Did China Steal Canada’s Edge in 5G from Nortel? (The original headline of the Bloomberg piece, now changed.)
Starting in the late 1990s, the Canadian Security Intelligence Service, the country’s version of the CIA, became aware of “unusual traffic,” suggesting that hackers in China were stealing data and documents from Ottawa. “We went to Nortel in Ottawa, and we told the executives, ‘They’re sucking your intellectual property out,’ ” says Michel Juneau-Katsuya, who headed the agency’s Asia-Pacific unit at the time. “They didn’t do anything.”
By 2004 the hackers had breached Nortel’s uppermost ranks. The person who sent the roughly 800 documents to China appeared to be none other than Frank Dunn, Nortel’s embattled chief executive officer. Four days before Dunn was fired—fallout from an accounting scandal on his watch that forced the company to restate its financial results—someone using his login had relayed the PowerPoints and other sensitive files to an IP address registered to Shanghai Faxian Corp. It appeared to be a front company with no known business dealings with Nortel.
The thief wasn’t Dunn, of course. Hackers had stolen his password and those of six others from Nortel’s prized optical unit, in which the company had invested billions of dollars. Using a script called Il.browse, the intruders swept up entire categories from Nortel’s systems: Product Development, Research and Development, Design Documents & Minutes, and more. “They were taking the whole contents of a folder—it was like a vacuum cleaner approach,” says Brian Shields, who was then a senior adviser on systems security and part of the five-person team that investigated the breach.
Years later, Shields would look at the hack, and Nortel’s failure to adequately respond to it, as the beginning of the end of the company. […]
No one knows who managed to hack Nortel or where that data went in China. But Shields, and many others who’ve looked into the case, have a strong suspicion it was the Chinese government, which weakened a key Western rival as it promoted its own technology champions, including Huawei Technologies Co., the big telecom equipment manufacturer. Huawei says it wasn’t aware of the Nortel hack at the time, nor involved in it. It also says it never received any information from Nortel. “Any allegations of Huawei’s awareness of or involvement in espionage are entirely false,” the company says in a statement. “None of Huawei’s products or technologies have been developed through improper or nefarious means.”
What isn’t in dispute is that the Nortel hack coincided with a separate offensive by Huawei. This one was totally legal and arguably even more damaging. While Nortel struggled, Huawei thrived thanks to its unique structure — it was privately held, enjoyed generous credit lines from state-owned banks, and had an ability to absorb losses for years before making money on its products. It poached Nortel’s biggest customers and, eventually, hired away the researchers who would give it the lead in 5G networks. “This is plain and simple: Economic espionage did in Nortel,” Shields says. “And all you have to do is look at what entity in the world took over No. 1 and how quickly they did it.”
It’s behind a paywall, though accessible if you haven’t used all your “free” visits.
Man oh man!
Wait till scheer & Co. hear about this!
The line in the Bloomberg article is that it’s all Stephen Harper’s fault for not bailing out Nortel. Not the Chinese spies (educated on the strength of degrees from Quebec universities most renowned for being the last resorts of Chinese kids passed over by UBC) assigned to infiltrating, looting and destroying the company.
You got that right. I saw. I was there. Although the Chinese did hack Nortel thet didn’t have to. The hundreds of Chinese nationals who worked for Nortel simply took the knowledge back to China with them.
It was clear that these Canadian trained Chinese engineers were only here to learn Nortel’s secrets not true migrants to Canada, but Canada being a soppy PC country could not see it..
Canada being a soppy PC country could not see it..
Could not or would not. Which party was in charge when Nortel’s share price started submerging 20 years ago?
Why would anyone be surprised? The commie Chinese steal everything. And don’t count on turd Jr. to do or say anything.
Nothing is ever as it seems.
I can’t believe we don’t have massive import duties on Chinese goods. We can get our cheap shit that falls apart from Vietnam, India, Thailand, Malaysia, Indonesia or others.
This story has circulated for years. The probable answer is both yes and no.
Yes the chicoms pilfered technology (it’s what they do), and critical staff (they were probably plants anyway).
Nortel was pretty lax when it came to security. There’s a lesson here for Canada.
One thing I noticed about Nortel, even back when it as Northern Telecom, was that it everything it touched would turn to gold.
In the early 1980s, I worked for a certain company in Saskatoon. Shortly before I started there, NT started a fibre optic cable plant and many people from my employer quit and went there. By the late ’80s or early ’90s, it got out of that business and sold it to Corning. I don’t know what happened to the plant.
A few years later, NT was starting up a board manufacturing plant in Saskatoon. I had an interview for a position there, but I didn’t get the job. I don’t know if the company ever got it going there because, from what I heard, that same facility was re-located in St. Laurent near the end of the decade.
