This deal was in many ways a proxy fight between the US and China or the future of you know, technology, dominance and technology kind of control. This very small country got caught in the middle.
Bloomberg's Jordan Robertson and Drake Bennett are back on the show with another wild Who done it? They reported for Business Week. This time it's about China's tech giant Huawei and the company's extraordinary efforts to out maneuver its competitors to build a five G network in Denmark.
So how did this information that's supposed to be some of the most protected information of the company get out to the last people in the world who should have known it.
It wasn't until they actually got to look at his laptop that they were able to piece together. Oh, here's what happened.
I'm West Kasova today on the Big Take, microphones, drones, and the search for mole. Jordan, your story starts with Denmark looking to upgrade its telecommunication system.
Right just twenty nineteen, Denmark is looking to upgrade it's telecommunications network to five G and in fact, Denmark is going to be one of the first countries in Europe to upgrade to five G. Now they have two choices. There's Erickson from Sweden and there's Huawei from China. Now Huawei is the incumbent. Huawei has in some ways the advantage because Huawei had supplied the Danish Telecom, Denmark's biggest
telecommunications provider, with equipment since twenty thirteen. Huawei was already there. Huawei was already in country.
And in fact, Huawei was across a lot of countries in Europe, in Asia. They had become a really dominant player in this field. Is that right.
Huawei had expanded aggressively outside of China over the preceding decade, providing three G and four G networks to the UK, of course, to Denmark and just throughout Europe. So Huawei was a very big player in ways that it never was really in the United States. You know, Huawei never really made that jump fully to the US. There's certainly Huawei equipment in the US, but it was not nearly as pervasive as it was in parts of Europe. So
Denmark goes shopping for a five G provider. Huawei was already supplying its three G and four G equipment, but there were all of a sudden, there were these national security concerns. The Trump administration was kind of pounding the table, telling anybody who would listen, don't buy Huawei, go with a Nordic beat up company, Go with the Sweden's Erickson, or go with you know, Finland's Nokia. Go with anybody but Huawei.
And why were they so insistent about not using Huawei.
The US argument was that China could use this equipment, and not just it's the equipment, but the people that come with this equipment to facilitate spying. That is true,
China could do that. In twenty twenty one, we published a story outlining an incident, a previously secret incident that had happened in Australia in twenty twelve, which really gave rise to the fears among Western allies, the US, Australia, you know, chief among them, the suspicion that Huawei would be used by China to spy was not just hypothetical.
This incident in twenty twelve, the short version of it is the Australian Intelligence Services detected a breach, a very significant breach of Australia's telecommunication systems, and what they discovered was that China was inserting malware into the official Huawei updates that were applied to systems in Australia's telecommunications network
by Huawei technicians. So Australia detects this major breach of its telecommunications systems in twenty twelve, it informs the Americans, and what happens was that was essentially the starting pistol for the US, Australia and other Western nations to kind of raise the red flag and say, whoa, this isn't
just hypothetical that Huawei could be used to spy. Is actually happening, and it's happened in a really sophisticated, stealthy, hard to detect way that you could really only do if you have insiders control over that networking equipment.
And what did Huawei say about that at.
The time when we reported on that story, Huawei issued US a statement saying they'd never been told of a breach, and you know, our information was that US intelligence and Australian intelligence assessed, you know, this was an insider operation. This was not necessarily the Chinese government going to Huawei and asking permission, but that this was an infiltration of Huawei's service technicians by Chinese intelligence. In twenty twelve, and
twenty thirteen. What Denmark decided to do was they said, we like what Huawei's talking about. We want to go with Huawei equipment, but we're going to subject the equipment to a very rigorous review. In the UK with the British Signals Intelligence had set up a special testing lab with Huawei to look for back doors or secret pathways into a product that would otherwise be undetectable. It was not a bad solution and it was an interesting compromise
that we don't have many other examples of. China has consistently denied using Huawei for any intelligence collection or cyber attacks or things like that. Every country says that the information that we had, of course was very strong, including on the record comments from former senior US officials describing this breach, describing the intelligence and really describing for the first time the origin, if you will, of Western concerns about Huawei. But Denmark had a more nuanced view of this.
