Thursday, May 8, 2008

Espionage: News Corp Manager Knew of Hacking Claim

Also see: "News Corp could Lose Spying Trial over Murdoch, ABC Reports"
May 08, 2008

Espionage case ... a senior News Corp official has testified in a lawsuit against satellite network security company NDS

Known hacker was employed by subsidiary of News Corp

Hacker given bonus same month information leaked online

A SENIOR News Corp official this week testified he continued to employ a hacker for six years after learning of claims the man broke into a competitor's security system, in a $US900 million ($960 million) corporate espionage lawsuit.

Hacker Christopher Tarnovsky also received a $US5000 ($5300) bonus in the same month a satellite TV company's confidential information appeared online, a US federal court in Santa Ana, California heard.

The allegations against Tarnovsky are at the centre of a corporate espionage lawsuit against News Corp subsidiary NDS, which provides security technology to a global satellite network.

The lawsuit alleges NDS hired hackers to steal information from satellite TV company DISH Network Corp and post it online, costing the company up to $US900 million. NDS has denied the allegations.

NDS chairman and chief executive Abe Peled this week testified he was told of the claims against Tarnovsky by a former hacker in 2001.

"We made it clear that these people were turning over to the good side and are expected to fight piracy instead of engage in it and we trusted Mr Tarnovsky and instructed him not to do so," Mr Peled said.

"Obviously, there's a theoretical risk (in hiring hackers)," he said.

Technology companies and governments routinely employ hackers to test their own security systems. The skills used by hackers to detect flaws in security systems are similar to those required by senior IT administrators.

Mr Peled is a member of the News Corp executive management committee headed by News Corp chairman and chief executive Rupert Murdoch.

In his testimony last week, Tarnovsky said NDS hired him to develop piracy software but that it was used to boost the security of NDS's clients and not to infiltrate DISH's security system.

The lawyer for DISH introduced Tarnovsky in court as one of "the two best hackers in the world".

Tarnovsky was paid by Harper Collins, a subsidiary of News Corp, and received a $US5000 bonus in late 2000. An earlier trial exhibit showed that the DISH security code was leaked online in the same month.

NDS has denied that the two events were connected.

Mr Peled said Tarnovsky received the bonus "because he must have made a very good technical contribution".

Tarnovsky earlier testified that his first payment of $US20,000 in cash was hidden in electronic devices mailed from Canada.

According to lawyers for DISH, Tarnovsky's mission was to hack into the network's system, steal security codes and distribute pirated smart cards that allowed users to access premium channels for free.

Tarnovsky testified that he "never got money for reprogramming Echostar cards". EchoStar Communications instigated the lawsuit before splitting into two companies, DISH and EchoStar Corp.

However Tarnovsky admitted that he constructed a device called "the stinger" that could communicate with any smart card in the world.

Another hacker, Tony Dionisi, testified that Tarnovsky bragged about creating "the stinger" and that he knew of another hacker and NDS employee who reprogrammed 50 EchoStar smart cards with the device.

In an interview with ABC News in the US, Mr Murdoch "absolutely" denied that NDS was involved in hacking.

"We always have ethical business practices," he said.

News Corp has denied wrongdoing and that Mr Murdoch knew about the allegations against Tarnovsky.

The trial against NDS ended today. Jury deliberations are expected to begin as early as this week.

With Reuters
News Corp is the parent company of the publisher of,25642,23664552-5014111,00.html

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