Bits Blog: Study May Offer Insight Into Coca-Cola Breach

Spend enough time with cybersecurity experts and chances are you will hear some variation of this line: There are two types of companies in the United States, those that have been hacked and those that don’t yet know they’ve been hacked.

Government intelligence officials and cybersecurity specialists say hackers — predominantly from China — are siphoning gigabytes, if not terabytes, of data from companies in the United States every day. We count on much of this information to deliver the innovative products and services that will lead to new jobs and economic growth. The security software company McAfee estimates that in 2008 alone, companies around the world lost more than $1 trillion because of this sort of intellectual property theft.

“I’ve seen behind the curtain,” Shawn Henry, the Federal Bureau of Investigation.’s former top cyber agent, who recently joined the cybersecurity start-up CrowdStrike, told me in an interview in April. “I can’t go into the particulars because it’s classified, but the vast majority of companies have been breached.”

The problem is that such breaches rarely make headlines because companies fear what disclosure will mean for their stock price. Google was the first to try to change that mentality when, in 2010, it disclosed that it and 34 other companies, many based in Silicon Valley, had been attacked by Chinese hackers. Of those 34, only Intel and Adobe Systems came forward, and they provided few details.

Still, news of some breaches leak out. That was the case, most recently, with Coca-Cola. This month, Bloomberg News reported that Coca-Cola was breached by Chinese hackers in 2009 during a failed $2.4 billion takeover attempt of the China Huiyuan Juice Group. That attempted deal would have been the largest foreign acquisition of a Chinese company.

Now, a 2010 case study published by the Mandiant Corporation, a cybersecurity firm, may offer further details. The study, which does not mention Coca-Cola specifically, details a 2009 breach of a “Fortune 500 Manufacturer” that aligns almost perfectly with Bloomberg’s account of Coca-Cola’s breach.

According to the study:

In 2009, a U.S. based Fortune 500 manufacturing company initiated discussions to acquire a Chinese corporation. During the negotiations, APT [advanced persistent threat] attackers compromised computers belonging to the executives of the U.S.-based company, most likely in an effort to learn more details of the negotiations. Sensitive data left the company on a weekly basis during negotiations, potentially providing the Chinese company with visibility to pricing and negotiation strategies.

As Bloomberg reported, Mandiant’s study said the company gained knowledge of the breach only when law enforcement officials notified it of the intrusion. The study also details how hackers penetrated the company via a so-called spearphishing attack, in which the attackers sent e-mails to certain executives from a fake account ostensibly belonging to the chief executive.

According to Bloomberg, an e-mail containing the subject line: “Save power is save money! (from CEO)” was sent to the e-mail account of Bernhard Goepelt, Coca-Cola’s current general counsel. The e-mail contained a malicious link that, once clicked, downloaded malware that gave the attackers full access to Coca-Cola’s network.

Mandiant’s 2010 report said the e-mail “was crafted to look like it originated from a fellow employee and discussed a message from the CEO on conserving resources.”

Tal Be’ery, a senior Web researcher at Imperva, a data security firm, compared details of the Coca-Cola breach with Mandiant’s study and said the two accounts clearly referred to the same company. Executives at Mandiant and media officers at Coca-Cola did not return requests for comment.

If Mandiant’s study is, in fact, based on Coca-Cola, then it offers new insights into the breach. According to the study, once in, hackers used password-stealing software to gain access to other systems on the company’s network. They also used the compromised executive’s account to launch what is known as an SQL server attack, in which hackers exploit a software vulnerability and enter commands that cause databases to produce their contents.

But one of the most interesting aspects of the breach, according to Mandiant, was how well the attackers had concealed their tracks. According to Mandiant, hackers used so-called stub malware. This is an agile agent whose code can be tweaked by hackers to use it for various functions while leaving a small forensic footprint.

The one discrepancy between the Bloomberg and Mandiant accounts was why, ultimately, the company’s acquisition fell apart. According to Bloomberg, Coca-Cola’s takeover attempt of China Huiyuan Juice Group was thwarted because China’s Ministry of Commerce rejected it for antitrust reasons. Mandiant’s report offered a different take:

The intrusion had a significant impact on the victim organization. As a result of the compromise, the U.S. company terminated their acquisition plans. While it was not possible to determine all the data that had been lost, the victim company was not able to compete the acquisition and accomplish their business objectives.

Updated: In an e-mail, Kent J. Landers, a spokesman for Coca-Cola, said that the company does not comment on security matters, but said Coca-Cola did not complete its acquisition of China Huiyuan Juice Group ”as a result of the China Ministry of Commerce declining approval for the proposed transaction.”