They said, just as China could use Huawei to spy on Denmark, so too could the US with any of its allied countries products as well. So Denmark was equally suspicious about US approved products as it was China.
Approved products, and there was a reason for that. Around the time our story takes place, Denmark was going through a kind of painful reckoning with its own intelligence and services and its relationship with the American NSA, and it was revealed that Denmark had basically allowed the NSA American signals intelligence to tap into these cables that transit the country to spy on the leaders of allies of ours,
including Germany and Sweden and others. And so there was good reason for Danish government officials to take with a grain of salt this idea that China is the only country that would you use a friendly tech company and pair it with their intelligence apparatus.
To piggyback on that. I mean, Denmark was closer to some of these highly sensitive intelligence operations than many countries are. So Denmark knew all too well. You know what the US is capable of, and what any country is capable of if they have access to the telecommunications equipment and
the people who run it. So when Drake and I were reporting this and visiting, you know, Copenhagen and talking to people, what we found was this very firm belief among senior Danish government officials that they weren't going to
take sides in this Huawei battle. I mean, despite the fact that Denmark is obviously a very close Western ally it's a part of NATO and part of the U. On this matter, you know, Denmark was not going to just roll over to the US demands and they were going to have a bake off and they were really going to see who's who's going to win this, Ericsson from Sweden or Huawei from China.
You know. The other thing is that Huawei's equipment is good gear, you know, and it's cheap, So I think if you're setting all this stuff aside, it's like a good choice. You've got these sort of political considerations on both sides, and then you know you have this Danish company TDC trying to kind of decide on the merits as well.
Twenty years ago, Wawei's equipment was seen as knockoff, low quality, obviously low costs as well. But a lot has changed in the last two decades and Huawei's equipment is state of the art. They have very very good customer service. Huawei will ship as many people to your country into your facility as you need to solve whatever problem you need solved. And there were many people inside TDC, Denmark's biggest telecom that were very happy with wahweih and had been for many years.
And Drake, maybe you could tell us why upgrading from four G to five G is such a big undertaking and why getting this choice right mattered so much.
So this was a big deal for some reasons that were technological and some reasons that were sort of political. As Jordan mentioned, Denmark was one of the first European countries to make this upgrade to five G. The promise of five G is really that it's going to be faster, more reliable. There's not going to be really any delay at all. You can put a lot more devices on
the network, there's a lot more bandwidth. The bottom line is just that it's going to be a real step change from what we have now and in ways that'll kind of allow different kinds of devices to be on the cellular network.
Here we have what Jordan describes as this bakeoff between ericson the kind of hometown favorite and Huawei to get this five G contract and so what happens from there.
So the negotiations stretch through the winter of twenty eighteen twenty nineteen, and then we come to the end of the process, with sort of the bidder end of this process. Both sides have put in what's supposed to be their best and final offers. This information is very highly sensitive at TDC, the Danish Telecom. A couple weeks after both sides have submitted their best and final offers, Huawei suddenly, in the wee hours of the morning, turns in a
revised bid. And that's a little weird in and of itself. But the thing that's really weird about it, and very suggestive is that while Huawei's earlier bid was higher than Erickson's, the new one is just under Ericson's bid, so just
enough to be the winner. And that day, the Huawei country manager, a man named Jason Lan, whose job it is to get this contract and who has used the sort of ample resources of Huawei to try to whine and dine his way to get it, he asks for a meeting with a senior executive at TDC, the Danish Telecom.
The two get to the meeting and Lan, who normally is this kind of solicitous guy, Land seemed like a totally different person, has this extremely uncharacteristic swagger, while the TDC executive, a guy named Jens Alos, doesn't sort of say specifically what it is that Land says. According to a statement Alos gave to his security team, this is extremely alarming to Alos, who basically cuts the meeting short after just a few minutes and goes back to the
office and launches an investigation. So how did this information that's supposed to be some of the most protected information in the company get out to kind of like the last people in the world who should have known it.
