FBI Fears Counterfeit Networking Equipment Could Compromise Security

The FBI has discovered that counterfeit networking equipment may have compromised security of U.S. military and other sensitive government systems, according to a PowerPoint presentation posted on an alternative news Web site.

AboveTopSecret.com, a site that features news about UFOs, the paranormal, secret societies, and conspiracies, posted parts of the presentation on its Web site. The FBI appeared to validate the report by issuing a statement saying the PowerPoint presentation was not meant for widespread distribution.

The report states that the military, the FBI, the Federal Aviation Administration, defense contractors, universities, and financial institutions purchased counterfeit equipment such as routers, switches, servers, and WAN interface cards. Other equipment, including PCs and printers, could also create security vulnerabilities, according to the FBI. It's unclear whether the counterfeiting was state sponsored or for-profit, according to the presentation.

The report highlights that the federal government's procurement system places an emphasis on low prices, and counterfeit goods sell for substantially less than authentic ones. It states that one out of 10 IT products on the market is counterfeit.

The FBI indicated the gear originated in China and revealed that the products sometimes ship directly to the United States through online purchases. Sometimes they arrive via foreign governments -- including Canada, Germany, the Netherlands, and the United Kingdom. Subcontractors and vendors also play a part, and the government performs minimal, if any, background checks on vendors, according to the presentation.

With counterfeit networking equipment, government systems are exposed to failure, unauthorized access, and weakening of cryptographic systems, the FBI presentation pointed out.

FBI Assistant Director James Finch of the FBI's Cyber Division said that division provided an unclassified PowerPoint presentation and briefing in January in response to a request from another federal government agency.

"This unclassified briefing was never intended for broad distribution or posting to the Internet," he said in a prepared statement. "This presentation discussed cyberthreats, including Operation Cisco Raider. In late February 2008, the FBI and its partners at the U.S. Department of Justice and U.S. Department of Homeland Security announced the culmination of this two-year operation."

The February announcement included information about counterfeit products entering sensitive government IT systems.

The FBI said Operation Cisco Raider included 15 investigations across nine FBI field offices and resulted in 39 search warrants. The effort, which included Cisco Systems' cooperation, disrupted a large distribution network and recovered about 3,500 counterfeit components thought to be valued at more than $3.5 million, the FBI said.

A Cisco spokesperson said the company did not believe that the equipment allowed unauthorized access to the government's systems, and the FBI said it was not accusing the Chinese government of spying, according to statements published in The New York Times.