Cyberstrike

by James Barrington

  The single microphone the FBI had installed in his apartment hadn’t produced any useful intelligence. They suspected he was waiting for something, but at no point did he say anything in his infrequent telephone calls that gave any indication of what he was planning to do or when he was planning to do it. He never used his landline so the Bureau had to rely upon their electronic eavesdropping device to hear what he was saying, and even then they could only hear his side of the conversation.

  The first useful clue, in fact, came not from anything organised by the FBI but in a long-distance telephone call to Morgan’s mobile from another UK-registered mobile, a call that – perhaps predictably – woke him from a confused and confusing dream at a little after four in the morning. At least he wasn’t still jet-lagged.

  ‘Who is it?’

  ‘For God’s sake, Morgan, you sound about as sharp as a sponge. Where’s your get up and go? In the SBS we were trained to react in under a second from being sound asleep.’

  ‘It got up and went,’ Morgan replied, immediately recognising the caller’s voice. ‘It’s four in the morning, Cam, and I need my beauty sleep, so I hope you didn’t call me just so we could swap clichés.’

  Three and a half thousand miles away, Cameron Riley sounded irritatingly chirpy and buoyant, probably just to annoy Morgan.

  ‘Not exactly, no. This is your early morning early warning call. The London Exchange has seen an unusually high level of well out-of-the-money index put options traded this morning, and that’s been mirrored in most of the European exchanges and the Far East as well. My guess is that when Wall Street opens you’ll see the same pattern on your side of the Pond. It’s time to circle the wagons. If your deduction is right, that means whatever these people have got planned is pretty imminent, so best you put on your boots and spurs, grab a six-gun and a Winchester rifle and sort it out.’

  ‘Washington these days isn’t quite like that, Cam, so enough of the Wild West stuff, okay. Anything else?’

  ‘Only that I assume you’ve checked the calendar?’

  ‘Why? Is it your birthday or something?’

  ‘Not my birthday, no, but you could say that tomorrow was and is the birthday of an entire nation, so I do just wonder if these guys are planning their own personal form of celebration. Something to remember them by, that kind of thing.’

  Morgan didn’t need to check the date, because Washington was already abuzz with preparations for the parties and concerts that would dominate the city the next day.

  ‘Shit,’ he said. ‘I see what you mean. Thanks for the heads-up. I’ll try to get the wheels turning.’

  Morgan glanced at the illuminated digits of the bedside clock in the hotel room and made an instant decision. There was nothing he could usefully do at that time in the morning, so he reset the alarm for six, switched off the light and closed his eyes again.

  But sleep proved elusive. By six he was up, showered and dressed and on his way down to the coffee shop to buy himself a double-shot caffeine kick-starter to complete the waking up process. An hour after that, he’d called both Barbara Simpson and Natasha Black on their mobiles to bring them up to speed and was sitting in the back of a cab on his way to 935 Pennsylvania Avenue to talk to Grant Rogers.

  It was probably, Morgan reflected as the taxi driver carved his way through the early morning traffic, going to be a fairly short briefing. The single piece of new information he had, which was in fact merely a logical deduction based on a certain kind of activity in the stock markets, suggested that the terrorist attack – assuming that they weren’t seeing something that wasn’t there – was imminent.

  He still had absolutely no idea what form the attack would take, where it would happen – except most probably somewhere in DC – when it would be launched, though sometime the following day looked favourite, and, crucially, he had no clue what the hell they could do to stop it.

  Chapter 40

  J. Edgar Hoover Building, Pennsylvania Avenue, Washington D.C., United States of America

  ‘How sure are you about this?’ Grant Rogers asked, looking quizzically at Ben Morgan. ‘Say on a scale of one to ten.’