After the break, TDC goes looking for a possible leaker inside their operation Jordan. Right before the break, we heard how these Danish executives found out that Huawei may have gotten information about their competitors' bid and they launched this investigation. What did they do? How'd they go about trying to find a suspected leaker?
So the first thing that TDC did was they homed in on the actual ericson bid document. This was a set of documents that existed on TDC's network but was very closely protected. It was a restricted access list. Only about a dozen people had authorized access to it. And at first they don't necessarily assume it's a person or it could be a hacker. They don't know. All they
know is that this information leaked. When you buy equipment from a company like Huawei or Ericson or anybody else, you don't just get the equipment, you get the people too, Like you get the service technicians essentially come and work on your campus to service and maintain this equipment. So one of the first things that you know, the TDC security team considered was was there a hack. Did one of these Huawei employees that you know walks freely throughout
the TDC offices, did they install malware? Did they go into a room that they weren't supposed to, you know, was there an insider of that variety? And secondarily what they considered was did somebody who had legitimate access to this file did they intentionally leak it? So at the beginning, there were two parallel investigations, and that led to the security team asking for and receiving the executives' cell phones, their laptops, and what they were looking for was evidence
of potential hack. Now they didn't find one.
And while they're doing all this, while they're getting everyone's laptops and cell phones, they're trying to keep secret the fact that there is this investigation, what the investigation is for. So it's this very delicate operation. The security team at TDC who's carrying out the investigation works in this subterranean room. They're basically trying to investigate the leadership of the company that they work for without letting them know that that's
what they're doing. Among other things, it kind of makes the folks on the security team, who are kind of paranoid guys to begin with. It's a lot of former intelligence officers, former cops. It makes them even more jumpy than usual.
A hack would have been the easier breach to investigate. If there's a hack, you can identify the device that was compromised, you could identify the account that was compromised, and you can close those holes. What TDC's security team landed on, however, was the far worse option, which was there is a mole. There is a leaker inside this company who is intentionally sharing very secret information about Ericson's
bid with Huawei to help Whahwei win this contract. The only people who had access to that information were some of the most senior executives at the company. So that is a very concerning prospect because the folks on this security team they didn't know who to trust.
And Drake the security team went to great lengths to not only disguise the fact that they were doing this investigation, but to actually protect the equipment that they were using to try to find the suspected leaker.
A lot of what the security team was doing was looking at this hardware for signs of infiltration, and so every night after they'd done that, they would box them up in these big, kind of rugged military style crates and then drive them to downtown Copenhagen and wheel them into this bank vault at Danska Bank so that they could be safe off the site of TDC's offices for
the night. Despite all of these precautions they're taking, members of the team start to get the distinct impression that they also are being investigated or surveilled, and there's evidence that they were right. They discovered these microphones in the TDC boardroom that really weren't supposed to be there, and nobody could quite explain how they had gotten there.
Who did they think was listening in on them?
I mean, they never figured out who installed the microphones. The suspicion was that these were not folks inside TDC. This wasn't people at TDC trying to find out about the investigation. That's when they decided they needed to move the entire investigation off site. They decamped to this fifteenth floor room that's on the water and Copenhagen has got this very beautiful, dramatic location with views of the shore.
But even after moving, they still had this feeling that they were being watched.
Yeah, and this gets us to one of the kind of most eerie sort of occurrences in the story, which is that one night after the team has gone home, like twelve twenty am, there's a security guard who's making his rounds and he sees these bright lights and realizes that he's looking at a drone hundreds of feet up in the air, and as he watches, it kind of like maneuvers around for several minutes and then descends kind of out of sight to the ground.
And it's hovering right outside the window of the investigator's office.
That's right exactly. And the investigators and they get to work the next day and sort of learn this story, realize that they've left the blinds open in this window and there's actually this giant whiteboard as part of the documents that we base this on, like a photo of it, where they've kind of laid out this giant chart of connections everything they're looking at in their investigation.
So if the drone had a camera, they fear that it could have been photographed.
Yeah, I mean, the idea is that this would have been visible to that drone.
