Hong Kong chief executive CY Leung faces questions over secret $7m payout from Australian firm - Sydney Morning Herald

http://www.smh.com.au/national/hong-kong-chief-executive-cy-leung-faces-questions-over-secret-7m-payout-from-australian-firm-20141008-1134yv.html

DateOctober 8, 2014 - 8:52PM

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Nick McKenzie, Richard Baker and John Garnaut

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Hong Kong chief executive CY Leung, centre. Photo: AP

• Hong Kong's embattled chief executive, CY Leung, has pocketed millions in secret fees from a listed Australian company in return for supporting its Asian business ambitions, a Fairfax Media investigation can reveal.

The arrangement is outlined in a secret contract dated December 2, 2011, before he was elected chief executive, in which Australian engineering company UGL agreed to pay the Beijing-backed politician £4 million (more than $A7 million).

Richard Leupen at a UGL analyst presentation. Photo: Michael O'Sullivan

The payments were made in two instalments, in 2012 and 2013,  after he became Hong Kong's top official.

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The payments relate to a deal in which UGL bought an insolvent 200-year old British property services firm he was associated with called DTZ Holdings, whose prospects depended on Mr Leung's network of managers and clients in Hong Kong and mainland China.

Mr Leung, who is currently battling unprecedented pro-democracy protests, strenuously defended his judgment to not declare the payments on his register of  personal interests, when Fairfax brought them to his attention. 

The letter from Leupen to CY Leung.

The sale left Mr Leung with a secretive financial windfall – including an additional guarantee that UGL would pay to him an outstanding £1.5 million bonus owed by the insolvent firm – but left DTZ's other shareholders and unsecured creditors with nothing, wiping out investments and debts worth tens of millions of dollars.

Mr Leung's side deal equated to more than 5 per cent of the purchase price.

A statement from his office said the payments related to past, not future, service and they were agreed at a time when he held no official position and before he was elected chief executive. 

"The payments therefore arise from Mr Leung's resignation from DTZ, not any future service to be provided by him," said Mr Leung's spokesman, Michael Yu. 

"Both the resignation from DTZ and conclusion of the agreement with UGL took place before Mr Leung was elected as the chief executive," he said. "There is no requirement under our current systems of declaration for Mr Leung to declare the above."

Mr Leung's statement added that he had stepped down as a member of Hong Kong's executive council on October 3, 2011, prior to DTZ's sale to UGL, Mr Leung was a director of DTZ and chairman of its Asia-Pacific operations when he and fellow board members decided to appoint administrators to sell the company's assets to UGL for £76 million. 

He announced his resignation from DTZ on November 24, formally confirmed his candidature for the role of Hong Kong chief executive on November 27 and signed the lucrative contract on December 2, 2011. 

 Mr Leung's resignation took effect on December 4, 2011, the day that UGL acquired DTZ.

The arrangement raises transparency questions for Mr Leung and also the Australian purchasing company, which is in the process of selling the DTZ business on to a US private equity firm, TPG. 

DTZ's administrators, Ernst & Young, and its chairman at the time of its sale to UGL, Tim Melville Ross, said they were not aware of the Hong Kong politician's agreement with the Australian company. 

The terms are set out under a cover letter from UGL's chief executive, Richard Leupen.

"It has been a pleasure getting to know you during this time and I look forward to continuing our relationship into the future," wrote Mr Leupen. "Your achievements in Hong Kong and China have been outstanding." 

An attached schedule shows Mr Leung agreed to ensure that nominated members of his Asian management team remained in place and also that he would "provide such assistance in the promotion of the UGL Group and the DTZ group as UGL may reasonably require".

He also agreed to not to compete with UGL and to act as "a referee and advisor from time to time", adding in a handwritten note that his support was on the condition it "does not create any conflict of interest".

The wording appears to clash with Mr Leung's statement that the payments only related to past dealings. 

The terms also contrast with DTZ's 2011 annual report, which states that Mr Leung was not to receive any payments beyond those statutorily required if his employment ceased due to a change of ownership.

In detailed answers to questions, the Australian company UGL underscored Mr Leung's immense importance to the Chinese operations of the company they were purchasing.

Crucially, UGL said the payment agreement was made not in hope of soliciting favours for the business but out of fear that he could destroy it. 

"It was entered into solely to ensure CY Leung did not move to a competitor or set up or promote any business in competition with DTZ, or poach any people from DTZ, and hence to ensure the business retained its value after the UGL acquisition," said UGL. 

"The China/HK business was critical to UGL's assessment of DTZ's value at the time of the acquisition," it said. 

"It is standard business practice to pay for such undertakings, as you are requiring the individual to take on obligations and to forgo future opportunities."

UGL said the documentation did not include a clause to invalidate Mr Leung's payment in the event that he succeeded in his bid for office because management did not think that he would win. 

"At the time of the negotiations, media coverage suggested that other candidates were favoured to be elected, so the possibility of CY Leung securing office was not the focus of UGL's negotiations," said UGL. 

Leading Australian corporate integrity expert Neville Tiffen said the lack of transparency around the payments raised serious probity questions.

These questions extend to whether Mr Leung or UGL disclosed the proposed payments to DTZ's UK administrators or directors at the time the administrators and DTZ board agreed to the beleaguered company's rapid sale.

Such questions have come at an awkward time for Mr Leung, who is battling to assuage tens of thousands of students and supporters who have paralysed much of the city's central business district over the past ten days, calling for his resignation. 

The protesters accuse Mr Leung of working for Beijing, at the expense of Hong Kong's promised democracy and autonomy, and failing to defend the institutions that underpin one of the world's most vibrant and successful cities. 

Both sides have retreated from earlier positions and protest numbers have thinned ahead of anticipated negotiations. 

UGL, the Australian firm, conceded that Mr Leung's multimillion-dollar payment deal was not disclosed in any public document but said there was no duty otherwise. 

