Posts Tagged ‘Security’

Microsoft Spot New Antivirus Blocking Trojan

In Uncategorized on 22.01.11 at 04:05

A new Trojan has been spotted by Microsoft researchers in China that neutralize antivirus products that rely on cloud-based technology. The cloud technology is a relatively new technology, specially used in security software. Upon running, it targets major Chinese AV vendors and other international security brands by blocking their internet access at the network driver layer.

“Engineering it is not trivial.”

Kurt Baumgartner

Of particular concern here is the sophistication of the so-called “Bohu” Trojan, which blocks the cloud-based antivirus software by means of a Windows Sockets service provider interface (SPI) filter, itself made possible by the installation of an NDIS driver. The malware employs social engineering techniques to trick users into executing it.

The use of cloud-based technologies is becoming more prevalent, as traditional antivirus companies adopt techniques that allow them to detect and neutralize malware infestations in minutes rather than in days.

Speaking to eWeek, Kurt Baumgartner, who is a senior malware researcher at Kaspersky Lab acknowledged that engineering it is “not trivial.”

This effectively gives Bohu the ability to perform deep packet inspection on the network data, which it uses to modify search terms sent to, and cookies belong to the top search engines.

For now, Microsoft says it has already contacted the affected vendors about the Bohu threat.

More on this story:
article at eWeek
article at Computer Weekly
article at IT Pro


Microsoft tool now scans for the Zeus Trojan
Security loopholes surfaces on Mac App Store
Zeus Trojan mules used fake names, passports
Evidence of Zeus Trojan found in majority of Fortune 500 companies

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Markit Launch Liquidity Metrics for Euro Loans

In Financial Engeneering, Quantitative Finance, Technology, Trading software on 21.09.10 at 11:24

The information services company, Markit, will be providing liquidity metrics and composite liquidity scores for European ABS and leveraged loans that are covered by its pricing services, according to a press release.

“With the addition of leveraged loans and European ABS, our liquidity metrics now cover a broad spectrum of sectors in fixed income.”

Armins Rusis

The information services company already measures liquidity for CDS and evaluated bonds. By adding European ABS and leveraged loans, Markit is offering clients a more comprehensive view of the liquidity of financial assets across the fixed-income sectors, the company says.

Markit’s study of the liquidity scores for leveraged loans showed that liquidity has steadily improved in 2010.

Globally, this year the number of loans with Markit’s score for the lowest liquidity level has dipped 13.6%, while the number of loans in Markit’s categories for the highest two liquidity levels has risen 133%.

“Liquidity metrics provide new perspective for portfolio managers studying opportunities in the over-the-counter markets,” says Armins Rusis, global co-head of fixed income at Markit.

“Our ability to provide insight on the average size associated with dealers’ bid-offer quotes, for example, is extremely valuable to clients who, until now, have not benefited from this level of transparency. With the addition of leveraged loans and European ABS, our liquidity metrics now cover a broad spectrum of sectors in fixed income.”

Markit’s liquidity metrics for European ABS provides enhanced liquidity information for the 4,400 ABS securities that are part of Markit’s European ABS pricing service.

The firm’s new European ABS liquidity score is a composite measure of the observable liquidity of a security that is based on the depth of pricing contributions as well as the number of market quotes.

Scores will range from 1 to 5, where 1 means having the highest liquidity.

Meanwhile, Markit’s liquidity metrics for loans will cover the 6,400 syndicated loan facilities that are included in Markit’s loan pricing service.

The new service will give clients the access to the indicative bid/ask levels, the market depth, the number of sources quoting each facility, the frequency of quotes as well as the number of quotes.

These include size, average size and average bid-offer spread.

For each priced asset, the liquidity metrics for loans are complemented by the information provider’s own composite liquidity score, which brings together data on market depth, bid-ask spread, average size and frequency of quotes into a single score from 1 to 5, where 1 would indicate the highest liquidity.

Liquidity metrics will assist sell-side and buy-side institutions in risk management, product control, compliance and trading purposes.

Related by The Swapper:

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Why The Nervousness In Telecoms?