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Tunnel Collapse Outside Tokyo Traps Motorists

Kyodo News, via Associated Press

A surveillance camera within the Sasago tunnel showed rescue workers at the scene of a collapse on Sunday.

TOKYO — At least seven people were feared dead after part of a highway tunnel collapsed Sunday in eastern Japan, trapping them in their vehicles and starting a fire that filled the tunnel with thick, black smoke.

Franck Robichon/European Pressphoto Agency

Fire fighters and rescue personnel gathered at the entrance to the Sasago tunnel, west of Tokyo.

Three vehicles appear to have been crushed under concrete that fell from the ceiling of the three-mile Sasago Tunnel near the city of Otsuki in Yamanashi Prefecture, about 50 miles west of Tokyo, the national government’s disaster management agency said. Agency and police officials said it remained unclear why the 150- to 200-foot section of eight-inch-thick concrete, weighing about 180 tons, suddenly fell.

A vehicle carrying six people caught fire, emitting heavy smoke that initially prevented firefighters from entering the tunnel. But even after putting out the blaze, rescuers had to temporarily suspend efforts to reach the trapped vehicles because of the danger of a further collapse, officials said.

They said rescue efforts resumed later in the day, though progress was slow because firefighters were still moving carefully.

Officials said a 28-year-old woman managed to flee from the vehicle that caught fire. She told firefighters that five other people remained trapped in her vehicle. It was unknown how many people were in the other vehicles besides the drivers, who were apparently also still trapped inside.

One of the other vehicles appeared to be a truck belonging to a food wholesaler, officials said. They said the driver called his company right after the accident to ask for help, but subsequent attempts to reach him by his cellphone failed.

The operator of the highway, Central Nippon Expressway, held a news conference to apologize for the accident. The police said they had opened an investigation into the cause of the collapse and whether professional negligence by the operator was a factor.

The accident closed a section of the Chuo Expressway, a vital transportation artery connecting Tokyo to western Japan. Such long tunnels — usually lined with smooth, white concrete — are a common sight on highways in this mountainous island nation.

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Syria Rebels Find Skype Useful, but Dangers Lurk

In a demonstration of their growing sophistication and organization, Syrian rebels responded to a nationwide shutdown of the Internet by turning to satellite technology to coordinate within the country and to communicate with outside activists.

When Syria’s Internet service disappeared Thursday, government officials first blamed rebel attacks. Activist groups blamed the government and viewed the blackout as a sign that troops would violently clamp down on rebels.

But having dealt with periodic outages for more than a year, the opposition had anticipated a full shutdown of Syria’s Internet service providers. To prepare, they have spent months smuggling communications equipment like mobile handsets and portable satellite phones into the country.

“We’re very well equipped here,” said Albaraa Abdul Rahman, 27, an activist in Saqba, a poor suburb 20 minutes outside Damascus. He said he was in touch with an expert in Homs who helped connect his office and 10 others like it in and around Damascus.

Using the connection, the activists in Saqba talked to rebel fighters on Skype and relayed to overseas activists details about clashes with government forces. A video showed the rebels’ bare-bones room, four battery backups that could power a laptop for eight hours and a generator set up on a balcony.

For months, rebels fighting to overthrow President Bashar al-Assad have used Skype, a peer-to-peer Internet communication system, to organize and talk to outside news organizations and activists. A few days ago, Jad al-Yamani, an activist in Homs, sent a message to rebel fighters that tanks were moving toward a government checkpoint.

He notified the other fighters so that they could go observe the checkpoint. “Through Skype you know how the army moves or can stop it,” Mr. Yamani said.

On Friday, Dawoud Sleiman, 39, a member of the antigovernment Ahrar al-Shamal Battalion, part of the Free Syrian Army, reached out to other members of the rebel group. They were set up at the government’s Wadi Aldaif military base in Idlib, a province near the Turkish border that has seen heavy fighting, and connected to Skype via satellite Internet service.

Mr. Sleiman, who is based in Turkey, said the Free Syrian Army stopped using cellphone networks and land lines months ago and instead relies almost entirely on Skype. “Brigade members communicate through the hand-held devices,” he said.

This week rebels posted an announcement via Skype that called for the arrest of the head of intelligence in Idlib, who is accused of killing five rebels. “A big financial prize will be offered to anyone who brings the head of this guy,” the message read. “One of our brothers abroad has donated the cash.”

If the uprisings in Tunisia and Egypt were Twitter Revolutions, then Syria is becoming the Skype Rebellion. To get around a near-nationwide Internet shutdown, rebels have armed themselves with mobile satellite phones and dial-up modems.