It said the main creditor, Royal Bank of Scotland, was aware of the payment and deducted the amount from the DTZ purchase price. 

"This was a matter for the seller, as it was a necessary payment for the protection of the value of the business," said UGL. "The acquisition would not have proceeded if this value was not protected and assured." 

DTZ's administrator, Ernst and Young, said in a statement it did not know about the arrangement. 

"The Administrators have no detailed knowledge of any specific arrangements made between UGL and any other party." 

The former chairman of DTZ, Tim Melville Ross, also said he was unaware of the deal between Mr Leung and UGL.. 

 "If there were any discussions between Mr Leung and UGL, these were quite separate from the negotiations between DTZ and UGL," he said.

Corporate integrity expert and former head of global compliance for Rio Tinto, Neville Tiffen, examined the secret documents for Fairfax Media.

Mr Tiffen said: "Whenever you are offering financial benefits to public officials or directors of a company, dealings must be transparent. Without transparency, people's conduct is brought into question."

Read more: http://www.smh.com.au/national/hong-kong-chief-executive-cy-leung-faces-questions-over-secret-7m-payout-from-australian-firm-20141008-1134yv.html#ixzz3FYGhR9ea

2 Hong Kong college students emerge as leaders in mass protest - Los Angeles Times

http://www.latimes.com/world/asia/la-fg-hong-kong-leaders-20141006-story.html#page=1

Just months after being elected leader of Hong Kong's biggest university student group, Alex Chow joined in the city's annual, orderly July 1 pro-democracy march. But in a move that foreshadowed last week's massive sit-ins, Chow and a committed core of activists decided to break from the usual script.

After the march, they sat down in a road in the Central District, locking arms and chanting, "Our own government, our own choice."

After midnight, police moved in to break up the unauthorized gathering, picking up the kicking and screaming activists and arresting 511, including Chow. As one of the biggest confrontations between Hong Kong police and the public in years, it left a deep impression on the 24-year-old comparative literature and sociology student, whose ponderous eyes are prone to welling up with tears.

"There were tattoo artists, massage therapists, construction workers, engineers, teachers, photographers, retired civil servants. I really felt sorry for them," said Chow, writing about the day's events a few days later in an online forum. "In the past 30 years, the democracy movement has been too slow and too painstaking. The power of civil disobedience lies … in the blood and tears of everyone who is behind the struggle."

Chow's frustration has catapulted him to the center of the biggest political crisis facing leaders in Hong Kong — and Beijing — in years. Whether more blood and tears are soon to come rests, to a large extent, on Chow's young shoulders.

Chow has worked closely with founders of two other groups, a 3-year-old high school student organization called Scholarism and a recent protest movement called Occupy Central With Love and Peace, to mobilize the largest and most disruptive demonstrations in the territory in decades.

But the government has shown a preference to deal with Chow's Hong Kong Federation of Students, a storied organization dating to 1958 that counts many of the territory's current leaders as alumni. And so it is that Chow and his more introverted 21-year-old deputy, Lester Shum, have emerged as first among equals as protest organizers and now, perhaps, negotiators.

A fast talker skilled at impassioned oratory, Chow in recent weeks has proved himself adept at rousing crowds who have poured into the streets to demand a free choice of candidates in the city's 2017 election for chief executive — a framework that Communist Party leaders in Beijing have explicitly rejected. On Saturday, dressed in dark blue jeans and matching blue nubuck oxfords, Chow told thousands of demonstrators occupying government headquarters: "This is not a student movement; this is a Hong Kongers' movement."

We are just ordinary students. What we're fighting for is our future, for a democratic system.- Lester Shum of the Hong Kong Federation of Students

Whether Chow and Shum can steer the movement to a peaceful conclusion and win real concessions remains unclear. Even many student protesters, let alone older demonstrators, say they aren't taking orders from Chow and Shum and have doubts about their strategy.

"This is a self-initiated, spontaneous protest and we'll go home when we want, not when someone tells us to," said Tony Tsang, 19, listening on Thursday night as Chow warned that the Beijing-backed chief executive of Hong Kong, Leung Chun-ying, must step down or students would "occupy" government buildings. "I don't think he should be asking C.Y. Leung to quit; they would just replace him with another guy who's exactly the same."

Less than an hour later, as midnight approached, Leung offered to hold talks with Chow's group — but refused to resign — and Chow backed away from his threats. News of the detente was met with ambivalence among the demonstrators.

cComments

• The authorities' strategy had worked. Instead of using force to evict the protesters from the streets, they want the citizens themselves to speak up and complain about the inconveniences they had to put up with. Many residents have little sympathy for protesters, because their livelihood...
  J. VON HETTLINGEN
  AT 3:54 PM OCTOBER 06, 2014

Veteran observers of the student-led movement, though, have praised Chow's and Shum's leadership — in particular their move Thursday to reach out to the government for dialogue. This may have averted, or at least delayed, an escalation of tension, these observers said.

"They are as passionate organizers as they are good strategists," said Dixon Ming Sing, associate professor of social science at the Hong Kong University of Science and Technology and a longtime researcher of the city's democracy movement.

Still, their meteoric rise to global attention has surprised some. Nelson Lee, a lecturer at the Chinese University of Hong Kong who taught Shum in two politics courses, said the college junior "was always on the quiet side."

Shum, who switched his major to politics after one year studying engineering, was passionate about getting an intellectual grounding, Lee recalled. Lee's "Politics of Culture" class, which delves into Marxist theories and neocapitalism, is popular among young activists, and Shum appealed to Lee in person to enroll in the oversubscribed course.

Shum, more casual in dress and deliberate in speech than Chow, was nervously chewing his thumb and index finger before Saturday night's rally. Taking the stage in white wrinkled shorts and black flip-flops, he appeared to be fighting a lingering cough.

