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On the run with Murdoch's pirates


What happens when one of the biggest media groups in the world sets up its own private security force? What happens when part of this operation goes rogue? Fairfax reporter Neil Chenoweth’s new book, Murdoch’s Pirates, investigates News Corporation’s links to worldwide piracy. Here is an extract from the book.


Toronto, 24 October 1997
Toronto is a mean town when you're looking for a bolthole. The operation was blown, and the agent was running. No ordered retreat here—this was panicked flight, strung out on adrenaline. Far beyond the threshold of fear and desperation, it is when the quarry knows his pursuers are close and all he wants in life is a place to go to ground.
Author Neil Chenoweth.

Any halfway serious intelligence operation has an emergency plan. It's Spy Stuff 101 - in the world of John le Carré, a little in-house tradecraft. That means fallback options, safe houses, collateral assets to call on, a whole range of contingencies, a long way before you get round to explaining the really neat pension scheme. But it was long past any of that. Alex couldn't go back to the hotel, the telephone call had made that clear. It was the first place the police would look for him, after the Stop and Detain alert went out to the airports.


The order was to arrest him on probable cause. There were $25,000 in money orders in his hotel room and some expensive computer equipment, but Alex had to walk away from it all. This too was a measure of his distress, for he wasn't the sort of man who walked away from money easily.
Instead he was now heading across town to find another anonymous hotel room, all the time feeling his panic building. He cursed himself for using a credit card that might be traced, flung out of the new lodging and was back on the street. Toronto in late October had the chill of late Fall; a towering blonde German, he was trying to look inconspicuous. He managed to find another hotel, this one cheap and anonymous; he was jumpy as a cat, ready to flee if any police car cruised past. By morning he was in his fourth hotel. It seemed only a matter of time before his luck ran out. In London, his controller was trying to work out where the operation had gone wrong. Ray Adams had made the travel arrangements himself. In a previous life he had been a Commander at Scotland Yard, running its intelligence division, S11. Now he ran a network of seventeen agents in Europe for Rupert Murdoch. He knew how to do this stuff. He had put Alex on a business class ticket on Lufthansa flight LH 474 at 5pm October 21 out of Frankfurt, to arrive in Toronto at 7.20 that same Tuesday evening. The return flight was a week later.
The complicating factor here was that Alex wasn't travelling alone. Adams had booked a ticket for Alex's wife as well. In part, it was because Adams didn't see any real danger. It would be a little vacation for her, a treat. Agents sometimes need something unexpected like that; their family needs to feel the love. It was just a chance to kick back, really. Think of it as a bit like Date Night, on Uncle Rupert's dime.
At an operational level (he didn't tell Alex this, let alone his wife) it was a nice domestic touch, to disarm the suspicions of the people Alex would be meeting. How could they think he was a spy when he brought his wife along with him? What kind of man puts his partner in danger as well? It was a gesture that has Trust Me written all over it. And the first meeting with the Canadian pirates had gone well. Then hours later they had ratted on him. Did it without a second thought. 'Sure I did it,' the pirate who fingered Alex tells me a decade later when I run him down. 'What's to think about? He was going to help the opposition. Of course I took him out.'
So now Alex and the missus were hotel hopping, on the run together in Toronto then across the US border, accompanied by a business associate of Alex's. Alex had wiped the hard drive of his laptop repeatedly during the night. It would take a very, very good forensic technician to retrieve anything from it. But that was still not completely out of the question.
And it had come to this. A hacker on the payroll of NDS, the arm of News Corporation that provided security for its pay-tv operations, was on the run from the police in two countries. The best prospect now that he had been smuggled across the border into the United States, was to fly him out through an airport with low security. If he was caught, the repercussions for NDS, for News Corporation and for Rupert Murdoch in the glare of publicity were potentially disastrous. The first question would be how News Corporation came to be involved in what looked like criminal piracy directed against NDS's biggest client, DirecTV. How had it come to this?