  ‘I suppose about a seven or eight would more or less cover it. It’s faintly possible that we could just be looking at a major change in the global market sentiment, the bulls all turning into bears, something like that, but I genuinely don’t think that’s very likely, not least because it seems to be worldwide. You always get fluctuations in the types of options being traded, but those tend to affect a single company or perhaps one specific sector of the market because the traders are expecting either very good or very bad news. But what my contact back in the UK is telling me – his name is Cameron Riley – is that all the markets he’s looked at are experiencing the same thing, all the way from Hong Kong to London.’

  ‘Look, finance isn’t really my thing,’ Rogers said, ‘so just assume I’m an idiot and I know nothing about options. Can you tell me what the hell is going on?’

  Morgan knew that was a simple question with a complicated answer. Warfare in the twenty-first century was about controlling economic markets and who owned what, rather than trying to make territorial gains using armies and tanks and bombers. The Russians, the Chinese and even terrorist groups like IS had realised that misinformation, fake news and cyberattacks were low cost but high impact ways of becoming wealthier. They didn’t want to destroy companies, just to control them or make money from them. Globally, governments were less important than the big tech firms, banks and critical infrastructure, and all nations were beginning to realise this. In the UK there’s now a National Cyber Force that’s predicted eventually to absorb over 50 per cent of Britain’s annual military budget.

  Explaining all that could take the rest of the day, so Morgan just answered the question Rogers had asked, sticking to the specifics.

  ‘Look, I’m not an absolute expert, but for a short period I was involved in banking in Britain so I do know how the markets work. In simple terms, buying an option is the same as placing a bet. Just assume that the share price of a company is ten dollars but you think the price is going to rise. If you want to make money out of it, you’ve got two choices. You can go out and buy shares, but each one will cost you ten dollars, so if you buy a hundred you’ll be laying out a grand. If you haven’t got that money available you can buy a call option on the stock at, say ten dollars and fifty cents. That will give you the right, but not the obligation, to buy that stock at ten and a half dollars – that’s called the strike price – and the option will only cost you a small percentage of the price of the underlying stock, say one dollar. It’s not quite that simple, because the cost of the option depends upon the strike price you’ve selected and the time before the option expires, but I still haven’t really woken up yet so I need to keep the figures really simple to allow my brain to keep up.

  ‘So the cost of buying a call option that gives you the right to purchase one hundred shares in the company will only cost you one hundred dollars, not one thousand. If the stock then goes up to, say, twelve dollars, if you’d actually bought the shares you’d have made a two hundred dollar paper profit, because you’d have bought at ten dollars but you could sell at twelve dollars. That’s a two dollar profit per share and you’d bought one hundred of them. Simple arithmetic.

  ‘But if you bought the option instead, your outlay would have been one hundred dollars, but because you can now buy shares in the company for ten dollars fifty cents and then sell each share for twelve dollars, each option is now worth the one dollar you paid for it plus one dollar fifty. That’s the original price of the option and the increase in value of the underlying stock. So your one hundred dollar investment is now worth two hundred and fifty dollars, that’s a one hundred and fifty per cent profit. Of course, if you guessed wrong and the stock value falls, your option will expire worthless so you’d have lost the one hundred dollars. That’s the risk you always take when you buy an option. If you buy the shares and they th
en fall in value you’ve obviously made a paper loss but you still own the stock, so you can just hang on for the ride until the price recovers.

  ‘Put options work exactly the same but the other way round. If you assume that the price of the stock is going to fall, you’d buy a put option at, say, nine dollars, and if the stock value fell to eight you would have the right to sell shares at nine dollars so your profit would be one dollar per share. The attraction of options is that they’re much cheaper to buy than the underlying stock, the financial risk is minimal, just whatever the option costs to buy, and if that stock rises or falls a long way the profit potential is virtually unlimited. A lot of investors use them to hedge their bets, so if they own stock in a company and they’re uncertain about its future they might buy a chunk of put options just in case the stock value falls, things like that. And investors who like a gamble might buy both call and put options on the same company – that’s called a butterfly – if the share price looks really volatile. If its value goes up, they can exercise the call options, and if it goes they down exercise the puts. They’ll only lose their money if the share price remains exactly the same, which means both options will expire worthless. Does that make any kind of sense?’