"We are just ordinary students. What we're fighting for is our future, for a democratic system," he said, his voice growing hoarse. After wrapping up his remarks, he performed his trademark slight bow to the audience. "All of you have worked so hard," he said.

On Sunday, as protesters again appeared at loggerheads with the government and Leung said forcefully that demonstrators needed to clear the streets in time for the workweek to start Monday, Chow and Shum were facing calls from many quarters to declare victory and retreat.

Hong Kong University President Peter Mathieson urged all of his school's students and staff to leave the protest zones. "I am making this appeal from my heart because I genuinely believe that if you stay, there is a risk to your safety," he said, adding to an ominous sense that police might use substantial force to disperse the crowds.

Bao Tong, a former secretary to the reformist mainland China Communist Party leader Zhao Ziyang, who sympathized with Tiananmen Square protesters in 1989, penned an open message Sunday to the protesters urging them to wind down the demonstrations:

"The seeds have already been sown, and they need time to lie fallow," Bao said. "No great task can be achieved all at once; they all need some time to gestate."

But Willy Lam, a political analyst and professor at the Chinese University of Hong Kong, said Chow and Shum fear if they go home now, they'll lose all momentum.

"They don't want to give up without achieving something tangible," he said. "Even if police are to come out in force, they are determined to hang on."

Lam said that stance was understandable "because they are the first ever student leaders from Hong Kong to have made this big achievement, to apply really big pressure and assemble more than 150,000 people on the streets."

But what is unclear, Lam said, "is whether their decision to hang tough, to hang on, might be the best solution going into the next step." To achieve serious revisions to the election rules dictated by Beijing, Lam said, the students need to build a united front with other stakeholders, including Occupy Central and liberal lawmakers in Hong Kong's legislature, as well as nongovernmental organizations.

lRelatedWORLDPolice use tear gas as thousands of protesters persist in Hong Kong

At Saturday night's rally, Shum acknowledged that he and Chow — who have been arrested several times for civil disobedience — were taking serious personal risks. "We might be in for big trouble," he said. "We might have to go to jail. Alex and I each have got five charges on our back."

But he and Chow seemed to have made a clear choice.

Before the July sit-in, Chow said he received an email from his father, who was overseas. His dad expressed support for his son but also concern that he might end up like a "Tiananmen mother," a reference to a group of women who lost children in the 1989 crackdown.

cComments

• The authorities' strategy had worked. Instead of using force to evict the protesters from the streets, they want the citizens themselves to speak up and complain about the inconveniences they had to put up with. Many residents have little sympathy for protesters, because their livelihood...
  J. VON HETTLINGEN
  AT 3:54 PM OCTOBER 06, 20141

Addressing the crowd that night, Chow choked up and covered his tear-streaked face.

"Even if we can win a bit of democracy," he said before his arrest, "that should be the best reward for my parents."

Law is a special correspondent.

Meet the Woman Heading Facebook’s Huge International Growth - TIME

http://time.com/3462041/facebook-growth/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

• Victor Luckerson @VLuck
 

Oct. 4, 2014

    

Nicola Mendelsohn, vice president for EMEA at Facebook Inc., gestures as she addresses delegates during the Dublin Web Summit in Dublin on Oct. 30, 2013.Aidan Crawley—Bloomberg/Getty Images

Like many of the U.S. tech giants, Facebook is increasingly betting its financial future overseas. The company, whose social network has already achieved widespread adoption in North America and Western Europe, is focusing more of its resources on fast-developing markets like Africa, the Middle East and India. In April Facebook announced that it had 100 million users in India, and it reached the same milestone in Africa in September.

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The company is trying to get more people in these regions online through its Internet.org initiative, which aims to beam Internet connectivity to remote areas. At the same time Facebook is courting marketers by offering up region-specific advertising units that are tailored to the different ways people communicate around the world.

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During New York’s Advertising Week, TIME sat down with Nicola Mendelsohn, Facebook’s Vice President for Europe, the Middle East and Africa, to discuss the growth of Facebook’s business abroad, how privacy concerns differ across cultures and whether Yo isn’t such a crazy app idea after all.

TIME: Obviously Facebook’s mobile transition has been a big story the past couple of years. But here when people think about it, they think of smartphones. Was Facebook’s feature phone business one that happened after smartphones or was it happening concurrently?

Mendelsohn: Two thirds of the world are accessing Facebook through feature phones, so it’s a hugely important part of how people access the platform. What we’re trying to do is make the world more open and connected so people can share more. Mobile means many different things depending on where on the planet you are and how you access Facebook and the Internet.

We’ve made a change in how we go to market in terms of our advertising products. It used to be that we had exactly the same advertising product all around the world. We’ve now started to place more and more resources in the developing markets, like Africa, like India, like Indonesia, to really understand how people are using Facebook, how they’re using mobile and come up with different products that work better there.

One is an insight borne out of what we saw in India. Data is expensive, and for a lot of people it can be prohibitive in terms of how they access Facebook or the Internet. What we saw was a whole “missed calls” phenomenon that was going on. Between us we’d create our own language—one missed call means go pick the kids up, two means let’s meet for a drink, three means I’ll meet you for lunch or whatever it is. We set up the missed call product so that advertisers could have the opportunity to tap into this meme and deliver information to people, some of whom are coming onto the Internet and to Facebook for the very first time and who are actually really excited to get messaging from advertisers. That’s the first place that we’ve done this, and the results are such that we’re going to look to do this in South Africa as well.

TIME: You just mentioned that a lot of people in these markets might be excited about seeing advertising because they haven’t been exposed to the Internet as much. Is the appetite for ads there higher than in America, where people are exposed to ads all the time?

Mendelsohn: People like advertising if it’s relevant and entertaining and useful to them. What we see in some of the high-growth markets is that brands are talking to them for the very first time, and there is an excitement about that because it’s new and it has not happened before. We see behaviors where people actually share the adverts that they see with other people because it’s of interest and it’s new information.