Spec-Grade Liquidity Worsens

Unintended Consequences of Reform Hinder ABS Issuance

US Bank TruPS CDO Defaults Near 14% on Deferral Transfer Spike

Big Banks Block OTC Clearing in “Proxy War”

S&P’s: Future Is Unclear for European RMBS


Crédit Agricole Private Equity Acquires Exclusive Networks group

In Financial Markets, International Econnomic Politics, National Economic Politics on 03.09.10 at 01:37

Crédit Agricole Private Equity has used a primary LBO to acquire a 69% shareholding in Exclusive Networks, one of Europe’s biggest value-added distributors of business security, storage and network solutions, a press release states.

We intend to support the group in its ambitious projects with the aim of tripling its size within five years.”

Philippe Zurawski

Crédit Agricole Private Equity has acquired a 69% stake in the Exclusive Networks group, a B-to-B distributor of information systems security solutions, as part of a primary LBO alongside the group’s chief executive and key managers, Edmond de Rothschild Investment Partners, which partially reinvests, and Socadif, the statement says.

Based in Boulogne-Billancourt (Hauts-de-Seine), the Exclusive Networks group is one of Europe’s biggest value-added distributors of business security, storage and network solutions.

The group wants to positions itself as the exclusive partner of innovative software vendors in France and abroad, offering high-end technical services, global support, marketing promotion and training in the products it markets through its reseller network.

The group currently has 40, mainly US, suppliers and over 1500 resellers in around ten European countries. Exclusive Networks’ 2009 turnover was €82.6 million, of which €40 million in France, and it has 127 employees.

The LBO aimed to create Europe’s leading distributor of IT security systems by continuing the rollout of the group’s two-pronged development strategy: increase in the number of suppliers in countries in which the group already has a presence, and support for its expansion into Europe (Germany and Scandinavia in particular) through external growth.

Olivier Breitmayer, the group’s President and CEO, has says that, “Crédit Agricole Private Equity’s stake in the company marks another stage in our development and will ensure we are able to follow through our strategic ambitions in the future”.”

Download: Press Release

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Europe: Cyber Criminals Attack Critical Water, Oil and Gas Systems

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics on 29.08.10 at 21:34

For the first time, Norwegian companies are being targeted by a new kind of computer attacks, aimed at critical social management systems, like water oil and gas supply systems. The attacks was first discovered in Germany and Belarus in June. Since then, at least 6000 infected computers have been confirmed.

“A malicious foreign power  – given €86 million, 750 people and two years to prepare – could launch a devastating cyber attack on the EU.”

Charlie Miller

This summer the Norwegian National Security Authority (NSM) discovered for the first time targeted computer attacks directed against internal process and control systems to ensure supply of electricity and water. Similar attacks was discovered in Germany and Belarus. EU’s cyber-security unit, ENISA, will in late October or early November carry out the first ever pan-European cyber security exercise.

According to the Norwegian newspaper, Aftenposten, the National Security Authority confirms that Norwegian companies have been attacked, but will not say which.

“It’s the first time we see this Trojans, specifically designed to take control of the process and control systems. We know that other companies are affected, besides the Norwegians,” Christophe Birkeland at the NSM says.

Malicious software that comes into these systems, stealing business critical information, and in worst cases, destroy or take over control of the systems. We know Norwegian companies have gotten this Trojan into some of their systems,” he says.

NSM emphasizes that it is not reported any injuries at the moment.

However, NSM are now sending out a new warning against what they perceive as a serious threat to a number of critical social actors in Norway:

* Government and the national institutions.

* Power producers and suppliers.

* The oil companies.

* Water supply and treatment plants.

* Transport companies.

Going For The Most Advanced

In the operational center of Hafslund in Oslo,  computers provide electric power for about 1.4 million people in the area.

The Hafslund central is one of the world’s most advanced power systems.

“We have also experienced attempts to hack into our office support systems. We are fully focused on this, and it is a very familiar problem,” information officer, Morten Schau, at Hafslund says.

Faximile: Aftenposten, paper edition 08292010.

Customized Trojan

Behind the seemingly innocent file name “% System% \ drivers \ mrxnet” is the malicious, and highly sophisticated,  computer virus “Stuxnet,” which this summer has been a hot topic amongst computer security experts.

The attacks may have been going on for many months before it was discovered in Germany and Belarus in June.