In many cases, relatives and supporters living outside Syria bought the equipment and had it smuggled in, mostly through Lebanon and Turkey.

That equipment has allowed the rebels to continue to communicate almost entirely via Skype with little interruption, despite the blackout. “How the government used its weapons against the revolution, that is how activists use Skype,” Mr. Abdul Rahman said.

“We haven’t seen any interruption in the way Skype is being used,” said David Clinch, an editorial director of Storyful, a group that verifies social media posts for news organizations, including The New York Times (Mr. Clinch has served as a consultant for Skype).

Mr. Assad, who once fashioned himself as a reformer and the father of Syria’s Internet, has largely left the country’s access intact during the 20-month struggle with rebels. The government appeared to abandon that strategy on Thursday, when most citizens lost access. Some Syrians could still get online using service from Turkey. On Friday, Syrian officials blamed technical problems for the cutoff.

The shutdown is only the latest tactic in the escalating technology war waged in Arab Spring countries.

But several technology experts warned that the use of the Internet by rebels in Syria, even those relying on Skype, could leave them vulnerable to government surveillance.

Liam Stack contributed reporting from New York; Hala Droubi from Dubai, United Arab Emirates; and Hwaida Saad from Beirut, Lebanon.

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Most Americans Face Lower Tax Burden Than in the 80s

What Is Fair?:
Taxes are still a hot topic after the presidential election. But as a country that spends more than it collects in taxes, are we asking the right taxpayers to pay the right amounts?

BELLEVILLE, Ill. — Alan Hicks divides long days between the insurance business he started in the late 1970s and the barbecue restaurant he opened with his sons three years ago. He earned more than $250,000 last year and said taxes took more than 40 percent. What’s worse, in his view, is that others — the wealthy, hiding in loopholes; the poor, living on government benefits — are not paying their fair share.

“It feels like the harder we work, the more they take from us,” said Mr. Hicks, 55, as he waited for a meat truck one recent afternoon. “And it seems like there’s an awful lot of people in the United States who don’t pay any taxes.”

These are common sentiments in the eastern suburbs of St. Louis, a region of fading factory towns fringed by new subdivisions. Here, as across the country, people like Mr. Hicks are pained by the conviction that they are paying ever more to finance the expansion of government.

But in fact, most Americans in 2010 paid far less in total taxes — federal, state and local — than they would have paid 30 years ago. According to an analysis by The New York Times, the combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980.

Households earning more than $200,000 benefited from the largest percentage declines in total taxation as a share of income. Middle-income households benefited, too. More than 85 percent of households with earnings above $25,000 paid less in total taxes than comparable households in 1980.

Lower-income households, however, saved little or nothing. Many pay no federal income taxes, but they do pay a range of other levies, like federal payroll taxes, state sales taxes and local property taxes. Only about half of taxpaying households with incomes below $25,000 paid less in 2010.

The uneven decline is a result of two trends. Congress cut federal taxation at every income level over the last 30 years. State and local taxes, meanwhile, increased for most Americans. Those taxes generally take a larger share of income from those who make less, so the increases offset more and more of the federal savings at lower levels of income.

In a half-dozen states, including Connecticut, Florida and New Jersey, the increases were large enough to offset the federal savings for most households, not just the poorer ones.

Now an era of tax cuts may be reaching its end. The federal government depends increasingly on borrowed money to pay its bills, and many state and local governments are similarly confronting the reality that they are spending more money than they collect. In Washington, debates about tax cuts have yielded to debates about who should pay more.

President Obama campaigned for re-election on a promise to take a larger share of taxable income above roughly $250,000 a year. The White House is now negotiating with Congressional Republicans, who instead want to raise some money by reducing tax deductions. Federal spending cuts also are at issue.

If a deal is not struck by year’s end, a wide range of federal tax cuts passed since 2000 will expire and taxes will rise for roughly 90 percent of Americans, according to the independent Tax Policy Center. For lower-income households, taxation would spike well above 1980 levels. Upper-income households would lose some but not all of the benefits of tax cuts over the last three decades.

Public debate over taxes has typically focused on the federal income tax, but that now accounts for less than a third of the total tax revenues collected by federal, state and local governments. To analyze the total burden, The Times created a model, in consultation with experts, which estimated total tax bills for each taxpayer in each year from 1980, when the election of President Ronald Reagan opened an era of tax cutting, up to 2010, the most recent year for which relevant data is available.

The analysis shows that the overall burden of taxation declined as a share of income in the 1980s, rose to a new peak in the 1990s and fell again in the 2000s. Tax rates at most income levels were lower in 2010 than at any point during the 1980s.