 

TIME: Out of that 100 million users in Africa, which are the countries you are most focused on?

A: That’s Nigeria, Kenya, South Africa.

TIME: Do you expect, going forward, that the feature phone market is going to increase, or do you see with Android One and these cheaper smartphones that people are going to transition to those devices really quickly?

I think there will be an acceleration of these cheaper smartphones, driven in particular by the price. But I think they’re not going to have all the same features that the ones we have in the U.S. and the U.K. have. There will still be challenges on things like data costs. Actually the challenge becomes greater when you have the smartphone because it has access to so many more bells, gadgets, widgets. If you want to connect the planet, data and cost is something that is prohibitive to that. It’s one of the reasons that Mark Zuckerberg launched Internet.org.

TIME: Facebook’s average revenue generated per user is much lower in these emerging markets than it is in the U.S. What is Facebook’s plan to boost that number in the future?

What is the primary concern in this part of the world is how we connect everyone to the Internet. That’s the primary focus. In terms of the ARPU, that will emerge in different ways.

TIME: You’re dealing with a lot of different types of cultures across a vast number of countries. Do you see different privacy concerns in different areas? How do you deal with that on an individual basis?

For us, privacy is the most important issue and making sure that people know and are in control of the data they share and who they share it with. I think that’s important for people wherever you are the world. One of the nuanced differences that we see in some of these countries is the fact that people like to be friends with lots more people than perhaps they might in mainland Europe. We see people want to have lots of friends, including people that they’ve never never before, and share information with those people. That is a difference that might sit uncomfortably with other people in different parts of the world.

TIME: Are you familiar with the app Yo?

No, I’m not. Tell me about Yo.

TIME: All it does is send the word Yo to other people. It was actually pretty heavily mocked when it came out over the summer. But it sounds like from what you’re saying that’s a logical use case that actually exists, where people would want to send a single word that can provide context about what they’re doing.

I can’t talk to [Yo], but I think people communicate in different ways. The uptake in stickers—people sending emoticons just to express their feelings—is a different way of showing how people communicate. Not necessarily in Africa but in some of the more developed markets. People are becoming much more visual.

We’ve always seen with any new technology that’s come on since the printing press, that it causes people to think about how they communicate in different ways. One of the things that’s been surprising about this technology revolution is that it’s shortened some of the ways that we communicate with each other rather than increasing it. If the printing press meant that we could write canon of books, the mobile phone means I can write “LOL” and we both understand what that means.

Hong Kong Protesters Defy Government With Massive Rally - TIME

http://time.com/3466915/hong-kong-protesters-rally/

• Hannah Beech/Hong Kong @hkbeech
 

Oct. 4, 2014

    

Pro-democracy protesters man a barricade in Hong Kong's Mongkok shopping district, Oct. 4, 2014.Bobby Yip—Reuters

As the window for reconciliation appears to be narrowing

A bold rally of tens of thousands of people mobilized in Hong Kong Saturday night, just hours after the region’s Beijing-backed leader Leung Chun-ying issued a cease-and-desist order to protesters occupying some of the territory’s busiest districts. They came to sing, to raise their glowing cellphones in solidarity and to flaunt the nonviolent underpinnings of their movement, which has joined designer-clad mall rats with spectacled students. “Protesting peacefully is the spirit of Hong Kong” went one refrain that resounded across Admiralty, the business district normally populated by bankers and shoppers that also includes government offices.

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If Leung, whose resignation is one of the protesters’ aims, hoped to convince the demonstrators to leave the streets, he failed. Saturday’s assembly was likely the biggest yet in a student-supported movement to bring democratic reform to Hong Kong and safeguard the freedoms that differentiate the territory from the rest of China. Oxygen was sucked back into the movement precisely at the moment when the authorities deemed that the crowds had to disperse from major roads by Oct. 6, the beginning of the workweek.

Some people in Admiralty said Saturday they were inspired to come by the violence the protesters faced from tear-gas wielding police on Sept. 28 and mafia-linked thugs on Oct. 3. “It was different a few days ago,” said Sam Au, a 49-year-old construction project manager. “We were supporting the student movement. But now we’re supporting non-violence against protesters.” The roster of speakers made sure to highlight the peaceful nature of the movement, whose supporters have taken to raising their arms in a Ferguson-style surrender and chanting “calm down, calm down” to any potential troublemaker. Despite the crush of bodies in Admiralty, the protesters shuffled forward obediently. Volunteers offered fresh fruit, cooling plasters and charging stations for cellphones.

“Do we look like Red Guards?” asked Joshua Wong, the wisp of a 17-year-old whose student activism group is one of the rally’s organizers, in reference to the Chinese youth group whose chilling excesses helped Chairman Mao foment the Cultural Revolution of 1966-76. The crowd in Admiralty, which stretched across a highway as far as the eye could see, responded with a defiant “No.”

Many of the faces in the crowd were young; one typed frantically into her phone trying to convince her mother that she was at a friend’s house. “The [local] government never listens to what we want,” said Hiu Wah, a 19-year-old childhood education student at the Institute of Vocational Education. “They only listen to Beijing.” But others were older—and not offended when some of the rally’s speakers bemoaned a divide between idealistic youth and an older generation warier of displeasing Hong Kong’s overlords in Beijing. “We are here to protect the young people,” said a retired language professor from the Chinese University of Hong Kong surnamed Kwan. “They are the ones who will have to deal with the future after 2047.” Under the joint agreement that set the conditions for the former British colony’s return to China in 1997, Hong Kong was promised significant autonomy for 50 years under a formula called “one country, two systems.”

