Bloomberg News

Canada Pushes China on Cyber-Attack After Research Breach

July 29, 2014

Canada is seeking answers from China after authorities discovered what they say was a state-sponsored cyber-attack on its IT network.

Canada detected a breach of information-security infrastructure at the National Research Council, a federal agency that does research in areas such as communications and aerospace, Chief Information Officer Corinne Charette said in a statement today. The attack was conducted by “a highly sophisticated Chinese state-sponsored actor,” Charette said.

Foreign Affairs Minister John Baird discussed the matter in a meeting today in Beijing with his Chinese counterpart Wang Yi, according to Adam Hodge, a spokesman for Baird. China doesn’t accept the “groundless allegations” of its involvement in any cyber-attack, Yang Yundong, a spokesman for the Chinese embassy in Ottawa, said in an e-mailed statement.

The attack is the latest to penetrate Canadian government and corporate defenses. The federal tax agency said in April hackers exploited the Heartbleed security flaw to gain access to taxpayer data. China-based hackers looking to derail BHP Billiton Ltd. (BHP)’s $43 billion takeover of Potash Corp. of Saskatchewan Inc. in 2010 zeroed in on Canadian law firms connected with the transaction.

Stealing Passwords

Nortel Networks Corp. (NRTLQ:US) lost data for years to China-based hackers who penetrated the company’s network by stealing executives’ passwords, according to a 2012 report by the Wall Street Journal, citing a former employee. The telecom equipment maker filed for bankruptcy in 2009.

The Canadian government has stepped up scrutiny of IT security since a U.S. congressional committee warned in 2012 of the risks of using equipment sold by Huawei Technologies Co. Ltd. and ZTE Corp.

Industry Minister James Moore cited security concerns last year in blocking the C$520 million ($479 million) sale of Manitoba Telecom Services Inc. (MBT)’s Allstream division to an investment firm co-founded by Egyptian billionaire Naguib Sawiris.

“The government takes this issue very seriously and we are addressing it at the highest levels in both Beijing and Ottawa,” Caitlin Workman, a spokeswoman for the Foreign Affairs department, said today in an e-mail.

The National Research Council’s networks have been isolated from the broader government network “as a precautionary measure,” Charette said.

To contact the reporter on this story: Andrew Mayeda in Ottawa at amayeda@bloomberg.net

To contact the editors responsible for this story: Paul Badertscher at pbadertscher@bloomberg.net Chris Fournier, Theophilos Argitis


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