Its research arm, Bell Northern Research, had a number of facilities across the country 40 years ago. By the end of the ’80s, I think there was only one, which was located in Bell’s Corners near Ottawa. I’m not sure if the company decided to consolidate everything there or if the other locations were considered redundant and the people working there sacked.
Evidently, NT didn’t learn a lesson from what happened to the engineering company Lavalin. It pulled similar stunts and losing a lot of money while doing so. That’s why SNC eventually took it over because Lavalin bankrupted itself by thinking it could do anything it wanted and do it well.
Evidently, NT didn’t learn a lesson from what happened to the engineering company Lavalin” BA Deplorable
Nortel had a superior Product (compared to ATT), but they wouldn’t stop bribing Third World Countries (chasing US AID) The USA Senate had a hearing on Nortel & nobody in the USA, who did Government work, dared to buy from them least they be accused of taking a bribe… That was the end of Nortel.
In 1992 NBC NYC dumped their antiquated Switch Gear and installed Nortel, the Olympics in Barcelona also bought Nortel… The system worked seamlessly, becoming part of the NYC system meant my phone calls originated in Barcelona went through my NYC office extension…..No more blocked 800 numbers to Vender Engineering expertise……
JMHO
I worked there right to the end when they closed the doors in 2002.
ab…… a lesson for Canada? Canadians are incapable of learning anything. Just look around at our current circumstances and that should be sufficient.
Who cares? It is Khanada, so anything goes. Who cares in Khanada? If Corey Hurren is not an RCMP plant, then he is probably the only one who does. The only man in Khanada with balls.
China controls the voices of Canadian right. CPC uses Zoom for teleconferencing. A Chinese runs the largest gun forum and he shuts down any conversation critical of China. You’ve been had but all you do about it is whine on the Internet.
I like the cut of your jib, sir.
Cit…….. whining on the internet is all that is left, we no longer have the courage to physically remove our tormenters, we are cowards who willingly accept the current level of slavery.
DND purchased the Nortel Campus back in 2006. The “plan” was after some refurbishment military personnel in all the different buildings in the city would move into the place beginning in 2007 and probably be completed by 2010. However, when the tech guys went in they realized that there were literally hundreds of cables that were not linked to either telephone or registered cable companies…with whom these cables communicated is still a source of major speculation amongst us. By the way, it took almost ten years to clear all the cabling and put the requisite security in place. Personnel started moving in some time in 2016ish.
I heard that… I heard they found listening devices too. It’s ok, you can say it, it’s public knowledge.
Years ago I heard and saw:
The stock price of Nortel crash.
People lost their investments.
There were lost pensions.
Some who still were employed there were let go.
Some were re-hired on contract.
Story of Canada, with Communists, history is repetitive.
When Nortel’s share price started collapsing roughly 20 years ago, my father’s broker at the time convinced him to load up on its stock. (“It’s a good buy. It’ll go up!”) I, having read numerous articles about the company plus having had my own dealings with it, advised against it. Needless to say, he lost his shirt on that investment.
Had he invested that money in, say, companies like Alcan, Dofasco, and Falconbridge, he would have done quite well as they were taken over by foreign interests. I doubled my money on Alcan when that happened.
I didn’t buy in, but 2 people I knew did. One sold @ ~ 90 bucks and the other stayed in too long and lost big time– down to just a few dollars. What a shame.
I never invested in NT, either because of what I read. I smelled a rat when Bell dumped its holdings. When a major shareholder pulls up stakes, that’s usually not a good sign.
I knew a guy.. still work with him… biggest fat head in history. Bought Nortel and bragged and bragged about it as it went up to over $100/share… he was a big investor. I was never happier to see a stock crater like that, knowing this fat mouthed loser lost all of that investment (and he did).
I was in a IT Tech school (ATTA) at the time and a co-student was talking it up and buying shares. I don’t know how many fell for it, but i talked it over with my wife and I was ready to buy at the time ($90/share)…she said no.
The very NEXT day when I went to class to talk to one of the guys about how does one purchase about $2000 of stock in the event my wife agrees to it, it closed at $64 I believe.
Thank God I listened to my wife…
I never invested in Nortel, at least not directly. When its single largest shareholder (Bell, I recall) sold off its holdings, I knew that something was up.
I don’t recall why that happened, but that’s never a good sign when that happens. I suspect that someone already saw the writing on the wall and I wasn’t surprised that the share price went down, only at how quickly it happened.
So why, pray, are Mike Bloomberg’s stenographers suddenly raising the alarm about Red Chinese IP theft?
Because this sort of thing is only news to people who didn’t want to know.