The protesters have articulated two main goals they say need to be met before they disperse: Leung’s removal and the reversal of Beijing’s Aug. 31 decision to essentially pre-select two or three candidates for Hong Kong’s Chief Executive elections in 2017. Instead of voting for these screened individuals, the protesters want full autonomy to choose their leader. They are also worried that Hong Kong’s freedoms—independent courts, media and civil service, among others—are being eroded by Beijing.

But a steady stream of anti-protester invective in China’s state-controlled media, not to mention Leung’s Monday ultimatum, have raised questions of whether Beijing is in any sort of conciliatory mood. Certainly, under President Xi Jinping, China has pounded a patriotic drumbeat and detained hundreds of dissenters who dared question the wisdom of the Chinese Communist Party.

If that’s the case, middle ground between the protesters, who gave rapturous applause to speakers who promised to “fight to the end,” and the government, which has vowed to clear the streets by “all actions necessary,” will be difficult to locate. Further complicating things: there is no one leader of the protest coalition and there is more than one rally site, although Admiralty is by far the biggest. Control will be harder to maintain with mission creep. Early Sunday morning, scuffles broke out in Mongkok, one of the other protest sites, injuring a police officer.

Perhaps the realization that a conciliatory window is narrowing was what gave Saturday’s rally, for all its peaceful hymns and bright yellow stickers, a nervous edge. As some of the protesters exited the site just before midnight, rumors flew. Was a crackdown imminent on the thousands that were still camped out on the pavement—some snuggled in tents, others sprawled straight on the asphalt?

“I am really worried about myself and everyone in here,” said Don Lung, who works in education. “But I believe that many people in Hong Kong will fight for us.” The battle lines are drawn, but will the fight come?

—with reporting by Elizabeth Barber and Rishi Iyengar/Hong Kong

Hackers’ Attack Cracked 10 Financial Firms in Major Assault - New York Times

http://dealbook.nytimes.com/2014/10/03/hackers-attack-cracked-10-banks-in-major-assault/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Investment%20Banking&action=Click&pgtype=Blogs&region=Body

By MATTHEW GOLDSTEIN, NICOLE PERLROTH and DAVID E. SANGER OCTOBER 3, 2014 9:39 PMOctober 3, 2014 9:39 pm 48 Comments

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The huge cyberattack on JPMorgan Chase that touched more than 83 million households and businesses was one of the most serious computer intrusions into an American corporation. But it could have been much worse.

Questions over who the hackers are and the approach of their attack concern government and industry officials. Also troubling is that about nine other financial institutions — a number that has not been previously reported — were also infiltrated by the same group of overseas hackers, according to people briefed on the matter. The hackers are thought to be operating from Russia and appear to have at least loose connections with officials of the Russian government, the people briefed on the matter said.

It is unclear whether the other intrusions, at banks and brokerage firms, were as deep as the one that JPMorgan disclosed on Thursday. The identities of the other institutions could not be immediately learned.

The breadth of the attacks — and the lack of clarity about whether it was an effort to steal from accounts or to demonstrate that the hackers could penetrate even the best-protected American financial institutions — has left Washington intelligence officials and policy makers far more concerned than they have let on publicly. Some American officials speculate that the breach was intended to send a message to Wall Street and the United States about the vulnerability of the digital network of one of the world’s most important banking institutions.

“It could be in retaliation for the sanctions” placed on Russia, one senior official briefed on the intelligence said. “But it could be mixed motives — to steal if they can, or to sell whatever information they could glean.”

The JPMorgan hackers burrowed into the digital network of the bank and went down a path that gave them access to information about the names, addresses, phone numbers and email addresses of account holders. They never made it into where the more critical financial information and personal information are stored.

The bank’s security team, which first discovered the attack in late July, managed to block the hackers before they could compromise the most sensitive information about tens of millions of JPMorgan customers, said several security experts and others briefed on the matter. The attack was not completely halted until the middle of August and it was only in recent days that the bank began to tally its full extent.

American officials say they have been working with JPMorgan since the intrusion was detected, chiefly through the Treasury, the Secret Service and intelligence agencies that seek to find the source of the attacks. But that is slow work and one official cautioned against leaping to conclusions about the identities or the motives of the attackers.

“We’ve been wrong before,” he said.

Ways to Protect Yourself After the JPMorgan Hacking

By TARA SIEGEL BERNARD

Consumers can lessen the risk of financial harm to themselves from big data breaches like the one at JPMorgan Chase.

JPMorgan, the nation’s largest bank, has begun contacting customers and making clear that no money was taken from any accounts. There has been no evidence of any fraudulent use of customer information. Most of the household accounts belong to United States residents. The hackers ended up with the addresses, email addresses and phone numbers of everyone who logged into JPMorgan’s websites and mobile applications in the recent past.

Still, the recent attacks on the financial firms raise the possibility that the banks may not be up to the job of defending themselves. The attacks will also stoke questions about regulations governing when companies must inform regulators and their customers about a breach.

“It was a huge surprise that they were able to compromise a huge bank like JPMorgan,” said Al Pascual, a security analyst with Javelin Strategy and Research. “It scared the pants off many people.”

Several financial regulators have warned that a coordinated attack on the banking system could set off another financial crisis.

On Friday, George Jepsen, the Connecticut attorney general, opened an investigation into the breach at JPMorgan, while Benjamin M. Lawsky, New York’s top financial regulator, began calling bank officials to warn them to take the threat more seriously.

“There needs to be far more urgency,” Mr. Lawsky said in an interview.

JPMorgan has also been working with law enforcement, including the F.B.I., since shortly after detecting the intrusion, which affected about 90 of the bank’s computer servers. The bank said it believed that its systems were now secure and that the threat of the hackers’ returning was over.

“To date, we have not seen any unusual fraud activity related to this incident,” said Kristin Lemkau, a bank spokeswoman. “We have identified and closed the known access paths. We have no evidence that the attackers are still in our system. We have apologized to our customers.”