Governments still collected the same share of total income in 2010 as in 1980 — 31 cents from every dollar — because people with higher incomes pay taxes at higher rates, and household incomes rose over the last three decades, particularly at the top.

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Hockey Coaches Defy Doctors on Concussions, Study Finds

Despite several years of intensive research, coverage and discussion about the dangers of concussions, the idea of playing through head injuries is so deeply rooted in hockey culture that two university teams kept concussed players on the ice even though they were taking part in a major concussion study.

The study, which will be published Friday in a series of articles in the journal Neurosurgical Focus, was conducted during the 2011-12 hockey season by researchers from the University of Western Ontario, the University of Montreal, Harvard and other institutions.

“This culture is entrenched at all levels of hockey, from peewee to university,” said Dr. Paul S. Echlin, a concussion specialist and researcher in Burlington, Ontario, and the lead author of the study. “Concussion is a significant public health issue that requires a generational shift. As with smoking or seat belts, it doesn’t just happen overnight — it takes a massive effort and collective movement.”

The study is believed to be among the most comprehensive analyses of concussions in hockey, which has a rate of head trauma approaching that of football. Researchers followed two Canadian university teams — a men’s team and a women’s team — and scanned every player’s brain before and after the season. Players who sustained head injuries also received scans at three intervals after the injuries, with researchers using advanced magnetic resonance imaging techniques.

The teams were not named in the study, in which an independent specialist physician was present at each game and was empowered to pull any player off the ice for examination if a potential concussion was observed.

The men’s team, with 25 players and an average age of 22, played a 28-game regular season and a 3-game postseason. The women’s team, with 20 players and an average age of 20, played 24 regular-season games and no playoff games. Over the course of the season, there were five observed or self-reported concussions on the men’s team and six on the women’s team.

Researchers noted several instances of coaches, trainers and players avoiding examinations, ignoring medical advice or otherwise obstructing the study, even though the players had signed consent forms to participate and university ethics officials had given institutional consent.

“Unless something is broken, I want them out playing,” one coach said, according to the study.

In one incident, a neurologist observing the men’s team pulled a defenseman during the first period of a game after the player took two hits and was skating slowly. During the intermission the player reported dizziness and was advised to sit out, but the coach suggested he play the second period and “skate it off.” The defenseman stumbled through the rest of the game.

“At the end of the third period, I spoke with the player and the trainer and said that he should not play until he was formally evaluated and underwent the formal return-to-play protocol,” the neurologist said, as reported in the study. “I was dismayed to see that he played the next evening.”

After the team returned from its trip, the neurologist questioned the trainer about overruling his advice and placing the defenseman at risk.

“The trainer responded that he and the player did not understand the decision and that most of the team did not trust the neurologist,” according to the study. “He requested that the physician no longer be used to cover any more games.”

In another episode, a physician observer assessed a minor concussion in a female player and recommended that she miss the next night’s game. Even though the coach’s own playing career had ended because of concussions, she overrode the medical advice and inserted the player the next evening.

According to the report, the coach refused to speak to another physician observer on the second evening. The trainer was reluctant to press the issue with the coach because, the trainer said, the coach did not want the study to interfere with the team.

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Hockey Coaches Defy Doctors on Concussions, Study Finds

Despite several years of intensive research, coverage and discussion about the dangers of concussions, the idea of playing through head injuries is so deeply rooted in hockey culture that two university teams kept concussed players on the ice even though they were taking part in a major concussion study.

The study, which will be published Friday in a series of articles in the journal Neurosurgical Focus, was conducted during the 2011-12 hockey season by researchers from the University of Western Ontario, the University of Montreal, Harvard and other institutions.

“This culture is entrenched at all levels of hockey, from peewee to university,” said Dr. Paul S. Echlin, a concussion specialist and researcher in Burlington, Ontario, and the lead author of the study. “Concussion is a significant public health issue that requires a generational shift. As with smoking or seat belts, it doesn’t just happen overnight — it takes a massive effort and collective movement.”

The study is believed to be among the most comprehensive analyses of concussions in hockey, which has a rate of head trauma approaching that of football. Researchers followed two Canadian university teams — a men’s team and a women’s team — and scanned every player’s brain before and after the season. Players who sustained head injuries also received scans at three intervals after the injuries, with researchers using advanced magnetic resonance imaging techniques.

The teams were not named in the study, in which an independent specialist physician was present at each game and was empowered to pull any player off the ice for examination if a potential concussion was observed.

The men’s team, with 25 players and an average age of 22, played a 28-game regular season and a 3-game postseason. The women’s team, with 20 players and an average age of 20, played 24 regular-season games and no playoff games. Over the course of the season, there were five observed or self-reported concussions on the men’s team and six on the women’s team.