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In late 1997 the story lines at NDS Operational Security were starting to tangle up. In 1996 NDS chief executive Abe Peled had faced a piracy problem that could kill his business. He had made the decision to set up his own security unit to fight the pirates who hacked and then sold their own versions of the NDS smartcards used by BSkyB and the big US satellite broadcaster DirecTV. These pirate smartcards meant anyone could watch the BSkyB and programs for free
He had hired Reuven Hasak, the former deputy head of Israel's internal security agency, Shin Beit, to run it. Hasak had hired Adams as European Security chief, and a former US Army intelligence officer, John Norris, for North America. They had arrested a string of pirates and hired some of Europe's best hackers, including Oliver Kömmerling in Germany, whose NDS codename was Alex.
At some point the mission had changed. Hasak and Peled had set up a Black Hat team in Haifa, which had been trained by Kömmerling to reverse engineer, or hack, NDS smartcards in the sophisticated lab he had helped them set up in Haifa. The theory was that Oliver and the Back Hat team would help show up weaknesses in the NDS cards. But by late 1997 the target for the Black Hat team had changed.
The decision had been made to reverse-engineer the smartcards of their competitors. But even with Oliver's help, doing this would not be simple. The first problem was to get hold of samples of the cards—blank ones from the manufacturer first of all, to practise on; then actual cards issued by the pay-television companies.
Adams emailed Oliver Kömmerling early on Tuesday, October 21 1997: 'Give me urgently a description of all the chips we want as samples.' Oliver replied with the specs on the Wednesday afternoon, October 22. What they needed was the card used by Canal Plus for its Seca card, plus the card then being used by Nagra. This was all very mundane, except that organising the wherewithal to hack NDS's competitors was unfolding right at the same time as NDS had decided to send Oliver on a mission. At the same time as he was orchestrating one of the biggest reverse-engineering events in history, Oliver was going undercover in Toronto.
It was called Operation Duck. It was Ray Adams' idea and, given the timing, it was perhaps the silliest thing that NDS had done to date. As with so much that would happen in the Murdoch empire over the next decade, it only made sense if those involved believed they would never be called to account.
The smartcards that NDS made for the huge US broadcaster DirecTV had been widely pirated. NDS agents would pose as pirates themselves in an attempt to find a major Canadian pirate ring. The problem that no one foresaw was that NDS never told DirecTV about its undercover operation, and DirecTV believed that Oliver was still a pirate.
Oliver (or Alex as he was known at NDS) and Vicky flew business class from Frankfurt to Heathrow and then to Toronto, arriving on Tuesday evening, October 21. They were joined in Toronto by John Luyando, a wheeler dealer in piracy circles who had worked with Oliver in the past. His NDS codename was Jellyfish and NDS's US security chief, John Norris, had a great scorn for him. The prize that Kömmerling was offering to pirates in Canada was a hack for DirecTV's P2 card. He had called one pirate dealer, Ron Ereiser, about it but Ron already had his hack, thanks to his Bulgarians, Plamen Donev and Vesco.
Back in August Oliver had spoken on the phone for almost an hour with Marty Mullin, a big piracy dealer in eastern Canada. Mullin would later testify that Oliver offered him a hack for EchoStar (the other big US satellite broadcaster), but Oliver denies this.
The goal of Operation Duck was for Oliver to program some DirecTV cards for local dealers and use this as a stepping stone to get to Mullin, who was one of the two biggest piracy dealers in North America. Mullin had his own hack for P2 cards and NDS dearly wanted to know who Mullin's hacker was.
By October 25 Oliver had been in Toronto four days and had programmed a swag of pirate cards, using a program he had ripped off another pirate hack. And he had been paid a lot of money. That evening, he met with two piracy dealers in a car and programmed a few cards for them with his portable programmer box, to demonstrate that it worked.
The following night Oliver received a call from a friend in London, a partner in his old piracy ring, who was sleeping with a woman who worked for Federal Express. 'He told me, these guys [from the previous night] sent a parcel to Larry Rissler,' Oliver recalls.
Rissler was a former FBI agent who headed the Office of Signal Integrity—the operational security division—of DirecTV, and he had been hunting Oliver for some time. One of the dealers Oliver had met was a Rissler informant and he had despatched a re-programmed smartcard by FedEx to his boss. The parcel would be with Rissler early the next morning—if it wasn't already there.
Oliver hit the alarm button. He booked out of his hotel with Vicky and Luyando and took a cab ride in the middle of the night twenty miles to the US border, crossed it and booked into a motel on the other side, along the southern Lake Ontario shore. But this was the wrong move because, while piracy might not be illegal in Canada, in the United States you did jail time for it. Forty-five minutes later, Ray Adams called. He said they had to get out.
In Los Angeles, Larry Rissler had already picked up that Oliver was heading into the US. He had entered Oliver's name in the US Customs database, flagged him with a Search and Detain order. For Rissler, Oliver was a glittering prize. For years he had been Enemy Number One for DirecTV, the man who consistently hacked and broke their cards for the pirates. He had no idea that Oliver was working for NDS, or that NDS would not tell him about something like this.
Now it was only a matter of time before Oliver was picked up. But here, in his moment of triumph, Rissler made a mistake. He made a courtesy call to John Norris, to let him know what was happening. It would have been hard not to show a little satisfaction that DirecTV had beaten NDS to the punch.
Norris said it was wonderful news. He didn't tell Rissler that Oliver worked for NDS, or that this was an NDS undercover operation. He just put down the phone and sent an urgent message to Adams, who then got on the phone. 'Adams phoned and told me to go—go quickly,' Oliver said. 'So I had to wake up Luyando, and tell him, “Come, we have to leave.”'
Then the three of them – Oliver/Alex, Luyando/Jellyfish and Vicky - left everything behind in the motel room—computer equipment, money orders, clothes—as they headed south and east, away from the border. They booked into another motel, only to panic when they saw police cars go by. They were back on the road, looking for a new place to hide.
'We did that twice. In the third motel we paid cash.'
Oliver was continually on the phone to Adams. He hadn't even touched the smartcards, he said, so there were no fingerprints. He hadn't personally programmed the card, even if it was his decoder the Canadians used to do it. And even if there was a print or a DNA trace of some kind, there was no continuity of evidence to say it was the card that Alex's decoder had programmed.
Adams was continually emailing Hasak in Jerusalem. It wasn't even a criminal offence to re-program cards in Canada, he said. A good lawyer should get him off. Adams argued with the desperate eloquence that graces a man who is fighting not just for his agent, but for his own job. This was a tricky situation that required managing, he said magisterially. Of course it seemed completely clear that this whole mess was the fault not of Adams, but of his colleague John Norris, who had alerted them to the airports alert that Rissler had put out.
'I am well ware of these provisions and know better than anyone their strengths and weakness,' Adams emailed furiously. 'A stop and detain alert is really a pathetic provision. It means that we have no evidence against this person ONLY suspicion so please stop him and if he has anything with him detain him and let us know.'
The arguments went back and forth as they struggled with the logistics of getting Alex out of North America. It would have to be from an airport with low security, and not a direct flight to Germany. From Jerusalem, Hasak hosed Adams and Norris down when the infighting grew too ugly. In Norris's view, this operation to make contact with pirates had been Adams' bright idea, riding roughshod over the North American operations. Now the blame was all Adams'. Norris had always been contemptuous of Rissler at DirecTV. 'He's a nice idiot,' Norris had told Oliver before the operation. When he was really snitty, Norris called Rissler a speechwriter. But the worm had turned.
'The only possible evidence that could ever have existed to connect Alex to the card was what was on his PC,' Adams later wrote to Hasak, reviewing the episode. Adams had Oliver/Alex reformat the drive and then disassemble the laptop into two parts, each of which was posted by two different courier companies to two different addresses in Germany. But Oliver still had to walk through those airport gates.