But much remains unanswered about the intrusion, including just who the hackers are, which other financial institutions were hit and why the hackers went down a path inside JPMorgan’s computer system that contained troves of customer information, but not financial data.

The intrusion also highlights a possible gap in United States regulations. Banks are not required to report data breaches and online intrusions unless the incident is deemed to have resulted in a financial loss to customers. Breach notification laws differ by state, but most laws require only that companies disclose a breach if customer names were stolen in conjunction with other information like a credit card, Social Security number or driver’s license number.

In some states, companies can wait up to a month to inform customers of a breach. Other state laws are more vague.

In California, for example, banks, companies and large organizations must inform the state attorney general’s office and consumers about a breach without unreasonable delay — a rule that some companies interpret liberally, officials say. This year, Kamala Harris, the California attorney general, sued the Kaiser Foundation Health Plan, saying that it took more than a year for the foundation to disclose to some employees that their personal information may have been compromised.

For years, there have been attempts in Congress to force companies to inform customers more quickly when their information has been compromised, but recent bills have failed to muster enough support. One bill, sponsored by Senator Edward J. Markey, Democrat of Massachusetts, would create a clearinghouse where companies could exchange information about attacks.

United States bank executives say privately that they already share intelligence informally about attacks, which are occurring frequently on their systems.

This summer, Treasury Secretary Jacob J. Lew called on Congress to pass legislation that he said would bolster the information sharing process.

“As it stands, our laws do not do enough to foster information sharing and defend the public from digital threats,” Mr. Lew said.

That the hackers were apparently able to move around JPMorgan’s computer system undetected for several weeks is perhaps the most troubling aspect of the recent breach, officials at other large banks say.

The hackers were able to attain high administrative privileges within JPMorgan’s network, rooting more than 90 servers and rummaging through customer databases with detailed information for 76 million households and seven million small-business online accounts.

As they looked around, according to one person with knowledge of the breach, the hackers gleaned some critical details of customers’ accounts. With these, the hackers were able to determine whether the accounts fell within the private bank or in other business categories like mortgages.

Some people briefed on the results of the attack contend that it was only a matter of time before attackers could have gained access to customer funds and critical personal data.

Weeks into the attack, in mid-July, unusual behavior on the bank’s network was spotted, and the attackers were stopped before they had a chance to pull any customer data back to their servers abroad.

But they did make off with one file which has unnerved executives. That file contained a list of every application and program deployed on standard JPMorgan computers that hackers can crosscheck with known, or new, vulnerabilities in each system in a search for a backdoor entry.

JPMorgan Chase Hacking Affects 76 Million Households

By JESSICA SILVER-GREENBERG, MATTHEW GOLDSTEIN and NICOLE PERLROTH

The disclosure that attackers had gained access to 76 million households’ accounts dwarfed the bank’s earlier estimate of one million.

Swapping out those programs is costly and time-consuming, people say, because the bank would have to renegotiate licensing deals with technology suppliers and swap out programs and applications for hundreds of thousands of bank employees.

As one former employee explained: “It’s as if they stole the schematics to the Capitol — they can’t just switch out every single door and window pane overnight.”

The attack came after a recent turnover within JPMorgan’s information security group.

A number of staff members followed Frank Bisignano, JPMorgan’s former co-chief operating officer, to First Data last year. This year, First Data agreed to pay JPMorgan over accusations that by wooing other executives to the payment processor, Mr. Bisignano had violated the terms of his former employment contract.

By then, First Data had already hired JPMorgan’s chief information officer, Guy Chiarello; its cybersecurity czar, Anthony Belfiore; its head of compliance, Cindy Armine; and Tom Higgins, JPMorgan’s head of operation control.

Anish Bhimani, the bank’s chief information risk officer, remained. Mr. Bhimani, who is well respected in the cybersecurity industry, is a co-author of a 1996 book on cybersecurity, “Internet Security for Business.”

Ms. Lemkau said the bank was pleased with its current cybersecurity personnel. “This is the highest-quality team we have ever had,” she said.

Last December, JPMorgan hired Dana Deasy as chief information officer from BP. Greg Rattray, a former Air Force lieutenant colonel who specialized in cyberdefense was named the head of information security in June.

Challenges quickly followed. That same month, hackers found a way into the bank’s systems.

Reporting was contributed by Michael Corkery, Nathaniel Popper, Peter Eavis and Jessica Silver-Greenberg

33 Ways to Fix Being Utterly Bored at Work - TIME

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• The Muse
 

Sept. 30, 2014

    

Here's how to keep yourself motivated

You’ve gone above and beyond. You’ve talked to your boss about additional responsibilities and gotten the old “definitely—once we have a position open / more budget / don’t need you to focus on X anymore.”

Frankly, you’re bored with your job.

And while sometimes, that’s a sign that you should hightail it out of there, others it’s a matter of keeping yourself moving forward (and not gouging your eyes out) until the next busy season, new client, or promotion comes along.

If you’re in that boat, you’re in luck: Here’s a roundup of things you can do in the office or during off-hours to up your professional game even when your current job isn’t exactly doing it for you.

If You Want to Network

1. Start a Book Group

Pick books that are related to your field—or a general business read that everyone can get some use out of, like something from the 99U book series orGood to Great. A great cadence is once per month—take over a conference room for your lunch hour or, better yet, meet for happy hour and chat at a bar.

2. Create a Networking Group

Have a few friends in your field you see from time to time at industry events? See if they’d all want to get together every month for an informal networking group, where you all meet to chat (and get advice!) about challenges you’re facing.

3. Go on Lunch Dates

Ever heard of “Let’s Lunch?” It’s a (free!) online network that matches you up with someone in your area for lunch during the workweek. Connect your LinkedIn profile, provide your availability and geographic flexibility, and the site’s algorithm matches you up with a like-minded lunch partner. It’s a great way to grow your network utilizing the free time that’s already built into your day. (ViaAllison Stadd)

4. Ask a Co-worker to Join You

Go out to lunch with a co-worker you don’t know well. Not only will you get to know someone new, you’ll learn more about how your company operates—and potentially find new ways to collaborate and get involved.