  ‘My head is beginning to hurt and I think my ears are starting to bleed, but I more or less follow what you’ve said. And you said that index options don’t relate to individual shares or sectors of the economy but to the index as a whole. The Dow Jones or whatever. And these guys are expecting it to fall.’

  Morgan nodded. ‘You’ve got it. The other thing about the trading Cameron reported is that the options being bought are well out-of-the-money so they’re cheap. The closer any option is to the actual price of the stock or index the more expensive it is. So if the Dow Jones is at 30,000, for example, and somebody buys a put option at 29,000 they won’t pay very much for it because nobody expects it to fall that far, but if they bought one at 29,990 it would cost them a lot more money. Again, rough and ready figures only. But from what Cameron was telling me these option purchases are way below the normal spread, and that alone is suspicious. It implies, at the very least, that the people buying these options are expecting the market to fall through the floor. In fact, it looks as if they’re expecting almost every market to fall through the floor.’

  ‘Can we identify the people doing the buying?’

  Morgan shook his head. ‘I haven’t investigated this myself because I can’t, but Cameron – he’s the top security guy at the Bank of England and the Treasury – did run some initial tracing action and the purchasers are almost all proxies, and most probably proxies acting for other proxies. Unpicking the trail all the way back to the guy who actually speculated the money would be possible, but difficult and time-consuming. And at the end of it you’d probably find some person who knows nothing about options trading or anything else to do with finance but who’s just been given a wodge of money by some third party and told exactly what to do and how and when to do it, so that would be where the paper trail would stop, a long way from the principal involved.’

  Rogers nodded. ‘So if your man in London is right,’ he said, ‘when New York opens we should also see a whole bunch of options trading on the value of the Dow Jones, the S&P, the NASDAQ and all the others?’

  ‘Yes, but I think most of it will be concentrating on the NYSE Composite, because that covers all the stocks traded on the New York Stock Exchange. If there’s no activity, or only the normal level and types of trades, I’d be really happy because that would mean we’ve got it wrong.’

  Sometimes the timing of events just seems to work out almost perfectly. As Rogers finished talking he glanced at his watch and opened his mouth to say something else, but right then his mobile phone rang. The conversation was short, probably less than a minute in length, and Rogers said hardly a word, just listened. When he’d finished he looked over at Morgan.

  ‘New York’s been open about twenty minutes,’ he said, ‘and they’re already reporting unusually heavy trading on the Composite index, most of the purchases being well out-of-the-money put options.’

  ‘Bugger,’ Morgan muttered. ‘So we need to decide—’ He broke off as his own mobile rang.

  His conversation was also short and largely monosyllabic.

  ‘That,’ he said when he’d finished, ‘was the NSA. Or to be more exact, a friend of mine who’s been seconded to Fort Meade. Just like before nine eleven, the NSA is picking up significantly increased Internet traffic, particularly in and around the Middle East and also from that region to destinations worldwide including here in the States. They’ve also intercepted a handful of encrypted emails, some of which your NSA analysts and our guys over at GCHQ in England have managed to decrypt.’

  ‘And they say what?’

  ‘Pretty much what you’d expect them to say, which means nothing specific, and what they do say needs to be interpreted because of the nuances in the Arabic language and the possible different translations into English. They include general and non-specific statements like “Death from the skies,” “Vengeance is coming” and “America will pay” – which is exactly the same expression that those attempted boat bombers in London used – but much of it is the kind of doubletalk that we’re used to from radical Islam and Arabic terrorists generally. Messages where they substitute innocuous words for what they really mean. Bicycle instead of bomb, that kind of thing.’

  ‘Like al-Qaeda weddings, you mean? Which are actually planned bombings.’