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'Alex had absolutely nothing with him,' Adams assured Hasak later. 'I even disobeyed your advice that he could walk through with his laptop. He did not even have a credit card with him. There would have been absolutely no legitimate grounds for detaining him for a second. Had anyone done so, there was a lawyer ready to get him out of trouble.'
Oliver did not even have a credit card and Adams had two lawyers on standby ready to get him out of trouble. 'There would have been absolutely no legitimate grounds for detaining him for a second. . . Nothing existed technically to connect Alex to the card in either Canada, the USA or Germany.'
So Oliver was home safe. That was the end of it, everyone walked away clean . . . except that Larry Rissler was seething. He knew someone had tipped Oliver off and his list of suspects was very short. He fronted Norris, who denied any link to Oliver. In reality, Norris had made sure he didn't even know Oliver's real name - he was just Alex. Rissler accused Norris of hiding the fact that Oliver worked for NDS. Rissler's chief source in the pirate community claimed to have proof that Oliver worked for NDS and his accusations became more and more insistent. Norris lied straight-faced to him, told him that Oliver had no connection at all with NDS that he knew of.
The row was escalating to the point where the future of the NDS contract with DirecTV could be at stake—and that would mean the future of NDS itself. Five days after Oliver flew out, the pressure grew too much. The Cowboy blinked. Norris told Rissler that he was right - Oliver was one of their people.
Adams was incandescent. 'We discussed this,' he raged, that 'under no circumstances must we tell Larry Rissler that Alex works for us. It was an absolute priority. That decision was made and we all acted on it…Despite whatever table thumping Larry Rissler may indulge in I knew that there was absolutely nothing that LR could do about Alex . . . My frustration is that we went to great lengths to protect Alex and then give away our greatest secret to someone we do not trust.'
That was the problem. It was DirecTV that wasn't trustworthy. It had come to this. A hacker on News Corporation's payroll was on the run from police in two countries. He virtually had to be smuggled out of the United States. If he had been caught, the repercussions for NDS, for News Corporation and for Rupert Murdoch in the glare of publicity were potentially disastrous. The first question would be how News Corporation came to be involved in what looked like criminal piracy directed against NDS's biggest client, DirecTV. Whatever their ultimate intentions, in order to mount this sting operation NDS had been pirating DirecTV—peddling software codes and stealing the signal from their best customer, without even telling them.
None of this troubled Ray Adams in October 1997 as he struggled with a much simpler issue. Why—why—had Norris come clean? It was so simple. 'All we had to do was stick to our story and deny.'
It would become a familiar legal strategy: Deny, deny, deny . . .
But now Alex/Oliver was home safe. That was the end of it, everyone walked away clean . . . except that there was an enduring problem. The question was: what part of News Corporation should have been alerted to what was going on? What part of a modern media business involves hiding people from the police and working out the best way to smuggle them out of the country, betraying the confidence of the customers whom they were paid to protect? And how was it that none of these players were ever called to account?
And the most troubling thing was that this was just the beginning, the first desperate adventure. The drama that followed would trigger four separate major court actions against NDS, in which almost every major satellite broadcaster in the world sued the News Corp arm for billions of dollars in damages from industrial espionage. And yet, in the end, NDS would prove staggeringly profitable for Rupert Murdoch's empire.
The stakes here were very high and the casualties would not just be on the balance sheet. Twelve months later, Alex's offsider in Germany would be dead, and Alex himself would be hiring bodyguards.