5. Start a Lunch Club

Grab four other officemates, and assign everyone a day to bring enough lunch for everyone else on a specified day of the week. Cook once, get delicious meals (and team bonding) all five days!

6. Start the Company Softball League

Or frisbee team. Or 5K for charity. Showing some initiative to get everyone out of the office and hanging out with each other on a non-work basis will show the higher-ups you have what it takes to shine in the office, too.

7. Build Your LinkedIn Following

One expert suggests we should be using LinkedIn more like Twitter—finding and engaging with as many followers as possible. So start building your network. Here are a few more things you can do on LinkedIn every month, week, and day.

If You Want to Boost Your Skills

8. Try Morning Pages

Start every day with 15 minutes of creative writing. Entrepreneur Chris Winfield says it has “become an essential way to clear his mind, unleash creative ideas, and quiet his inner critic, reducing his anxiety.”

9. Start a Blog

It can be a place for you to write about happenings in your field, share thoughts on pop culture, or even pursue a hobby—just be clear on what your purpose is and who you want to read it. Then, get started by making a long list of topics you could potentially write about. Commit to pushing something out at least once a week to keep your (obviously avid) followers engaged.

10. Or a Podcast

Blogging not for you? Start a podcast. Better yet, invite industry leaders to be interviewed on your podcast. You’re boosting your personal brand and your professional network at once!

11. Write an Article

Then, try to get it published on an industry website. You’ll hone a new skill—writing and researching—and you’ll start to build your name as a thought leader in your space.

12. Get Your Voice Heard

Look for an upcoming conference or event you could speak at, and pitch yourself as a panel speaker or leader. Here’s exactly how to do it.

13. Look for Hidden Benefits

Browse your company’s benefits page, and make sure you’re taking advantage of all of them. Many companies offer free financial planning services, a professional development budget, or even sabbaticals or trips to other offices. Hey, if it’s cool with HR, it’s bound to be cool with your boss.

14. Learn to Code

No, really—it’ll boost your career no matter what you do (take it fromthis PR pro).Here’s a cool way to get started.

15. Or Learn Something Else

Pick a class, any class—here are 50 (cheap) ideas.

16. Or Teach Something

Consider developing live or online courses, workshops, or seminars in your areas of expertise. (Platforms like Skillshare make it easy to share what you know.)

17. Build a Personal Website

No matter what field you’re in, it’s a great idea. We have a seven-day plan that makes it super easy, and at the end of it all you’ll have an online presence that shows off who you are and displays your best work.

If You Want to Make Your Office Happier

18. Revamp Your Cubicle

It’s amazing what some fresh photos, some non-fluorescent lighting, and some organization can do for your inspiration (not to mention sanity). Here are a few ideas to get you started.

19. Fix Something

Look for a process, procedure, or meeting that everyone grumbles about, and think of one or two ways to improve upon it. Put together a plan, present it to your boss, and see if you can be the one who turns it into action.

20. Teach the Group

Offer to research and present on something to your team—whether it’s socially responsible business practices or a new project management tool.

21. Launch a Brown Bag Program

Once a month, invite cool speakers in to chat with your team about something in your field.

22. Mentor a Junior Employee

Look to see if your company has an official program you can participate in, or just look for younger co-workers who you could take under your wing.

23. Make a List

Create a list of resources you find helpful, sites you love to read, the best conferences or classes in your field, or anything else you think your co-workers might find useful, and send it out to everyone on your team.

24. Ask for a New Employee

If you don’t already have one, come up with a proposal for getting an intern or other direct report. Having someone to take some work off your plate can open up space for you to work on more inspiring projects—and having someone to mentor can be a great growth experience.

25. Create a Client Survey

Ask your customers and potential customers key questions that could help you better serve them (as well as for their general feedback). At minimum, you’ll get some helpful guidance for future sales or initiatives, and you’ll probably look like a star while you’re at it.

If You Want to Get Out of the Office

26. Plan a Trip

Research shows that just the act of planning a trip makes you happier, as you’re anticipating what’s to come. While we don’t recommend doing the actual planning on company time, daydreaming about your destination will certainly make the day go by faster.

27. Plan a Fundraiser

Or otherwise get involved in a cause you care about. Bonus: It’s a great way to network—reach out to people you haven’t talked to in a while or think are interesting with an invite.

28. Do Something Totally Unrelated to Your Job

Take a bartending class, sign up for a half-marathon, get SCUBA certified. While it might not have anything to do with your job, you’ll definitely be more inspired in your off hours, and that’ll give your life inspiration an overall boost.

29. Learn a New Language

Along similar lines, even if you don’t speak Spanish or German at work, speaking and reading in a new language can get your brain thinking in totally new ways. (Here are five fun ways to give it a whirl.)

If You Want Something Totally New

30. Take on a Side Project

Start that funny Tumblr you’ve always wanted to, sell your wares as a consultant in your field, or start an Etsy store. It’ll give you a good challenge outside of your day job—not to mention some cold, hard cash.

31. Go Pro Bono

Use some of your free time to do some work for a nonprofit or early-stage startup with a mission that you’re really excited about. This will give you a chance to grow your skills (or potentially learn new ones) and remind you why you loved your work in the first place, plus it could even turn into an exciting full-time opportunity down the line.

32. Get a New Job

If you’ve tried everything and are still bored at your current gig, it’s probably time to look for a new one. Start making a list of your favorite companies, polishing up your resume, and getting someinformational interviews on the calendar. On that note:

33. Take a Day Off

Hey, if you’re bored at work, you can probably afford it. Try this one-day, 10-hour plan to totally kick start your job search on a day off.