Yeah, it wasn't just a drone. The security team also starts to believe that it too, is being followed. You know, some members of that security team begin to see the same people pop up around town. In one case, one of the members of the security team saw a woman in a bar who appeared to be taking photos of him. When he confronted her, she hurried away. When he and his group sat back down again at the bar, a different woman enters the bar and appeared to be listening
to their conversation. The security team could never prove that these events were related, but they had the strong suspicion that they were. Whether it was the drone, whether it was the women in the bar, this was a series of events that just really kind of culminated in this growing fear and suspicion that this investigation had a lot more elements to it than they had originally been aware.
So Jordan. Eventually, the security team starts to make headway looking through all the records, all the different devices, and they think they found the potential person who was leaking this information.
They home in on a suspect. You know, one of the other big characters in this story is a guy named Dove Goldstein. Dove Goldstein had worked at TDC for many years. He had risen through the ranks. He worked in the finance department, and he worked on big project He worked on special projects. He worked on the contracts for these big network infrastructure upgrades. He was considered a
trusted executive reporting to the chief financial officer. There had been suspicions raised about this person because he was asking questions, he was on their radar screen, But it wasn't until they actually got to look at his laptop that they
were able to piece together. Oh, here's what happened, And the way Dove Goldstein enters this story is that when the security team began looking at his history, in his calendar, in his text messages, in his emails, what they saw was a very deep and growing relationship with Jason Land, Huawei's country manager for Denmark, and the communications that TDC's security team unearthed really showed a very clear pattern around when the negotiations were heating up and while he was
getting ready to either make a big presentation to TDC or submit like a preliminary bid, the communications between Jason and Dove heated up as well. They would meet for lengthy dinners. In one case, there was a four and a half hour dinner at a very expensive restaurant in central Copenhagen, so there was a relationship there. What TDC security team found in analyzing Dove Goldstein's laptop was Dove Goldstein opened some files on his computer that he wasn't
supposed to have. This included Erickson's bid. He sets a meeting with Jason Land, he goes to that meeting, he brings the laptop with that information that he had just opened to that meeting, and he is recorded on CCTV the building CCTV system leaving for the meeting, returning from the meeting with this Lenovo laptop under his arm.
So he wasn't supposed to have that detailed information about Ericson's bid. How did he get it?
What the security team found was that Dove Goldstein had received this information from his boss, the company's chief financial officer, a guy named Steve Postwa. This information was easier for him to get because he was in many of these meetings. He was not on the five G committee that ultimately
made the decision, but he was the company's CFO. Our reporting found that while TDC's security team found evidence that the CFO had shared the information with his subordinate, they did not find evidence that he knew that that information had then subsequently been shared. Nevertheless, this was considered the smoking gun.
And Drake, why would Gov Goldstein's boss share that information with him?
Yeah, I mean that's a great question. We don't know.
So Drake, what happened then when it was discovered that Huawei had received this information?
So TDC decides pretty quickly in their investigation that they can't do business with Huawei after what they've learned, and communicate this to Huawei in kind of provisional way and then do it in an official way. At this breakfast meeting where Jason Land is there. Other Huawei executives have flown in to be there. From the sound of it
was a pretty intense meeting. According to you know, a statement that TDC executive made to the security team after the fact, there were these kind of veiled threats of the difficulties that Danish companies would have in China should the deal go against Huawei, But TDC sticks with its decision to go with Erickson.
Jordan, how do you and Drake know all of these details? You have a lot of information about secret meetings and the inner workings of a security team that's doing an internal investigation. How were you able to find all of this out?
So, Drake and I, you know, not only spoke with about a half dozen people who were either involved with or briefed about the findings of this investigation, but we were also able to review extensive internal documentation from TDC describing the investigation and its conclusions, you know, And this included investigator's notes, This included reports that were prepared for briefings to the board and to TDC's CEO and other executives.
A lot of our reporting comes from those documents, you know, and the interviews with those people involved with or briefed about the investigation.
And Drake, what did TDC say about your reporting?