One of the many technical features is the fact that the Trojan hides itself very well. Since June, at least 6.000 computers have been confirmed infected by “Stuxnet”.

The cyber criminals have exploited vulnerabilities in Windows, but first in early August did Microsoft create a security update that plugged the hole.

Siemens System Infected

The attack has been directed towards a management system supplied by Siemens – Simatic WinCC.

WinCC is used to control everything from pizza ovens to oil platforms.

In Norway, the system is in use in at least 200 oil companies, power suppliers, and metal and food industries.

Siemens admits that 12 companies have been affected, but stresses that this is not its Norwegian customers.

“Those customers who were infected was quickly helped, and the problem is now fixed,” information officer, Christian Jahr, at Siemens says.

“What happened was that an employee has used a USB stick outside the office, or in other private places. This became infected with the virus, which is activated when used on a PC with WinCC installed. This goes to show that you have to be awake and updated to ensure the best security facilities possible,” Jahr says.

Who’s Fighting Who?

No one knows who is behind the attacks, or what country they come from.

Worldwide companies in Indonesia, India, Iran and the US are being hit the hardest.

There are also several different theories about what the goal is:

* Industrial Espionage.

* Blackmail.

* Sabotage attempts.

The most important way to protect themselves is to make absolutely watertight bulkhead between the data networks used to control machines, and computer systems used for communication with the outside world, according to the experts.

One must also prevent careless use of memory sticks and other USB devices.

Previously, both the police, governments, health institutions, banks and industrial companies have been hit by computer criminals.

Able To Crash The Whole EU

A malicious foreign power – given €86 million, 750 people and two years to prepare – could launch a devastating cyber attack on the EU, a US security expert says.

Charlie Miller, a mathematician who served for five years at the US’ National Security Agency stress-testing foreign targets’ computer systems and designing network intrusion detection tools,” calculated the EU scenario on the basis of a more detailed study of US vulnerability.

This is how it can be done:

Got 100 Million Dollar?

The assault would begin with a member of staff at, say, the London Stock Exchange or the French electricity grid operator, RTE, opening a PDF attachment in an email which looks as if it had been sent by a colleague.

Take down the EU, or buy a famous piece of art? (The price tag is about the same).

The PDF would contain software enabling a hacker on a different continent to silently take over his computer.

Over time, the hacker would monitor the employees’ keystrokes, sniff out passwords, and use the information to take over computers higher up the command chain, eventually putting him in a position to switch off the target’s firewalls, leaving it open to DOS (Denial of Service) attacks, and to install RATs (Remote Administration Tools), which control its hardware.

Around 18 to 21 months down the line, with enough targets compromised, the assault could take place, the writes.

The EU 27 countries would wake up to find electricity power stations shut down; communication by phone and Internet disabled; air, rail and road transport impossible; stock exchanges and day-to-day bank transactions frozen.

Crucial data in governments and financial institutions are scrambled and military units at home and abroad cut off from central command or sent fake orders.

Normal life could be restarted in a few days’ time. But the damage done to administrative capacity, consumer confidence and the economy by loss of vital data would last for years.

Mr Miller says the bulk of the money –  €83 million ($105 million) would be used to pay an army of 750 hackers, with just €3 million spent on hardware – a testing lab with 50 computers, another two computers each per hacker and assorted smart-phones and network equipment.

* 100 million dollar are just small change for some of our current dictators and drug barons.

* You can win a 100 million dollar at one single game of poker in Las Vegas.

* You can earn 100 million dollars in one year as a  commodities trader at Citigroup.

* 100 million dollar is what Tiger Woods paid for his divorce settlement.

Money won’t be a problem, but organizing the the right people for the operation might be.

Army Of Hackers

An elite corps would consist of 20 world class experts whose main job would be to find “0-day exploits” – previously undetected security gaps in popular software such as Windows, Java or Adobe.

The experts would have to be paid a small fortune –  over €200.000 ($250.000) – each a year.

Or extorted, Dr. Miller adds.

Another 40 people, drawn from the enemy country’s secret services or recruited inside EU member states, would get inside “air-gapped” facilities – the most secure targets, such as military command structures or air traffic control bodies, which are physically cut-off from the Internet in order to prevent cyber attacks.