Our Dysfunctional Financial System - TIME

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• Rana Foroohar @RanaForoohar
 

6:15 AM ET

    

Tapes of what really happens between bankers and regulators show how far we have to go

In some ways, the most shocking thing about the 46 hours of secret audiotapes made by former Federal Reserve bank examiner Carmen Segarra in 2012 is that they are no shock at all. Did anyone ever doubt that the New York Fed was in hock to Wall Street? Or that Fed bank examiners–the regulators tasked with monitoring the risks banks take–might fear alienating the powerful financiers on whom they depend for information or future jobs?

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It’s one thing to know and another to hear in painful, crackling detail how the Fed’s financial cops slip on their velvet gloves to deal with Goldman Sachs. Or how Segarra, one of a group of examiners brought in after the financial crisis to keep a closer watch on the till, was fired, perhaps for doing her job a little too well. One can only hope that this latest example of regulatory capture by Wall Street will focus minds on the fact that six years on from the crisis, we still have a dysfunctional financial system.

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Consider one of the shady deals highlighted on the secret tapes of New York Fed meetings, which Segarra made with a spy recorder before she was let go and which were made public on Sept. 26 in a joint report by ProPublica and This American Life. The 2012 transaction with Banco Santander, initiated in the midst of the European debt crisis, ensured that the Spanish bank would look better on paper than it really was at the time. Santander paid Goldman a $40 million fee to hold shares in a Brazilian subsidiary so that it could meet European Banking Authority rules. The Fed employees, who work inside the banks they examine (yes, it’s literally an inside job), knew the deal was dodgy. One even compared it to Goldman’s “getting paid to watch a briefcase.” But it was technically legal, and nobody wanted to make a fuss, so the transaction went through.

It’s hard to know where to begin with what’s problematic here. I’ll focus on the least sexy but perhaps most important point: existing capital requirements–the cash that banks are obligated to hold to offset risk–are pathetic. Despite all the postcrisis backslapping in Washington about how banks have become safer, our system as a whole has not. No too-big-to-fail institution currently is required to keep more than 3% of its holdings in cash (a figure that will rise to 5% and 6% in 2018), which means banks can fund 97% of their own investments with debt. No company outside the financial sector would dream of conducting daily business with that much risk. As Stanford professor Anat Admati, whose book The Bankers’ New Clothes makes a powerful case for reining in such leverage levels, told me, “We’ve got to get rid of this idea that banking is special and that it should be treated differently than every other industry.”

Of course, if you start telling financiers they should use more than a few percentage points of their own money when they gamble, they’ll throw a fit. They will tell you that would make it impossible for them to lend to real businesses. They will also uncork lots of complex financial terms–“Tier 1 capital,” “liquidity ratios,” “risk-weighted off-balance-sheet exposures”–that tend to suffocate useful (a.k.a. comprehensible) debate. Financiers use insider jargon to intimidate and obfuscate. This is something we need to fight. In banking, as in so many things, complexity is the enemy. The right questions are the simplest ones: Are financial institutions doing things that provide a clear, measurable benefit to the real economy? Sadly, the answer is often no.

One thing we’ve learned since the crisis is that bailing out Wall Street didn’t help Main Street. Credit to individuals and many businesses plummeted during and after the bailouts and remains below precrisis levels today. Numerous experts believe that the size of the financial sector is slowing growth in the real economy by sucking the monetary oxygen out of the room. Banks don’t want to lend; they want to trade, often via esoteric deals that do almost nothing for anyone outside Wall Street.

This disconnect between the real economy and finance is now being closely studied by policymakers and academics. Adair Turner, a former British banking regulator, thinks that only about 15% of U.K. financial flows go to the real economy; the rest stay within the financial system, propping up existing corporate assets, supporting trading and enabling $40 million briefcase-watching fees. If the New York Fed really wants to redeem itself, it might consider commissioning a similar study to look at Wall Street’s contribution to the U.S. economy. After all, if finance can’t justify itself by showing it’s actually doing what it was set up to do–take in deposits and lend them back to all of us–what can justify it?

Business Magnate Richard Branson Gives His Staff Unlimited Vacation - TIME

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• Sam Frizell @Sam_Frizell
 

Sept. 25, 2014

    

Virgin founder Richard BransonMichael Buckner—Getty Images

Is Virgin's Richard Branson the best boss ever, or an eccentric?

Richard Branson, the chairman and founder of Virgin Group, said on his website Tuesday that he’s giving his whole personal staff unlimited vacation days.

Branson’s staff of almost 200 can “take off whenever they want for as long as they want,” the executive said on his website, adding that employees don’t need to ask for approval, nor are their managers requested to keep track of their days away from work.

Employees can take however much time off from work they choose, “the assumption being that they are only going to do it when they feel a hundred per cent comfortable that they and their team are up to date on every project and that their absence will not in any way damage the business,” Branson said.

The flexible hours employees were working both in the office and at home already make it hard to track how many hours they’re working anyway, Branson said.

The Financial Times reported that the new rules apply to around 170 staff at the Virgin head offices in the U.K. and U.S., whereas the 50,000 employees of the larger Virgin Group won’t enjoy the same policy — though Branson said in his note if it’s successful, he’ll encourage Virgin’s subsidiaries to adopt the policy as well.

Branson said he was inspired by Netflix, the video-streaming service, which has a similar policy.

PayPal to Separate From eBay in 2015 - Associated Press

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• Associated Press
 

7:23 AM ET

    

(SAN JOSE, Calif.) — PayPal is splitting from EBay Inc. and will become a separate and publicly traded company next year.

The separation is expected to occur in the second half of 2015.

EBay said Tuesday that its board decided that the separation was the best path for growth and shareholder value creation for each business.

Dan Schulman, the president of the enterprise growth group at American Express, will be the new president at PayPal, effective immediately. The 56-year-old will become PayPal’s CEO once the separation takes place.