Adelaide, October 1997
A little disclosure here. To write about News Corporation means spending a lot of time talking to lawyers. When I was writing Virtual Murdoch in 2001 I received legal threats from half a dozen law firms around the world. It was educational in highlighting the different national legal styles.
Australian lawyers, in my experience, have not distinguished themselves by their tremendous sense of humour - at times they can be a little snippy. American lawyers don't bother with small threats. They have it down to a routine: they press the button and launch an intercontinental ballistic missile, perhaps in their spare moments between elevenses and the next client meeting. When I wrote in 1999, seeking information from Squadron Ellenoff Plesent & Sheinfeld, the New York firm that had represented News since the 1970s, their reply came from Ira Lee Sorkin. These days Ira is better known for his sterling work over the last two decades as Bernie Madoff's lawyer. Ira duly dropped a thermonuclear device on my head, but I could tell he had more important things to do. His response was so impersonal, and I think it lost something from that. But when it comes to causing pain and discomfort—in short when you want a lawyer to club your target somewhere soft and vulnerable with a large pointy stick—it's hard to go past the British. It's that old-world charm.
But law firms are just the side show. For decades the man who manned News Corp's front line of defence, as chief legal counsel (now Rupert Murdoch's personal advisor), was Arthur Siskind. Arthur and I have never really hit it off. One of the first times I met him was in October 1997, the month that Alex had his little imbroglio in Toronto. I was on the opposite side of the world, in South Australia, when Arthur threw me out of the News Corp annual meeting. Actually it was the morning tea for shareholders afterwards. And he was pretty polite about it, which really shows he was a model of restraint.
The annual meeting was a showcase for what the global media empire was doing: from the newspapers in Australia and the fledgling pay-tv operation Foxtel there; to Star TV, the satellite broadcaster that covered all of India and Asia from its base in Hong Kong; to BSkyB in Britain along with the Sun, News of the World and The Times and Sunday Times. Then there were the big bets that Murdoch had recently made on cable channels in the US—Fox Sports, and a maverick operation called Fox News that Roger Ailes hand launched just a year before, at a cost of $1 billion. Would it really work? And the Fox television network and stations, together with Twentieth Century Fox. The meeting ended with a breathtaking trailer for a film that James Cameron had directed, which was due to launch in two months time, called Titanic.

