Israel espionage case points to new Net threat

Executives of top telecom firms accused of spying on each other. A jealous ex-husband suspected of monitoring his former in-laws. Private investigators implicated in computer-hacking-for-hire; one now involved in a possible attempted suicide. So much bad publicity, government officials worry it might impact the entire nation’s economy.

At the center of it all — a tiny computer program that’s caused the biggest corporate scandal anyone in Israel can remember.  

Most consumers have heard of software that can spy on them, and their computers. Such malicious software is often brazenly marketed to spouses who suspect their mate is cheating.  But that same technology, sometimes called a Trojan horse, because it sneaks onto a victim’s computer in disguise, can be used to commit brazen acts of industrial espionage.

And U.S. experts say what happened in Israel could — and probably already has — happen here.

Israel is now reeling from what some are calling “Trojangate,” a corporate scandal that has dominated news coverage there since it was revealed May 29. Already, there have been nearly 20 arrests. Published reports indicate mountains of documents have been stolen from dozens of top Israeli firms. Some 100 servers loaded with stolen data have been seized.

But Trojangate, experts say, is not unique. It’s just the first time a major cyber-espionage case has been unmasked by law enforcement. There's evidence suggesting U.S. firms have already been targeted by similar attacks.

Last fall, banks in the New York area were targeted by a program designed to infect only certain financial institution computers and obtain critical bank passwords, according to Webroot Software’s Richard Stiennon, who studies emerging threats for the anti-spyware firm. At the time, he was an analyst with the Gartner research firm, and he helped the banks complain to their anti-virus providers.

Also last year, anti-virus firm MessageLabs discovered a Trojan horse designed specifically to attack a type of software used only in airplane design.

“The phenomenon should worry everyone,” said Baruch Gindin, managing director of Gartner's Middle East operations, based in Israel. “There is nothing unique to Israel here. The technology is simple to use. This is a moral issue rather than a technology issue.”

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