59 billion in Russia because of the conflict. The losses grow every day.<\/p>\n\n\n\n

And if China does invade Taiwan, we could see the same thing again, at a much larger scale. <\/p>\n\n\n\n

Just as in Russia, Western investments built over years could become hostages, capital stranded, supply chains and relationships disrupted. Companies are caught between sanctions and Chinese law forbidding compliance with them.<\/p>\n\n\n\n

That\u2019s not just geopolitics. It\u2019s business forecasting<\/p>\n\n\n\n

As I\u2019ve heard one business leader put it recently, companies need to be wrestling with the strategic risks China poses to their growth in the long-term\u2014and thinking about what actions they can and should be taking now, to prevent catastrophe later.<\/p>\n\n\n\n

I know this all sounds alarming. But while the threat is immense, that doesn\u2019t mean harm is inevitable.<\/p>\n\n\n\n

Because while the private sector can\u2019t stand alone against the danger\u2014you\u2019re not alone. The FBI and MI5 share a relentless focus on a common mission: protect our countries and keep our people safe.<\/p>\n\n\n\n

I spend a lot of my time talking with other leaders focused on national security, both at home in the U.S. and abroad. I know Ken does too. And I\u2019ll say the frequency with which this threat dominates the discussion is striking. Because our counterparts say they\u2019re fighting to protect their students from intimidation, too. That Chinese officials are targeting their policies and candidates with malign influence, too.<\/p>\n\n\n\n

That hackers in China are carrying their companies\u2019 innovation off. That Chinese companies or proxies are using quasi-legal investments to undermine their economies, too.<\/p>\n\n\n\n

But the lesson the Chinese government has been unable to learn is that by targeting countries around the world that value the rule of law, they band us even closer together.<\/p>\n\n\n\n

Beijing may think our adherence to the rule of law is a weakness. But they\u2019re wrong.<\/p>\n\n\n\n

As rule-of-law agencies in rule-of-law nations with rule-of-law partners, we see how our democratic and legal processes arm us.<\/p>\n\n\n\n

We\u2019re confronting this threat and winning important battles, not just while adhering to our values\u2014but by adhering to our values and by continuing to foster close partnerships with all of you.<\/p>\n\n\n\n

In the process, we\u2019re showing why the Chinese government needs to change course\u2014for all our sakes.<\/p>\n\n\n\n

All of us in America, in the U.K., and across the free world, are in this together\u2014and together, we\u2019re an awfully formidable team.<\/p>\n\n\n\n

Resources<\/h3>\n\n\n\n