Researchers noted several instances of coaches, trainers and players avoiding examinations, ignoring medical advice or otherwise obstructing the study, even though the players had signed consent forms to participate and university ethics officials had given institutional consent.

“Unless something is broken, I want them out playing,” one coach said, according to the study.

In one incident, a neurologist observing the men’s team pulled a defenseman during the first period of a game after the player took two hits and was skating slowly. During the intermission the player reported dizziness and was advised to sit out, but the coach suggested he play the second period and “skate it off.” The defenseman stumbled through the rest of the game.

“At the end of the third period, I spoke with the player and the trainer and said that he should not play until he was formally evaluated and underwent the formal return-to-play protocol,” the neurologist said, as reported in the study. “I was dismayed to see that he played the next evening.”

After the team returned from its trip, the neurologist questioned the trainer about overruling his advice and placing the defenseman at risk.

“The trainer responded that he and the player did not understand the decision and that most of the team did not trust the neurologist,” according to the study. “He requested that the physician no longer be used to cover any more games.”

In another episode, a physician observer assessed a minor concussion in a female player and recommended that she miss the next night’s game. Even though the coach’s own playing career had ended because of concussions, she overrode the medical advice and inserted the player the next evening.

According to the report, the coach refused to speak to another physician observer on the second evening. The trainer was reluctant to press the issue with the coach because, the trainer said, the coach did not want the study to interfere with the team.

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General Assembly Grants Palestine Upgraded Status in U.N.

Damon Winter/The New York Times

The Palestinian Authority president, Mahmoud Abbas, center, was congratulated by Turkey’s foreign minister, Ahmet Davutoglu. More Photos »

UNITED NATIONS — More than 130 countries voted on Thursday to upgrade Palestine to a nonmember observer state of the United Nations, a triumph for Palestinian diplomacy and a sharp rebuke to the United States and Israel.

But the vote, at least for now, did little to bring either the Palestinians or the Israelis closer to the goal they claim to seek: two states living side by side, or increased Palestinian unity. Israel and the militant group Hamas both responded critically to the day’s events, though for different reasons.

The new status will give the Palestinians more tools to challenge Israel in international legal forums for its occupation activities in the West Bank, including settlement-building, and it helped bolster the Palestinian Authority, weakened after eight days of battle between its rival Hamas and Israel.

But even as a small but determined crowd of 2,000 celebrated in central Ramallah in the West Bank, waving flags and dancing, there was an underlying sense of concerned resignation.

“I hope this is good,” said Munir Shafie, 36, an electrical engineer who was there. “But how are we going to benefit?”

Still, the General Assembly vote — 138 countries in favor, 9 opposed and 41 abstaining — showed impressive backing for the Palestinians at a difficult time. It was taken on the 65th anniversary of the vote to divide the former British mandate of Palestine into two states, one Jewish and one Arab, a vote Israel considers the international seal of approval for its birth.

The past two years of Arab uprisings have marginalized the Palestinian cause to some extent as nations that focused their political aspirations on the Palestinian struggle have turned inward. The vote on Thursday, coming so soon after the Gaza fighting, put the Palestinians again — if briefly, perhaps — at the center of international discussion.

“The question is, where do we go from here and what does it mean?” Salam Fayyad, the Palestinian prime minister, who was in New York for the vote, said in an interview. “The sooner the tough rhetoric of this can subside and the more this is viewed as a logical consequence of many years of failure to move the process forward, the better.” He said nothing would change without deep American involvement.

President Mahmoud Abbas of the Palestinian Authority, speaking to the assembly’s member nations, said, “The General Assembly is called upon today to issue a birth certificate of the reality of the state of Palestine,” and he condemned what he called Israeli racism and colonialism. His remarks seemed aimed in part at Israel and in part at Hamas. But both quickly attacked him for the parts they found offensive.

“The world watched a defamatory and venomous speech that was full of mendacious propaganda against the Israel Defense Forces and the citizens of Israel,” Prime Minister Benjamin Netanyahu of Israel responded. “Someone who wants peace does not talk in such a manner.”

While Hamas had officially backed the United Nations bid of Mr. Abbas, it quickly criticized his speech because the group does not recognize Israel.

“There are controversial issues in the points that Abbas raised, and Hamas has the right to preserve its position over them,” said Salah al-Bardaweel, a spokesman for Hamas in Gaza, on Thursday.

“We do not recognize Israel, nor the partition of Palestine, and Israel has no right in Palestine,” he added. “Getting our membership in the U.N. bodies is our natural right, but without giving up any inch of Palestine’s soil.”