  ‘Exactly. Trying to decide which emails and stuff on the Internet relate to a real wedding rather than a planned al-Qaeda attack is almost impossible, and they can even send them in clear. But these messages were encrypted, so at least we can be reasonably sure we’re looking at the right stuff. Even so, there are no mentions of the kind of attack being planned, but at least we know when. It’ll be tomorrow. Independence Day. Several of the emails encode the date rather like Mohamed Atta did before the nine eleven attack, with his message about two sticks and a cake with one stick down, representing the numbers eleven and nine. These messages use different imagery, but the numbers four and seven are fairly obvious and consistent, and April has come and gone so it looks like the Fourth of July is the target date.’

  Grant Rogers looked like a man bearing the weight of the world on his shoulders. He slumped down in his seat, shoulders sagging. Then he appeared to mentally strengthen himself and straightened up.

  ‘Okay. We’ve got one suspected terrorist identified and under surveillance. Everything we found out so far suggests that the attack will happen tomorrow, so what do we do with him? Pick him up and sweat him, or let him run?’

  Morgan wasn’t sure if those were rhetorical questions, but he did have some ideas of his own.

  ‘I’m not sure that picking up that one man would be particularly helpful,’ he said. ‘There’s no way that those four people could carry out any kind of catastrophic attack on a city this size by themselves unless they’ve got a suitcase nuke or something equally devastating tucked away somewhere. There must be more of them involved than that, and if you arrest him the other three will still be out there and we’ll have no idea how to identify and locate any of them. So if it was up to me I’d let him run and hope he leads us to whoever else is involved so we can seize whatever weapons they’re planning on using. You’d just have to make sure your people didn’t lose him, because that could be a disaster.’

  Rogers nodded. ‘That would make sense to me as well, but it won’t be my decision. At the very least my SAC will have to sign off on it, and he’ll probably take some convincing because he’s more of a bureaucrat than a streetwise agent, plus he’ll want top cover from the high-level seat-shiners. For now I’ll leave the surveillance team in place and make sure there are no holes in the net he can slip through. Then I’ll kick the problem upstairs and wait for guidance from on high.’

  ‘Before you do that,’ Morgan said, ‘I was told back in the UK that you had cyberattacks o
n some of your utility companies, and we were experiencing the same kind of thing. Is that still going on over here?’

  ‘It is, but as far as I know there haven’t been any successful breaches. The agent giving one of our threat briefings said it was possible the intention was to hack into the local electricity companies and shut down their systems to try to create a blackout, but there’s a whole lot of redundancy here, just like you’d expect around the capital, and even if they did manage to disable one provider – and the briefer didn’t know exactly how that could be done because their systems are really robust – there are other companies that could take over the demand. So at worst you might get a blackout lasting a few seconds, or maybe a few minutes.’

  ‘Not exactly “Death from the skies” then?’

  ‘No. We did look at the radar and radio links at Andrews and Ronald Reagan International and Dulles in case these terrorists thought disabling power on the ground would cause aircraft to crash, like a sort of nine eleven for DC, but there’s no way it could happen. All the airports have backup generators and uninterruptible power supplies for critical systems, but even if somehow everything was completely shut down all the aircraft in the air could simply divert. So that didn’t make sense as a terror attack, unless their plan is just to mildly inconvenience us.’

  Morgan nodded. ‘I hear what you say, but I still don’t like the look of the pattern that seems to be emerging, the hacking attacks on utility companies. There must be a reason for it, but right now I don’t know what it could be. And the “Death from the skies” phrase does worry me. It has echoes of nine eleven and definitely suggests some sort of aerial assault. But the terrorists don’t have any bomber aircraft, unless they’ve cobbled together some kind of IED, an improvised explosive device, that they’re going to try and drop from a hijacked light aircraft on the crowds that will gather here tomorrow for Independence Day. And I guess you have defences here that would take care of something like that really easily.’