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Annual meetings are a nightmare for Rupert Murdoch's minders. Back in the US he can handle any number of public outings without making a ripple, but in Australia he has a gift for unhappy headlines. He had just told shareholders what a bad idea the current push for tighter privacy laws were. Really, who needs them, when newspapers were so good at self policing? 'Privacy laws are for the protection of the people who are already privileged and not for the ordinary man or woman,' he told reporters at the press conference after the meeting. After the recent death of Prince Diana, he continued, 'I think you'll see a great deal more restraint by all the newspapers in Britain and I think you will see a stronger and better-policed code of ethics.' That restraint would mean paying less money for paparazzi photographs. 'Princess Diana, whom we all had great respect for, generally worked with photographers to her satisfaction . . . I think newspapers paid far too much for them and there'll be a major cost saving if we can bring this thing through.'
Up to then, no one had thought to turn Diana's death into a budget line item. Murdoch also offered a small rebuke to questions from the Sydney Morning Herald as 'part of the consistent and nagging denigration of News Corporation that goes on in your newspaper day after day, orchestrated by friends of another organisation . . . but I won't go any further than that'. That was the Australian public broadcaster, the ABC, that Murdoch was being arch about. It's important when you're kicking your rivals to keep a light touch.
Back then the NDS story was just beginning. But working out what happened next at NDS would prove a long, frustrating trail. The first part of that would be understanding the people and events that had led up to Oliver's close call in Toronto in 1997. The question that would recur for me time and again was: who dropped the ball? Who was overseeing the dramas that played out at NDS? And who at some point should have told the NDS black-hat operations that what they were doing was a really bad idea? NDS reported to the Office of the Chairman at News Corporation. NDS execs reported to Rupert Murdoch's closest people. Arthur Siskind and News Corp's chief financial officer David DeVoe sat on the NDS board, as did James and Lachlan Murdoch and Chase Carey, who was by then co-COO of News Corp. How much of all this, if any, made it into NDS's reports to its board, is not known.
At the time I knew nothing of the adventure in Toronto. In hindsight it's tempting to link it in the same time frame as the annual meeting in Adelaide and getting thrown out of the morning tea, as some sort of indication that senior management's attention was focused elsewhere and no one was minding the store. But that doesn't really work, because the annual meeting was in early October, a fortnight before Oliver's great escape. On October 24 1997 the record shows that Rupert Murdoch was in Beijing for a meeting in the Great Hall of the People with Ding Guangen, the head of the Chinese government's Propaganda Department.
Actually that was later in the day. Earlier in the morning, around the time that Alex was desperately working his way through Toronto's seedier hotels on the other side of the world, Murdoch had taken time off for a little sightseeing and to buy some ties in Xiushui Market, or Silk Street. He had dispensed for the morning with the services of local exec Bruce Dover. Instead he was accompanied by a vivacious young Chinese executive from Star TV, acting as his interpreter for the first time, called Wendi Deng.

