Leader of hacking group LulzSec was working with the FBI

International swoop sees 5 people arrested, as it is revealed that "Sabu" had turned informant.

The secretive community of internet hackers has been shaken today as the FBI has arrested or charged five members of the hacking group LulzSec. In a dramatic sequence of events, it was revealed that the head of the group, who used the name "Sabu", has been working for the FBI since the middle of last year.

Sabu, whose real name is Hector Xavier Monsegur, is a 28 year old unemployed Puerto Rican living in New York. He has been charged with 12 criminal counts of conspiracy to engage in computer hacking and other crimes. He has pleaded guilty to carrying out online attacks against PayPal and Mastercard.

LulzSec, a group of up to 10 people, stormed the hacking scene last year, attacking high profile targets including Sony, the CIA, the US Senate, and the FBI. After this explosive start, it announced abruptly in June that it would leave the hacking world. It wasn't quite the end though. The group continued to carry out some attacks against targets including Rupert Murdoch's News Corporation.

Back in June, the Guardian published leaked chat logs which gave an insight into internal tensions in the organisation:

The group's ambitions went too far for some of its members: when the group hit an FBI-affiliated site on 3 June, two lost their nerve and quit, fearing reprisals from the US government. After revealing that the two, "recursion" and "devrandom" have quit, saying they were "not up for the heat", Sabu tells the remaining members: "You realise we smacked the FBI today. This means everyone in here must remain extremely secure."

Fox News, which broke the story, quoted an unnamed FBI official:

This is devastating to the organization. We're chopping off the head of LulzSec.

Both Fox News and the FBI have reason to be pleased about this, as they've both been targeted by LulzSec in the past.

The worry in the hacking community will be that these five arrests -- two in the UK, two in Ireland, and one in Chicago -- could be just the tip of the iceberg. The co-operation of Monsegur could mean arrests not only of other members of LulzSec but of others within the broader hacking collective, Anonymous, from which the smaller group sprung. It is necessarily a very paranoid world, and this development will do nothing to appease these fears about security.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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How the Conservatives lost the argument over austerity

After repeatedly missing their deficit targets, the Tories can no longer present spending cuts as essential.

“The age of irresponsibility is giving way to the age of austerity,” declared David Cameron at the Conservatives' 2009 spring conference. Fear of spending cuts helped deny his party a majority a year later, but by 2015 the Tories claimed vindication. By framing austerity as unavoidable, they had trapped Labour in a political no man's land. Though voters did not relish cuts, polling consistently showed that they regarded them as necessary.

But only two years later, it is the Conservatives who appear trapped. An austerity-weary electorate has deprived them of their majority and the argument for fiscal restraint is growing weaker by the day. If cuts are the supposed rule, then the £1bn gifted to the Democratic Unionist Party is the most glaring exception. Michael Fallon, the Defence Secretary, sought to justify this largesse as "investment" into "the infrastructure of Northern Ireland" from "which everybody will benefit" – a classic Keynesian argument. But this did not, he hastened to add, mean the end of austerity: "Austerity is never over until we clear the deficit."

Britain's deficit (which peaked at £153bn in 2009-10) was the original and pre-eminent justification for cuts. Unless borrowing was largely eliminated by 2015, George Osborne warned, Britain's public finances would become unsustainable. But as time has passed, this argument has become progressively weaker. The UK has cumulatively borrowed £200bn more than promised by Osborne, yet apocalypse has been averted. With its low borrowing costs, an independent currency and a lender of last resort (the Bank of England), the UK is able to tolerate consistent deficits (borrowing stood at £46.6bn in 2016-17).

In defiance of all this, Osborne vowed to achieve a budget surplus by 2019-20 (a goal achieved by the UK in just 12 years since 1948). The Tories made the target in the knowledge that promised tax cuts and spending increases would make it almost impossible to attain – but it was a political weapon with which to wound Labour.

Brexit, however, forced the Conservatives to disarm. Mindful of the economic instability to come, Philip Hammond postponed the surplus target to 2025 (15 years after Osborne's original goal). Britain's past and future borrowing levels mean the deficit has lost its political potency.

In these circumstances, it is unsurprising that voters are increasingly inclined to look for full-scale alternatives. Labour has remade itself as an unambiguously anti-austerity party and Britain's public realm is frayed from seven years of cuts: overburdened schools and hospitals, dilapidated infrastructure, potholed roads, uncollected bins.

Through a shift in rhetoric, Theresa May acknowledged voters' weariness with austerity but her policies did not match. Though the pace of cuts was slowed, signature measures such as the public sector pay cap and the freeze in working-age benefits endured. May's cold insistence to an underpaid nurse that there was no "magic money tree" exemplified the Tories' predicament.

In his recent Mansion House speech, Philip Hammond conceded that voters were impatient "after seven years of hard slog” but vowed to "make anew the case" for austerity. But other Tories believe they need to stop fighting a losing battle. The Conservatives' historic strength has been their adaptability. Depending on circumstance, they have been Europhile and Eurosceptic, statist and laissez-faire, isolationist and interventionist. If the Tories are to retain power, yet another metamorphosis may be needed: from austerity to stimulus.

George Eaton is political editor of the New Statesman.

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