Israel’s ambassador to the United Nations, Ron Prosor, spoke after Mr. Abbas and said he was concerned that the Palestinian Authority failed to recognize Israel for what it is.

“Three months ago, Israel’s prime minister stood in this very hall and extended his hand in peace to President Abbas,” Mr. Prosor said. “He reiterated that his goal was to create a solution of two states for two peoples, where a demilitarized Palestinian state will recognize Israel as a Jewish state.

“That’s right. Two states for two peoples. In fact, President Abbas, I did not hear you use the phrase ‘two states for two peoples’ this afternoon. In fact, I have never heard you say the phrase ‘two states for two peoples’ because the Palestinian leadership has never recognized that Israel is the nation-state of the Jewish people.”

The Israelis also say that the fact that Mr. Abbas is not welcome in Gaza, the Palestinian coastal enclave run by Hamas, from which he was ejected five years ago, shows that there is no viable Palestinian leadership living up to its obligations now.

Jennifer Steinhauer contributed reporting from Washington, Isabel Kershner from Jerusalem, and Khaled Abu Aker from Ramallah, West Bank.

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Hacking Report Criticizes Murdoch Newspaper and British Press Standards

LONDON — The leader of a major inquiry into the standards of British newspapers triggered by the phone hacking scandal offered an excoriating critique of the press as a whole on Thursday, saying it displayed “significant and reckless disregard for accuracy,” and urged the press to form an independent regulator to be underpinned by law.

Dan Kitwood/Getty Images

Lord Justice Sir Brian Leveson on Thursday with his inquiry on press standards.

Kerim Okten/European Pressphoto Agency

The British actor Hugh Grant arrived Thursday at the Queen Elizabeth II conference center in London, where Lord Justice Sir Brian Leveson was scheduled to release a report on the British press.

The report singled out Rupert Murdoch’s defunct tabloid The News of the World for sharp criticism.

“Too many stories in too many newspapers were the subject of complaints from too many people with too little in the way of titles taking responsibility, or considering the consequences for the individuals involved,” the head of the inquiry, Lord Justice Sir Brian Leveson, said in a 46-page summary of the findings in his long-awaited, 1,987-page report published in four volumes.

“The ball moves back into the politicians’ court,” Sir Brian said, referring to what form new and tighter regulations should take. “They must now decide who guards the guardians.”

The report was published after some 337 witnesses testified in person in 9 months of hearings that sought to unravel the close ties between politicians, the press and the police, reaching into what were depicted as an opaque web of links and cross-links within the British elite as well as a catalog of murky and sometimes unlawful practices within the newspaper industry.

“This inquiry has been the most concentrated look at the press this country has ever seen,” Sir Brian said after the report was made public.

But in a first reaction, Prime Minister David Cameron resisted the report’s recommendation that a new form of press regulation should be underpinned by laws, telling lawmakers that they “should be wary” of “crossing the Rubicon” by enacting legislation with the potential to limit free speech and free expression.

Mr. Cameron’s remarks drew immediate criticism from the leader of the Labour opposition, Ed Miliband, who said Sir Brian’s proposals should be accepted in their entirety.

Mr. Cameron ordered the Leveson Inquiry in July, 2011, as the phone hacking scandal at The News of the World blossomed into broad public revulsion with reports that the newspaper had ordered the interception of voice mail messages left on the cellphone of Milly Dowler, a British teenager who was abducted in 2002 and later found murdered. Sir Brian said there had been a “failure of management and compliance” at the 168-year-old News of the World, which Mr. Murdoch closed in July, 2011, accusing it of a “general lack of respect for individual privacy and dignity.”

“It was said that The News of the World had lost its way in relation to phone hacking,” the summary said. “Its casual attitude to privacy and the lip service it paid to consent demonstrated a far more general loss of direction.”

Speaking after the report was published, Sir Brian said that while the British press held a “privileged and powerful place in our society,” its “responsibilities have simply been ignored.”

“A free press in a democracy holds power to account. But, with a few honorable exceptions, the U.K. press has not performed that vital role in the case of its own power.”

“The press needs to establish a new regulatory body which is truly independent of industry leaders and of government and politicians,” he said. “Guaranteed independence, long-term stability and genuine benefits for the industry cannot be realized without legislation,” he said, adding: “This is not and cannot reasonably or fairly be characterized as statutory regulation of the press.”

In the body of the exhaustive report, reprising at length the testimony of many of the witnesses who spoke at the hearings, the document discusses press culture and ethics; explores the press’s attitude toward the subjects of its stories; and discusses the cozy relationship between the press and the police, and the press and politicians.