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Stranger than fiction


News Corporation CEO Rupert Murdoch holds a copy of The Sun and The Times as he is driven away from his flat in central London July 11, 2011. Photo: Reuters


MURDOCH'S PIRATES

Reviewer: RICHARD THWAITES




This book reads like a spy novel, but the combatants work for private corporations, not states. There are no innocent parties, only winners and losers, in a world where law is seen as a tool and business ethics are for wimps. And because it is true, the story raises serious questions over the ability of national governments to provide a business environment in which rule of law can be taken seriously.
Advertisement
The competition is for control of a small item costing $2 - the credit card-size smart cards that give access to satellite pay TV. The security of those cards is the key to billions of dollars in pay TV revenues. Since the inception of pay television, independent hackers and organised pirate rings have repeatedly broken the codes to provide unauthorised access via a black market in forged smart cards.
Naturally, investors in pay TV have fought back to defend their revenues. News Corporation, planning a global satellite-television empire, acquired its own card security development company - News Datacom (later NDS). It was based in Israel and employed mainly former Israeli military and intelligence operatives. Its first chief executive turned out to be a convicted American swindler on the run from US authorities, but the staff were expert in their fields. Their primary task was to develop the DataCrypt system for New Corporation's pay TV systems.
But as Chenoweth writes, NDS also ran intelligence operations against pirate card makers and against New Corporation's competitors. They infiltrated the internet chatrooms where hackers would boast about their achievements, developed contacts and recruited agents. They employed former police detectives and intelligence operatives for many nationalities, including a former head of Scotland Yard's criminal intelligence bureau. These agents used their contacts with state agencies, bugged phones, burgled homes, set traps and employed every device familiar to readers of crime fiction - with apparent disdain for the law. As in the high times of maritime piracy, one man's pirate would be another man's privateer.

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In this shady world, hackers and agents were often on police watch lists of one kind or another, so they were flown around the world with false passports. The senior NDS officer responsible for undercover operations in Australia and East Asia was the wife of an Israeli diplomat, based in Taiwan. Her job was to protect the interests of News Corporation.
Whenever someone was caught out or things got sticky, the massive political, legal and public relations resources of News Corporation could usually protect them. If an operation was exposed too blatantly, agents would be jettisoned and denied. In one case, Chenoweth writes that News pretended to be suing a hacker who was, in fact, on their own payroll.
The most creative hackers were often difficult individuals. One seems to have been murdered, KGB-style, in a Berlin park, after eastern European gangsters concluded he was a threat to their lucrative piracy business. Another on the NDS payroll was arrested in a Bulgarian bar after shooting another man in a drunken rage.
By Chenoweth's account, this activity went well beyond defending a legitimate business against criminal attack. News Corporation was accused of using its smart card ''security'' operations to damage its competitors. News wanted its NDS card system to be the standard everywhere, but there were several European and American competitors in the smart card business.
When big contracts were coming up for review, there were suspiciously frequent public releases of codes to crack the cards of NDS's competitors. The main victims of these sabotage releases were the American services DIRECTV and EchoStar, and the French Canal Plus. These corporations established their own intelligence operations to find out what was going on and for several years there was running underground warfare. In the heat of it, some star European and American hackers seem to have been double agents, triple agents, or simply playing all sides for as long as they could.
At the corporate level, News Corporation was trying to buy a 30 per cent shareholding in DIRECTV that was held by General Motors. NDS provided the smart cards to DIRECTV and card piracy was a factor in the price of those shares. Chenoweth reports evidence that one of NDS's prize hackers had developed a cure-all solution for piracy on their current cards, but NDS did not release that code during the time that News Corporation had an interest in keeping DIRECTV share prices low.
Eventually Canal Plus and the US Echostar system sued NDS for sabotaging the security of their competitor's codes. The claims were for hundreds of millions in lost revenue, let alone any share price implications or criminal liability. News Corporation had 20 lawyers in the California court-room, the plaintiffs had three. Despite compelling evidence, and all indications that the judge was convinced by it, NDS was found guilty of only a minor misdemeanour with a $45 penalty. Even the judge's costs award against NDS was overturned by an appeals court of California's notoriously partisan, elected judiciary. By this time, News Corporation was a significant political asset of the Republican Party.
The Australian Financial Review journalist Neil Chenoweth has been a hound of News Corporation for many years. His investigative work on this story, over more than four years, has accumulated extraordinary detail from across the globe. We get potted biographies and character sketches of most of the key characters. I'm not sure we needed to know the names of the two dogs who sniffed a suspicious package at a critical moment in a Texas parcel depot - but it proves Chenoweth was thorough.
Chenoweth notes the legal hazards of investigating News Corporation, whose normal approach to litigation he describes as ''thermonuclear''. At many points in this story, the threat of massive legal costs seems to have been enough to extinguish open challenges to News Corporation's version of the truth.
This story is full of personal drama, colourful identities, and issues of high principle. Many episodes are presented in a cinematic present tense, but the large caste and complex plot would challenge any screenwriter. Chenoweth concludes with a number of serious questions about accountability of globalised corporations. I wonder who will dare to make the movie.
Richard Thwaites was working on broadcasting policy issues while Australia's pay television system was being introduced.

