• With: Aaron Cohen

    This is a rush transcript from "Your World," February 19, 2013. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: Well, they spy, we stew, because we still owe and they still hack, and now China is officially out of control, because don't look now, but proof today our sugar daddy is a thief.

    Virginia-based Mandiant Corporation out with a report today that links no less than the Chinese military with stealing vital secrets from us, hacking our military contractors or energy companies and scores of other industries, and doing it so brazenly, so consistently and so often that it borders on a joke.

    But I'll tell you what. It's no joke. And given the fact that it is China, our biggest creditor and a nation that owns more than $1.3 trillion [sic] of our debt, it creates a serious dilemma for us which could explain the White House's cautious, if not tepid response to all of this.

    But just because we owe, does that mean we don't owe a China response and an angry response at that? My next guest says you damn well bet we better have an angry response.

    To national security expert Aaron Cohen.

    Well, Aaron, I'm waiting. I'm not hearing it. What do you make of that?

    AARON COHEN, FOUNDER, IMS SECURITY: Well, I think that, obviously, this situation has to be dealt with carefully and that is what this administration is doing.

    But the fact is, is that this report that was released states a very scary fact, that over -- that hundreds of terabytes of information has been stolen from over 170 companies here in this country. And just to give you a scale of that size, it would be equivalent to 170 billion tweets of information stored over a period of let's say five years.

    And it's a lot of information. That information can be used against us. And the fact that we owe this country whatever amount of money we owe, it's a little disturbing in terms of national security.

    CAVUTO: The one thing that bothers me, besides just, you know, the egregious nature of this and the far-flung nature of this, is how they could do it with military contractors, of whom you would think that there are better safety and security measures installed, but the Chinese military can come in and willy-nilly seem to get what they want and whatever they want, however often they want.

    COHEN: Yes.

    The military, the actual unit in China that the Mandiant Corporation has pinpointed this small 12-story building just in the suburbs outside of Shanghai is a unit that's called 61398. It is their cyber-warfare unit. It's been known for some time that this unit has had a very strong capability in terms of its ability to be able to get large amounts of intelligence.

    How it's affected the private contractors, I wouldn't worry just yet. However, the fact that they have been able to hack into those systems means they have the ability to at least get past the initial layers. Now, I know that the security systems in place for private military contractors is very strict.

    I know that they go through a very serious safeguard process, so I wouldn't worry immediately about what information could have gotten into the People's Republic Army. However, it is something that needs to be looked at a lot closer, and this unit is dedicated in Shanghai. That's what they do, and this could be looked at as probably one of the largest cyber-espionage cases in terms of the volume of sheer information.

    (CROSSTALK)

    CAVUTO: Well, they deny it Aaron, as you know, they're denying it, and we say they're doing it. They say they're not doing it.

    And so we kind of let sleeping dogs lie and don't do much about it. And I'm wondering, obviously, to our own peril, why is that happening, and is it because we're beholden to the Chinese and we don't want to rock the boat, or we just don't have enough evidence, when I suspect we do?

    COHEN: Well, I think it's more of the we don't want to rock the boat, and I think that unfortunately doesn't favor very well when it comes to security issues, and when it comes to information.

    It's very hard to pinpoint where this attack is coming from, but clearly we have got a report that's been released, and we're starting to rock the boat, and the reason why we're starting to is because our security people realize that by putting this information out there that it's going to force these -- this hacking unit to change its tactics. And so I think it's the first one that you mentioned.

    COHEN: All right. We will watch.

    Aaron, thank you very much for joining us.

    COHEN: Thank you.

    CAVUTO: All right.

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