When the time came, the agents would un-airgap targets by connecting them to the Internet via 3G modems and satellite phones.

The rest of the cyber army, 690 people, mostly computer science graduates and post-graduates from inside the hostile state, would use the 0-day exploits to take over target networks.

They would also collect, maintain, create and test “bots” – software which secretly uses computers in ordinary people’s homes to run automated tasks, such as DOS attacks, which bombard target systems with overwhelming amounts of data.

The final assault would require 500 million bots in diverse locations, according to the calculations.

Dr. Miller, who currently works for the Baltimore, an US-based company, Independent Security Evaluators, admits that internet scare stories like this helps his firm to get business.

But he also underlines that classic intelligence gathering is the best line of defense, rather than hiring IT experts.

“It’s really hard to defend against an attack that’s well equipped and carried out by smart people. But you do have years to detect it before it happens. If you have an elaborate intelligence gathering network you could detect it, not technically because you can see it, but because you have human intel,” he says.

“If you want to spend your money well, spend it on your intelligence services.”

Here’s a copy of  the US National Security Agency stress testing of US and foreign computer systems.

EU’s First Cyber War Exercise

The threat of cyber war against EU targets became clear on 27 April 2007 when hackers crashed Estonian online news agencies with DOS attacks in the middle of an Estonia-Russia political dispute.

The assault gathered pace over the next three weeks disrupting online banking services and government communications.

Three and a half years down the line there is no hard evidence linking the attack to a foreign power, although activists in the pro-Kremlin youth group, Nashi, claim to have taken part.

“If these cyber attacks were used to test the Estonian cyber defense capabilities, much more sophisticated attacks could possibly follow, based on the knowledge acquired during the attacks,” a report on the 2007 events by the Estonian government’s Computer Emergency Response Team says.

NATO and EU countries are now putting more resources than ever into joint cyber-security projects.

EU’s cyber-security unit, the Crete-based European Network and Information Security Agency (ENISA), will in late October or early November carry out the first ever pan-EU cyber security exercise.

ENISA spokesman, Ulf Bergstrom, says the exercise will look at disrupting normal internet operations in the EU’s internal market and the way EU member states’ authorities co-operate across the union’s internal borders.

Mr Bergstrom notes that ENISA’s initial mandate, which covers security of e-commerce, online banking and mobile phones, is being expanded to cover cyber criminality.

“We have been given political signals, for example by information society commissioner Neelie Kroes, to work more closely with agencies like Europol and Interpol,” he says.

“Cyber security is vital for the economy of Europe, to protect the businesses and operations of ordinary citizens. This is the digital society that we take for granted, like water out of the tap, which we need to defend.”

Related by the Econotwist:

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U.S. Covered Bond Legislation: Same Shit – New Wrapping?

In Financial Markets, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 29.03.10 at 01:05

U.S. representative Scott Garret have proposed a legislation on how to create a functional market for the massive amount of covered bond that has been issued during the financial crises. This is the way governments have tried to solve every economic crisis over the last 250 years. And they’ve basically failed every time.

“The proposal seems designed to solve a wide range of pressing asset refinancing problems facing banks, not to create a market that will last decades or centuries to come.”

Hans-Joacim Dübel

Covered bonds are a proven and useful tool for supporting mortgage finance in Europe – and the Congress is right to be considering legislation to start such a market the US. But the bill introduced by Congressman Scott Garrett in the House needs to be changed if it is to restore investor trust and provide needed new liquidity to real estate markets,” Hans-Joacim Dübel at Finpolconsult writes.

Covered bonds work when they are simple, conservative and transparent. These principles, and not the interests of bankers or intermediaries, should drive legislative design, Mr. Dübel points out in an article published by Institutional Risk Analyst.

Hans-Joacim Dübel is an independent, international mortgage finance consultant and founder of Finpolconsult, a financial sector think-tank based in Berlin/Germany.

He has authored several European mortgage market studies in the past 15 years and was member of the E.U.  Commissions Mortgage Funding Expert Group in 2006. He has been continuously working on U.S. housing finance system issues for the past 10 years.

Achim recently consulted on the creation of covered bond laws in Turkey and Uruguay.