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A Murdoch page-turner
HELEN CROMPTON, The West Australian January 1, 2013, 2:35 pm

hxxp://au.news.yahoo.com/thewest/entertainment/a/-/entertainment/15744655/a-murdoch-pageturner/

A Murdoch page-turner

In the blurb about this book it says this is the story Rupert Murdoch does not want you to read. In its almost 400 pages you can fully appreciate why. If you took a tenth of the shenanigans in this book it would make a fabulous Hollywood movie. The whole account has enough drama to fuel an entire blockbuster franchise.

Neil Chenoweth is one of Australia's leading investigative business writers. He won the Gold Walkley media award in 2004 for helping to uncover the money trail in the case of the Offset Alpine Printing fire payout.

He won another Walkley for his book, Packer's Lunch, in 2006 and in 2008 made it a professional hat-trick for his reports on the Opes Prime scandal.

Murdoch's Pirates is an almost unbelievable and meticulously detailed account of how one of the world's biggest media groups created its own security force and what happened when an arm of that force went rogue. This is the definitive story about hacking, about the top hackers, how they differ, how they do what they do and what motivates them and how corporations either employ or attempt to thwart the brightest and the best of these technical geniuses - or pirates, depending on their chosen career path.

Chenoweth is a humorous bloke. It makes the unbelievable hysterical. Of a certain officer of the French law, Gilles Kaehlin, Chenoweth writes: "Kaehlin . . . by 1994 had been exiled to the Caribbean to run the police post at the airport and the little fishing port of Saint Martin . . . In two years he managed to enrage the local civil service, its business leaders, the drug cartels that operated out of the island and the general populace.

"In June 1986 a police operation led by Kaehlin triggered a riot and the enraged crowd proceeded to burn his house down. They threw his car into the harbour and put the police under siege.

"When Paris mounted an emergency repatriation to get Kaehlin off the island, the crowd threw rocks at the plane's windscreen. He was that sort of policeman."

More pertinently, Chenoweth draws a picture of Murdoch's empire and how the News of the World was not the first Murdoch concern to be accused of wrongdoing. A division of News Corp based in Jerusalem (Murdoch apparently has a fascination with things Israeli) employed ex-Scotland Yard operatives and former secret service agents who, all to a man, had controversial CVs.