John F. Burns, Sandy Lark Turner and Sandy Macaskill contributed reporting.

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Medicare Is Faulted in Electronic Medical Records Conversion

The conversion to electronic medical records — a critical piece of the Obama administration’s plan for health care reform — is “vulnerable” to fraud and abuse because of the failure of Medicare officials to develop appropriate safeguards, according to a sharply critical report to be issued Thursday by federal investigators.

Mike Spencer/Wilmington Star-News, via Associated Press

Celeste Stephens, a nurse, leads a session on electronic records at New Hanover Regional Medical Center in Wilmington, N.C.

Centers for Medicare and Medicaid Services

Marilyn Tavenner, acting administrator for Medicare.

The use of electronic medical records has been central to the aim of overhauling health care in America. Advocates contend that electronic records systems will improve patient care and lower costs through better coordination of medical services, and the Obama administration is spending billions of dollars to encourage doctors and hospitals to switch to electronic records to track patient care.

But the report says Medicare, which is charged with managing the incentive program that encourages the adoption of electronic records, has failed to put in place adequate safeguards to ensure that information being provided by hospitals and doctors about their electronic records systems is accurate. To qualify for the incentive payments, doctors and hospitals must demonstrate that the systems lead to better patient care, meeting a so-called meaningful use standard by, for example, checking for harmful drug interactions.

Medicare “faces obstacles” in overseeing the electronic records incentive program “that leave the program vulnerable to paying incentives to professionals and hospitals that do not fully meet the meaningful use requirements,” the investigators concluded. The report was prepared by the Office of Inspector General for the Department of Health and Human Services, which oversees Medicare.

The investigators contrasted the looser management of the incentive program with the agency’s pledge to more closely monitor Medicare payments of medical claims. Medicare officials have indicated that the agency intends to move away from a “pay and chase” model, in which it tried to get back any money it has paid in error, to one in which it focuses on trying to avoid making unjustified payments in the first place.

Late Wednesday, a Medicare spokesman said in a statement: “Protecting taxpayer dollars is our top priority and we have implemented aggressive procedures to hold providers accountable. Making a false claim is a serious offense with serious consequences and we believe the overwhelming majority of doctors and hospitals take seriously their responsibility to honestly report their performance.”

The government’s investment in electronic records was authorized under the broader stimulus package passed in 2009. Medicare expects to spend nearly $7 billion over five years as a way of inducing doctors and hospitals to adopt and use electronic records. So far, the report said, the agency has paid 74, 317 health professionals and 1,333 hospitals. By attesting that they meet the criteria established under the program, a doctor can receive as much as $44,000 for adopting electronic records, while a hospital could be paid as much as $2 million in the first year of its adoption. The inspector general’s report follows earlier concerns among regulators and others over whether doctors and hospitals are using electronic records inappropriately to charge more for services, as reported by The New York Times last September, and is likely to fuel the debate over the government’s efforts to promote electronic records. Critics say the push for electronic records may be resulting in higher Medicare spending with little in the way of improvement in patients’ health. Thursday’s report did not address patient care.

Even those within the industry say the speed with which systems are being developed and adopted by hospitals and doctors has led to a lack of clarity over how the records should be used and concerns about their overall accuracy.

“We’ve gone from the horse and buggy to the Model T, and we don’t know the rules of the road. Now we’ve had a big car pileup,” said Lynne Thomas Gordon, the chief executive of the American Health Information Management Association, a trade group in Chicago. The association, which contends more study is needed to determine whether hospitals and doctors actually are abusing electronic records to increase their payments, says it supports more clarity.

Although there is little disagreement over the potential benefits of electronic records in reducing duplicative tests and avoiding medical errors, critics increasingly argue that the federal government has not devoted enough time or resources to making certain the money it is investing is being well spent.

House Republicans echoed these concerns in early October in a letter to Kathleen Sebelius, secretary of health and human services. Citing the Times article, they called for suspending the incentive program until concerns about standardization had been resolved. “The top House policy makers on health care are concerned that H.H.S. is squandering taxpayer dollars by asking little of providers in return for incentive payments,” said a statement issued at the same time by the Republicans, who are likely to seize on the latest inspector general report as further evidence of lax oversight. Republicans have said they will continue to monitor the program.

In her letter in response, which has not been made public, Ms. Sebelius dismissed the idea of suspending the incentive program, arguing that it “would be profoundly unfair to the hospitals and eligible professionals that have invested billions of dollars and devoted countless hours of work to purchase and install systems and educate staff.” She said Medicare was trying to determine whether electronic records had been used in any fraudulent billing but she insisted that the current efforts to certify the systems and address the concerns raised by the Republicans and others were adequate.

