Unmasking Huawei: History Suggests It’s a National Security Threat

Putting 2 and 2 together for Canada
June 13, 2018 Updated: June 13, 2018


Canadians might remember Huawei as the main sponsor of Hockey Night in Canada’s Stanley Cup finals broadcasts. The Chinese telecommunications giant’s TV ads for the P20 Pro smartphone showcase a slick digital camera.

Since 2008, Huawei has had a presence in Canada, but the country is playing a potentially dangerous game if it feels Huawei’s investment in its economy outweighs the national security risk.

The situation is very different from the attempted Chinese takeover of Aecon, which was blocked by the federal government based on national security grounds.

Huawei got funding from the Province of Ontario and has developed deep relationships with Canadian universities.

Research is now being conducted on 5G technologies—the next generation of wireless data capability. Canadian professors have been transferring the full rights to their intellectual property (IP) to Huawei, as reported by the Globe and Mail.

Huawei also supplies network equipment to Bell Canada and Telus.

But south of the border, Best Buy, AT&T, and Verizon have all either stopped selling Huawei devices or plan to do so soon.

For the consumer, U.S. intelligence agencies have cautioned against buying Huawei phones. The company has been accused of placing backdoors in its products, which can be used for espionage.

Epoch Times Photo
The Huawei logo is seen in a shop in Shanghai on May 3 ahead of trade discussions between the United States and China. (Johannes Eisele/AFP/Getty Images)

U.S. security experts believe the Chinese communist regime is seeking cutting-edge technologies to enhance its military capabilities through cyber spying, with Huawei as a front. The tough American stance against Huawei stands in stark contrast to other G7 countries, where the company is able to conduct business more freely.

Intelligence experts say the challenge for Canada is that it is difficult to find the guilty party in cyber spying and theft, despite the fact that there is plenty of circumstantial evidence, and when combined with the motivations of the Chinese communist regime, a smoking gun becomes clearer.

Furthermore, Canadian governments and the country’s private sector haven’t always been receptive to warnings from intelligence agencies, and as such, the private sector and general public are less well informed.

US Leadership

“Huawei has a very dubious past, starting with its founder who is a former military officer,” said Michel Juneau-Katsuya, former chief of Asia-Pacific for the Canadian Security Intelligence Service (CSIS), in a phone interview.

Huawei founder Ren Zhengfei was a director of the People’s Liberation Army (PLA). The PLA is the attack force of the Chinese Communist Party; it’s not like a military force that just protects the public.

Some of the company’s antagonistic actions include selling forbidden technologies to Iran—for which it is under investigation—and spying on Chinese citizens as China works on a new form of digital autocracy.

Brian Lee Crowley, managing director of the Macdonald-Laurier Institute, sounded a stern warning regarding Huawei building communications infrastructure in Canada.

“Who knows what surveillance or even sabotage functions might be built into such networks by a Chinese state that must consider that Western governments might eventually become potential or actual military adversaries,” he said in an editorial.

The United States has banned Huawei from bidding on government contracts. Australia blocked Huawei from bidding on its national broadband plan in 2012. In that same year, Ottawa said it would block Huawei from bidding to build the Canadian government’s telecommunications and email network.

Now CEO of the NorthGate Group, a firm that performs threat and risk assessments for corporate clients, Juneau-Katsuya said Canada basically left it up to the private sector to decide if it wanted to do business with the Chinese telecommunications giant instead of taking the U.S. approach, which was to have its government warn its private sector of the risks of working with Huawei.

In fact, he said the Canadian tack “caused a great irritation to our American friends even before Mr. Trump came to power.” While the Trump administration has ramped up efforts to stop Chinese hacking, Huawei’s been under scrutiny in the United States for much longer.

Warnings about Chinese cyber spying haven’t been taken very seriously—both by Nortel and the Canadian government.

“We’re not getting the warning and the awareness that we should be getting in order to at least be capable to protect ourselves,” Juneau-Katsuya said about the Canadian government’s approach.

Questions About Ownership

“Huawei is a private company. Huawei is not an SOE [state-owned enterprise],” said Scott Bradley, Huawei Canada’s vice president of corporate affairs, in a phone interview.

But many believe this is not truly the case.

The Epoch Times asked Bradley if there was no connection between Huawei and the communist regime in China. “Correct,” he responded.

But big Chinese companies—especially those involved in sensitive industries like telecommunications—are all subject to the objectives of the ruling communist regime, said Juneau-Katsuya.

A 2012 investigative report on U.S. national security issues posed by Huawei and ZTE, another large Chinese telecommunications firm, said it “finds that Huawei did not fully cooperate with the investigation and was unwilling to explain its relationship with the Chinese government or Chinese Communist Party.”

The report’s authors also don’t believe Huawei’s U.S. subsidiaries operate independently of its Chinese headquarters. It would not be a stretch to assume a similar relationship exists for Canadian subsidiaries.

“Huawei and ZTE are cat’s paws for Chinese Communist Party domination, and we should treat them as such in every conceivable way,” said Richard Fisher, senior fellow with the International Assessment and Strategy Center, in a prior interview with The Epoch Times.

Bradley would not comment on the U.S. stance taken against Huawei; however, regarding the company’s presence in Canada, he said: “We compete in 170 countries around the world. … Canada is an open and competitive telecommunications market like almost every other market in the world.”

Nortel Gutted

Former employee Brian Shields was at the centre of Nortel’s efforts to combat Chinese hacking in the 2000s. He said he doesn’t have concrete proof that Huawei was behind the theft, but the pieces of the puzzle when put together strongly hints Huawei was involved.

China wants to acquire cutting edge technologies and become a dominant player in telecom. Nortel was a major player, and after it went down, Huawei came to the fore.

“The [Chinese] government has every reason to ensure that Huawei was successful,” he said in a phone interview. “I don’t think we could have stopped them. They were basically a juggernaut with a government backing.”

Shields, now a cyber crime analyst with the U.S. Postal Service in North Carolina, recounts that Nortel executives didn’t do what was recommended to protect the company when first hacked. He estimated that the compromise lasted at least 10 years. Huawei was able to undercut Nortel with the intelligence it was gathering—technical papers, research reports, business plans, and employee emails. Nortel went bankrupt in 2009.

Epoch Times Photo
The Nortel Networks office tower in Toronto in a file photo. The company was the victim of Chinese hacking. It went bankrupt in 2009. (The Canadian Press/Nathan Denette)

“The only one that would have benefited from the stuff that was stolen from us was a competitor. There’s no one else,” Shields said. “Circumstantial evidence is really strong … probably end up in the hands of Huawei or ZTE. You’re not just going to steal it and not do anything with it.”

The arrangement Huawei now has with Canadian universities bothers Shields.

According to The New York Times, the Trump administration is considering blocking Chinese citizens from conducting sensitive research at American universities for fears they may pass intellectual secrets to the Chinese communist regime.

As a communist nation, China is not incentivizing its citizens to come up with cutting-edge technology to stay ahead in an ever-escalating race. Shields said the Chinese are now trying to legitimize acquiring valuable IP through such arrangements with universities as opposed to stealing it outright.

Canada launched its national cyber security strategy on June 12 and acknowledged the threat from state-sponsored cyber espionage and military activities. The Department of National Defence and the Canadian Forces are examining how to best deal with the issue.

As it stands now, there is a significant discrepancy between how it perceives Huawei and how the Unites States does.

Follow Rahul on Twitter @RV_ETBiz

Follow Rahul on Twitter: @RV_ETBiz