Covered bond laws often come from crises

According to Dübel, the deep German real estate and banking crisis of the 1890s helped create the Pfandbriefe. The bankruptcy in the 1990s of the Credit Foncier de France, Europe’s oldest mortgage bank founded in 1852 led to the Obligations Foncieres.

The new laws always required very secure cover assets (high quality real estate or state guarantees) and conservative lending practices.

The simple, yet clearly defined design of covered bonds limits the number of counter-parties involved and keeps issuers accountable.

As a result, covered bonds became attractive for generations of European investors and required no external ratings until very recently.

Denmark May Be On To Something

There are varying types of European covered bonds, and they performed very differently last year. Denmark’s Realkreditobligationer, a pass-through bond basically unchanged since 1850, survived the financial crisis without tapping government support, Dübel notes.

“More common portfolio covered bonds require regular rolling over because of the mismatch in maturity between the cover assets and the bond; many of these ran into trouble last year. Governments and ratings agencies are taking notice.”

“Covered bonds weren’t exempt in Europe from the liberalization trend of the past decades. Issuers tried take a free ride on the existing simple and accepted bond products, introducing loans secured by movable assets or securities as cover assets. However, such departures from the basic concept of the bonds were occasional and did not alter the character of backing by either high-quality real estate or state guarantees.”

“The key point to make in all successful covered bond programs such as Denmark is that the interests of the borrower and the investor who ultimately holds the loan, not of the banker that makes the loan and issues the bond, must be paramount.”

Disregarding Historical Lessons

The current US proposal sponsored by Rep. Garrett, in contrast, seems to disregard many lessons learned from the financial crisis in the U.S. proper, Mr. Dübel says.

“Garrett’s proposal seems to ignore the bias for conservativeness needed to build investor trust when a new product is launched. In fact, the current covered bond proposal before the US Congress seems designed to solve a wide range of pressing asset refinancing problems facing banks, not to create a market that will last decades or centuries to come.”

“This follows a pattern of US financial history over the past century where the immediate wants and needs of the banks have been put ahead of the long-term interests of consumers and investors.”

For example, the Garrett bill allows for an unusual menu of eligible collateral in the covered bond pool, including securities that may introduce legal and agency (rating) risk, financial assets not backed by real estate or public guarantees, and short-term assets that can be perfectly financed by deposits. Even home equity loans, a symbol of irresponsible lending practices, have found their way into the Garrett bill.

“The present bill leaves lending standards – for real estate and other purposes – up to the primary regulator’s discretion and even allows ex-post inclusions of financial assets underwritten under historic standards. It ignores the importance of low loan-to-value ratios and specific real estate valuation standards.”

“Clear standards have featured prominently in European legislation; they are particularly relevant for a jurisdiction recovering from the financial fallout of large residential and commercial real estate price cycles.”

Moreover, the proposed transparency requirements over the cover pool assets fall behind established US standards. And the absence of a clear definition of the basic asset-liability management principles renders market and liquidity risk exposure of issuer and cover pool an unknown.

“These issues, seemingly, are left de-facto to the discretion of his primary regulator. Precisely those aspects of bonds that proved problematic last year are encouraged or ignored by the Garrett legislation; the best practices of the Danish balance principle are unnoticed.”

A potentially unlimited range of counter-parties involved in derivative and insurance protection of the cover translates into an ambiguous credit support structure that can vary from issuer to issuer, and is hard to analyze for investors.

Bonds issued under the bill, in fact, will be closer in character to so-called ‘structured’ covered bonds, bonds that were created as arbitrage products in Europe allowing for lower precision of design, than to general statutory covered bonds.

These hybrid bonds faced even greater problems through the crisis.

“Because of loosened standards on asset eligibility, risk management and counter party selection, high amounts of overcollateralization will be required by the market to render the product suggested by the Garrett proposal palatable for investors.”

Hans-Joacim Dübel

“These loser standards promise to highly subordinate bank depositors and unsecured bondholders on the bank balance sheet, and also raise the likelihood that insufficient funding liquidity will be available to a trustee appointed in insolvency. The result is an increased reliance on, and adverse selection of, public insurers of first and last resort, i.e. the Federal Deposit Insurance Corporation and the Federal Reserve System. This reliance on federal backstops comes even though an explicit role for the Federal Reserve System in liquidity provision, such as present in the case of Fannie Mae and Freddie Mac, has been avoided until now.”