Halfway through the book, in a chapter titled Denver, Colorado, April 1997, an up-close look at Murdoch manoeuvring is revealed:

"Two media billionaires eyeballing each other - one of the scariest sights in the world. Two crazy visions of the world run headlong into each other, with neither giving a millimetre. Rupert Murdoch had this wild dream of a broadcast empire that would reach around the world from New Zealand and Australia, through Asia, Europe, Latin America and of course, North America, fed from satellites 35,000km above the Earth in geosynchronous orbit. It would be a seamless global platform and NDS would hold it all together, that would secure it, provide the technology base to allow Murdoch to pump all his Fox programming down through his set-top boxes.

"Perhaps only half a dozen people understood just how ambitious Murdoch's plans were. One of them was now sitting opposite him. But he wasn't playing ball."

This refers to Charlie Ergen and the ASkyB merger, in which News Corp and EchoStar each had a 50 per cent share. The plot thickens.

Chenoweth explores why, since March 2002, five of the biggest pay TV companies have filed legal actions claiming a News Corp subsidiary had campaigned to sabotage their products.

Now we focus on that rogue arm of former spies, army intelligence officers, pirates and hackers.
Chenoweth's phone book must be an Aladdin's cave of contacts. To get his information he so ably puts together he has sat down with lawyers, hackers and senior media executives. Deaths, threats, wild stories and wild chases - some of which make headlines, others of which haven't been told until now - pepper the pages of this compelling read about corporate skulduggery and unbound ambition.

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Spying on a grand scale - Media
Review by Daniel Herborn - MURDOCH'S PIRATES
Neil Chenoweth - Allen & Unwin, 432pp

When Neil Chenoweth, a journalist for the Australian Financial Review and author of a biography of Rupert Murdoch, stumbled across the details of possible corporate espionage carried out by a little-known organisation called News Datacom (NDS), his first response was one of disbelief.
An Israeli start-up company founded by scientists and cryptographers, NDS had been acquired by News Corporation, its biggest customer, and existed in relative obscurity until a series of billion-dollar lawsuits, with satellite service provider EchoStar suing it for piracy and French pay TV channel Canal Plus taking legal action, which they later abandoned, alleging NDS leaked valuable code on the internet.
To come to terms with why hacking may become a hugely valuable tactic and disruptive force for content providers, it's important to understand that the revenue-raising potential of pay television rests largely on the security of pay walls. If people can easily access the content without paying the subscription fee then the value of the product plummets.
This makes enabling pay-TV smartcards with security measures a hugely lucrative business. But how does a firm producing these cards show the superiority of its cards over others? One way is by demonstrating that competitors' cards can be hacked. If you can hack into your competitors' systems, potentially you can trash the commercial value of their product.
In a series of articles for the AFR, Chenoweth drew on a massive cache of emails to allege NDS hacked its rivals for commercial gain as News Corporation was moving into the Australian pay TV market. Given the sheer commercial scale involved, Chenoweth has called the alleged hacking "arguably the biggest industrial espionage case in history".
Billed as a story "about what happens when an international corporation hires its own spy force", the focus is often narrower than that, with the narrative taking in a wealth of technical detail and the minutiae of the politics and rivalries between hackers, and the hacks and counter-hacks between covert groups.
Chenoweth has secured remarkable levels of access to the hackers, and the overriding impression is of technically gifted savants in way over their heads. Even after the controversies and the mysterious death of talented hacker Boris Floricic, ruled a suicide, they often come across as naive.
Inevitably, though, the key figure in this story is Murdoch, detached as he is from much of the action. Constants in the story are his seemingly inexhaustible reserves of energy and bullishness, his cunning and unexpected capacity for charm. Although a Luddite at heart, he couldn't resist the riches on offer in this high-tech field.
While his motivations for dabbling in data encryption in the first place remain clouded, his end game of accumulating wealth, media influence and power, or some amalgam of all three, is clear.
Murdoch's Pirates is a staggering feat of research, but at times suffers from a lack of accessibility.
It is to be hoped this factual account lays the path for further work that looks beyond the crosses, double crosses, aliases and the farcical confusion to the complex questions of how law enforcement agencies should deal with this new and high-stakes world of corporate spying.