(Answer: the China bubble has burst, and Mike has to pretend he was never a stooge for Red China. Something he would not have to do if he really believed Senile Joe had a real chance of victory in November.)
Interesting statement about the Chinese bubble bursting. I suspect you’re right and we will see more of the outcome after November (or the bubble being repaired).
What I find funny is the implication that Nortel was anything other than a rotting carcass of a company after it cratered in 2002-2003 timeframe. Stock price went from $124 to $0.47 and they laid off 60,000 employees. (I was working there in 2001 and I literally caught a Chinese woman printing out the entire code base for the product I was working on.) I brought it up with my boss who acted like I had a hole in my forehead. But I’m certain she walked that code right down to the Chinese embassy in Ottawa. The idea that Harper could have “bailed out” Nortel in 2008-2009 is absurd. By that time Nortel had sold off almost all of its IP to its competitors and laid off 90% of its workforce (imagine buying that IP after it had been stolen by the Chinese). It’s an interesting story, and I see a lot of truth in it about the spying, but all of what he said about Harper was simply false and unnecessary.
It is inconceivable that the government of the day would not have known about this. So, let’s get this straight:
(a) the government knew but did nothing
(b) Nortel brass knew but did nothing.
Oh, and …
(c) our press and loyal opposition now know but will do nothing.
How many damn envelopes are those Chicomms handing out?!
Enough to keep these so-called “guardians of the public trust” assuaged.
Many of Nortel’s executives were not just corrupt, but extremely arrogant toward their large customers (“this is what you’ll buy from us, and this is what you’ll be paying”), driving customers into the arms of the competition like Huawei. It’s crazy to think that a government bailout would have saved Nortel, but rather it would just have prolonged the inevitable collapse taking taxpayer money with it.
That attitude was endemic amongst those type of companies at the time, and, was largely the mindset of comm providers as well, circa 2000 era.
It hasn’t changed much since then.
I call bullcrap on the allegation that Nortel’s demise was due solely to China.
I had been following the company since the 1980s when it was still Northern Telecom. I read article after article critical of its upper management which thought that it could do no wrong even back then. I had a number of interviews with NT during that same time and I got the same attitude from people in the lower echelons. (“Ooooooh! Look at us! We are great! We are fantastic! We’re only looking for cheap labour, so why don’t you want to work for us?”)
It also got involved in activities that it had no business even considering. For example, during the mid-1980s, I worked for a certain company and I attended a presentation by someone from NT who wanted us to bring in its people for our quality control department and run it. Never mind that we had a QC group of our own, with some pretty fancy equipment. It thought it could do things better because we weren’t Northern Telecom. We sent them packing.
Its share price was kept artificially high because Bell, I believe, held the largest block for several years. During the late 1990s, it got out, which just happened to be lousy timing because that was when the dot-bomb implosion began simultaneously with Soros’s attack on SE Asian economies. Coincidentally, that’s when it changed its title to Nortel Networks and ran a series of ridiculous ads on TV proclaiming itself to be the wave of the future.
During its latter years, the company was so weakened by its arrogance and pomposity that it doesn’t surprise me that China infiltrated it and pilfered its ideas. But it wasn’t China that began it. It was Nortel itself and it became its own worst enemy.
After what I experienced with that outfit and what I read about it, good riddance.
I was working in the web 2.0 sector at the time, and what I heard was that when the dot-bomb hit, all those web startups that went under were financing their network equipment from Nortel. When they defaulted, Nortel took a financial hit it couldn’t recover from.
I’m not surprised that Nortel tried to corner the market as that was the attitude it had. It might have made sense if it had a solid financial footing, but that’s a question I can’t answer.
I didn’t start my current approach to investing by looking at annual reports until Nortel was near the end, by which time I had lost interest in it as an investment. It might have made for some interesting reading, though. Often, I’ve found that when a company gets bad press, there’s often an underlying financial reason why. Bombardier and SNC Lavalin don’t have the best of reputations and, if one does look at their reports, one finds that both of them are seriously in hock. It makes me wonder whether Nortel was in a similar situation.
When your inventions stop at gunpowder you have to steal.
Chicoms don’t invent stuff.
They will either enslave or kill everyone they need to.
The only thing lower are Salafists and their ilk.
And traitors.
actually Buddy, a few years ago China beat the USA in computing speed, they were 1.4 times as fast as top USA speed, then the yanks yanked out all stops and beat the Chinese big time. DO NOT undersell the Chinese as we did Japan
” … When your inventions stop at gunpowder you have to steal….”
Oh yeah? How come The West never invented a typewriter with 2500 ctaracters, eh? EH?
So there!