A bond with such an unusually high level of implicit government support will still be only mildly attractive for large, too-big-to-fail US banks who can save issuance costs by relying on unsecured bonds.

However, it will be very attractive for mid-sized banks that currently face strict market discipline through the threat of FDIC intervention, including possible claw-backs of securitized or pledged assets, and by implication high unsecured and even occasionally secured funding costs.

“In its current version, the Garret proposal in effect promises to just extend even further the life preserver of implicit federal guarantees for the U.S. financial system.”

“The U.S. would be better off with a bill that tries to truly lay the foundations for a new private bank bond market, a “gold standard” for financing retail and commercial mortgages that is based on high-quality assets and restoring private market discipline in a vital sector of the economy, namely real estate finance,” Hans-Joacim Dübel concludes.

“Legacy problems with shaky assets of all colors of bank balance sheets should be solved via bad banks and/or bank insolvency and restructuring, not in legislation that seeks to create an entirely new secondary market for selling bank mortgages to investors.”

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DnB NOR's Latest Fuck-Up

In Financial Markets, Health and Environment, National Economic Politics on 27.02.10 at 12:28

The grand national bank of Norway, DnB NOR, have done it again; five Norwegian fish exporters is filing for bankruptcy after buying structured foreign exchange products from the bank as hedge against losses. Over the last two years four small towns and over 150 000 private investors have lost all their money after buying complicated derivatives from DnB NOR.

“I had a fucking bad Christmas.  There was a lot of aquavit.”

Geir Børre Johansen

Several exporters of dried fish in Norway have bought foreign exchange products from DnB NOR as a hedge against losses. Now, five companies are out of business, the Norwegian news paper Dagens Næringsliv reports.

Many exporters of dried fish in the Lofoten area in northern Norway feared currency losses last year and thought they could secure their income with foreign exchange products from DnB NOR Markets.

Instead they are left with heavy losses, and several are already bankrupt, the Norwegian news paper writes.

DnB NOR Markets have earned more money on foreign exchange market than ever.

Recommended By The Bank

“DnB NOR Markets recommended to ensure the currency,” fish exporter Geir Børre Johansen at Røst Seafood says in a interview with Dagens Næringsliv.

“I had a fucking bad Christmas.  There was a lot of aquavit, he adds.

He thinks back on Christmas for just over a year ago. The euro had gone through the roof as the financial crisis ravaged. For an exporter with hedged against a fall in the euro exchange rate, it would mean big losses.

Many exporters like Røst Seafood was affected by the large exchange rate movements.

Several of these companies had purchased a type of foreign exchange product, sold by DnB NOR Markets, which could provide an additional benefit when/if the euro rose – up to a certain level, that is.

But if the exchange rate exceeded the agreed level, they risked heavy losses.

According to the news paper at least ten out of about 20 dried and salted fish businesses in the Lofoten area have entered into such contracts, in addition to regular currency hedging agreements.

A total of five companies have filed for bankrupt in recent months.

Total debt is around NOK 150 million.

Extreme Speculation

“This is miserable bank craftsmanship,” Professor Thore Johnsen at the Norwegian School of Management (NHH) says.

He thinks DnB NOR have behaved irresponsibly towards the fish exporters.

“The agreement that this is a hedging product is quite incomprehensible. It is an extreme speculation in the euro exchange rate. The bank provides the companies with an opportunity for disaster,” Professor Thore Johnsen says.

But he also points out that the companies that have signed such agreements, must take their share of the responsibility.

Strategy Specialists Ståle Johansen at DnB NOR Markets says he believe the dried fish exporters themselves must take responsibility for the fact that their foreign currency exposure was many times higher than sales revenue.

In 2008 four small town i northern Norway lost billions after buying U.S. mortgage backed securities from other banks in the DnB NOR system.

Over 150 000 private investors are still fighting DnB NOR in court after loosing all their savings when they bought  complicated products with hidden risks.

Related by the Econotwist:

DnB NOR: “Comprehensive System Failure”

DnB NOR Except Penalties of NOK 26 million

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