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Medicare Is Faulted in Electronic Medical Records Conversion

The conversion to electronic medical records — a critical piece of the Obama administration’s plan for health care reform — is “vulnerable” to fraud and abuse because of the failure of Medicare officials to develop appropriate safeguards, according to a sharply critical report to be issued Thursday by federal investigators.

Mike Spencer/Wilmington Star-News, via Associated Press

Celeste Stephens, a nurse, leads a session on electronic records at New Hanover Regional Medical Center in Wilmington, N.C.

Centers for Medicare and Medicaid Services

Marilyn Tavenner, acting administrator for Medicare.

The use of electronic medical records has been central to the aim of overhauling health care in America. Advocates contend that electronic records systems will improve patient care and lower costs through better coordination of medical services, and the Obama administration is spending billions of dollars to encourage doctors and hospitals to switch to electronic records to track patient care.

But the report says Medicare, which is charged with managing the incentive program that encourages the adoption of electronic records, has failed to put in place adequate safeguards to ensure that information being provided by hospitals and doctors about their electronic records systems is accurate. To qualify for the incentive payments, doctors and hospitals must demonstrate that the systems lead to better patient care, meeting a so-called meaningful use standard by, for example, checking for harmful drug interactions.

Medicare “faces obstacles” in overseeing the electronic records incentive program “that leave the program vulnerable to paying incentives to professionals and hospitals that do not fully meet the meaningful use requirements,” the investigators concluded. The report was prepared by the Office of Inspector General for the Department of Health and Human Services, which oversees Medicare.

The investigators contrasted the looser management of the incentive program with the agency’s pledge to more closely monitor Medicare payments of medical claims. Medicare officials have indicated that the agency intends to move away from a “pay and chase” model, in which it tried to get back any money it has paid in error, to one in which it focuses on trying to avoid making unjustified payments in the first place.

Late Wednesday, a Medicare spokesman said in a statement: “Protecting taxpayer dollars is our top priority and we have implemented aggressive procedures to hold providers accountable. Making a false claim is a serious offense with serious consequences and we believe the overwhelming majority of doctors and hospitals take seriously their responsibility to honestly report their performance.”

The government’s investment in electronic records was authorized under the broader stimulus package passed in 2009. Medicare expects to spend nearly $7 billion over five years as a way of inducing doctors and hospitals to adopt and use electronic records. So far, the report said, the agency has paid 74, 317 health professionals and 1,333 hospitals. By attesting that they meet the criteria established under the program, a doctor can receive as much as $44,000 for adopting electronic records, while a hospital could be paid as much as $2 million in the first year of its adoption. The inspector general’s report follows earlier concerns among regulators and others over whether doctors and hospitals are using electronic records inappropriately to charge more for services, as reported by The New York Times last September, and is likely to fuel the debate over the government’s efforts to promote electronic records. Critics say the push for electronic records may be resulting in higher Medicare spending with little in the way of improvement in patients’ health. Thursday’s report did not address patient care.

Even those within the industry say the speed with which systems are being developed and adopted by hospitals and doctors has led to a lack of clarity over how the records should be used and concerns about their overall accuracy.

“We’ve gone from the horse and buggy to the Model T, and we don’t know the rules of the road. Now we’ve had a big car pileup,” said Lynne Thomas Gordon, the chief executive of the American Health Information Management Association, a trade group in Chicago. The association, which contends more study is needed to determine whether hospitals and doctors actually are abusing electronic records to increase their payments, says it supports more clarity.

Although there is little disagreement over the potential benefits of electronic records in reducing duplicative tests and avoiding medical errors, critics increasingly argue that the federal government has not devoted enough time or resources to making certain the money it is investing is being well spent.

House Republicans echoed these concerns in early October in a letter to Kathleen Sebelius, secretary of health and human services. Citing the Times article, they called for suspending the incentive program until concerns about standardization had been resolved. “The top House policy makers on health care are concerned that H.H.S. is squandering taxpayer dollars by asking little of providers in return for incentive payments,” said a statement issued at the same time by the Republicans, who are likely to seize on the latest inspector general report as further evidence of lax oversight. Republicans have said they will continue to monitor the program.

In her letter in response, which has not been made public, Ms. Sebelius dismissed the idea of suspending the incentive program, arguing that it “would be profoundly unfair to the hospitals and eligible professionals that have invested billions of dollars and devoted countless hours of work to purchase and install systems and educate staff.” She said Medicare was trying to determine whether electronic records had been used in any fraudulent billing but she insisted that the current efforts to certify the systems and address the concerns raised by the Republicans and others were adequate.

Read More..