Just let me say this about that. The Chinese checks cleared. So there’s that
Yes they did though Nortel will never admit that. Somebody got paid off.
As I noted earlier, Nortel long had the attitude that it could do no wrong. Admitting a mistake was not part of its procedures.
No ruse flace?
Nortel was a going concern in Calgary. My engineer cousin had a good paying job there until it all collapsed.
Like many he finished his working days at Home Depot.
I was in Calgary when Northern Electric changed its name to Northern Telecom in 1978. I had business north of the city at the time and I remember the company had signs hanging on the sides of bridges crossing Deerfoot.
It would be racist to do something about it.
Simple Simon Westerners….how the Chinese must laugh.
And if you can also make the West cringe about its culture and fire people who refuse to cringe….well,
the West may well get exactly what it deserves
Hubris killed Nortel. Pride goeth before destruction and a haughty look before a fall. The instruments, while interesting, did not really matter.
The attitude of superiority and invincibility went down all the way to the lower levels.
During one of my interviews with Northern Telecom more than 30 years ago, I had a meeting with one of the technical people I might have ended up working with.
He asked me what sort of salary I expected. I named a figure, which was about mid-range for someone with my education and experience, something I was advised to do. Had I asked for too much, I would priced myself out of a job. Had I asked for too little, I would have given the impression I would have been willing to work for chicken feed.
That didn’t sit well with him. “Do you consider yourself average?” he asked me. When I said no, he responded, “Why don’t you ask for more?” I knew that the number I mentioned was realistic, but, by mentioning that figure, I didn’t display the inflated sense of self-worth I was expected to have if I’d worked there.
It wouldn’t have mattered what I would have been paid had I been offered the job. The story was told that, yes, NT paid quite well, but one wouldn’t have had any time in which to spend it. People were expected to give over their entire lives to the company and were expected to work long hours. I’d already been through a situation like that, so I knew what to avoid.
I didn’t have to worry about that, though. Apparently I wasn’t considered a “good fit”.
Sounds about right for canadianss.
China hasn’t buiIt anything on its own since the Great WaII. It is a sinster, unethicaI country without honour. We shouId not even be deaIing with them.
Is a bear catholic? Did the pope shite in the woods?
This is yesterday’s news. Just ask the former nortel twats whose photos adorn some China whoa way corporate mahogany walls. Piss off all you pieces of soulless shit. Truly hope there is a circle of hell for dot com psychopaths
NEVER EVER trust a chinaman.Even in your local restaurant.
Do you think the “laurentien elite” were involved?
Nortel Collapse was the perfect storm.
1. Hubris. They thought they were impregnable. Their arrogance was extreme. They looked down on the Americans.
2. They made ill advised acquisitions. They bought the company I worked for, for $500 million. Realistically company was worth much less. (I am not complaining though.)
3. Nortel, being arrogant, was not that concerned about network security. Towards the end they found many PCs in the company had hidden keystroke loggers that had collected passwords etc. Software on many PC had been compromised and technical papers copied. It was kept quiet because it would have looked bad for the company.
4. They employed hundreds of Chinese nationals in their R&D labs in Ottawa. After Nortel’s collapse these engineers moved back to China. I personally know a group of Chinese engineers who moved back to Shenzhen, China and started a software company for managing phone networks. Everything they knew about telecommunications they learned from Nortel. (The great flaw of multiculturalism.)
5. Finally all of this ineptitude coincided with the Dot Com crash.
Nortel didn’t have a chance.
But, as I mentioned elsewhere in this thread, it didn’t happen overnight. It was years in the making and Nortel, throughout that time, wasn’t asking for trouble, it was begging for it.
There used to be a book on the market which had a title something like The Best 50 Companies in Canada To Work For (maybe it was 100–I can’t remember). It was updated every year or so and Northern Telecom was always one of them.
I wasn’t sure whether NT bought that publicity or if the writer(s) actually believed it. I don’t recall any analysis of the underlying finances was ever made. But it seemed that few financial journalists ever had the courage to write anything negative about the company. Doing so would have been regarded as not just an attack on NT but on the country itself.
Still, The Financial Post and, if I’m not mistaken, The Globe and Mail were two publications what didn’t quite buy the image of NT being the technical darling it portrayed itself as being.
Yet, we shouldn’t be surprised that NT flamed out. Other similar did the same thing, including Mitel (which eventually became a train wreck on its own) and Gandalf Technologies.
Im gonna start the Naive Party and win every election from now on.
ah yes, we ohhhh sooooo polite canaduhians . . . .
%$&^#^#^$! chirese took down a giant.
with help from the naive giant’s employees and managers.
drawn from the naive populace.
Ima gonna winna everya electiona.