TDC didn't respond in detail to the very detailed questions we sent over to them. They did send us a statement that read, we recognize some of the things in Bloomberg's findings from our own files. We conducted a broad and deep investigation, and all appropriate measures were taken Accordingly. None of the employees directly mentioned by Bloomberg work for the company today and Jordan.
That raises the question what happened to Dove Goldstein and to his boss, the chief financial officer of TDC.
Shortly after the security team submitted its findings to the executive you know staff at TDC. Dove Goldstein's boss, Steve Postwor, the chief financial officer, he left the company. TDC announced his departure in March of that year, just a few weeks after you know, a lot of this was happening. They did not provide a reason for his departure. Dove Goldstein left a short time after. We reached both men separately, and they both declined to comment for the story.
And what about Huawei? What do they have to say about this?
We sent haweih very detailed statements of our findings. They declined to address specific questions, but issued us a statement saying that Huawei complies with applicable laws and regulations and strives for the highest standards of business conduct. We deny any wrongdoing. Jason Land, who is still a Huawei employee, issued us a statement through a personal attorney. Land quote believes that he has acted in compliance with all applicable
laws and regulations at all times. Land's lawyer describes Land's relationship with Goldstein as quote of a professional nature and one that was appropriate in the circumstances. Our reporting shows he continues to work for them this day.
When we come back, Huawei turns its attention to winning five G contracts across the globe.
Drake.
So what's happened since with Huawei they're still trying to pursue these contracts in other countries? How is that going well?
I think the moment that we're writing about here marks a kind of high water mark for Huawei. Before they really were winning a lot of contracts, taking business away from their competitors in all over the world, and afterward
that's changed. It's more that this is indicative of a certain kind of behavior that I think has alarmed business leaders and government officials in all sorts of countries for some time now, and so in the years since, you've seen Huawei lose deals kind of all over the place, and you've actually seen governments in Europe and elsewhere put in place policies where Huawei gear cannot be used in their telecom infrastructure, especially in sensitive parts of it, and
in some instances has to be taken out.
And is that in direct response to this sort of pressure from the US that were describing earlier to discourage the use of Huawei equipment.
Part of it is that the US has put extraordinary pressure on its allies to not use Huawei equipment, especially for five G, which is a special type of technology that requires lots and lots of maintenance by the equipment vendors. So like you don't just get Huawei equipment, you get their people as well. So the US has put amazing amount of pressure on its allies to not use WAWEH and that's had an effect with five G in North
America and Western Europe. However, if you look around the world, Huawei still has close to a third of the market total market share worldwide for telecommunications infrastructure equipment, right, and if you look at a map of the world, you see Asia, you see Russia, you see Latin America, you see Africa, right like you see giant parts of the globe that are firmly in Huawei's corner, and where Huawei did get five G deals, where Huawei still has a
really commanding presence. So Ericson and Nokia, for all of their successes in Western Europe and North America, with five G, they're far from the lead. And there's no indication that these you know, these two Nordic companies will be able to catch up Tohuawei anytime soon despite some of these setbacks.
Jordan, What are we supposed to make of this? This was one five G deal, a fairly small one in one country, and yet obviously has had big repercussions. What does this say about these larger forces between the US and China and West versus East.
This deal was in many ways a proxy fight between the US and China or the future of you know, technology, dominance and technology kind of control. This very small country got caught in the middle.
You know.
One way to think about this is that this was like round one. This was over five G. There will be other generations of telecommunications technology and what the Denmark incident showed is that a lot of these countries don't want to be bullied around by the US like they want to be independent, they want to maintain that independence.
One thing that is clear is that even though the US was successful throughout North America and Western Europe in dampening interest in Huawei's technology, that doesn't mean Huawei is dead. Far from it. Hahwei still has a commanding lead in telecommunications infrastructure around the world, and there will be another infrastructure bidding in a few years and another after that.
This will not be the last time that we've heard of this kind of proxy fight between the US and China over telecommunications infrastructure.
Jordan Drake, thanks so much for coming on the show. Thanks Wes, Thanks for listening to us here at The Big Take. It's a daily podcast from Bloomberg and iHeartRadio. For more shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you listen, and we'd love to hear from you. Email us questions or comments to Big Take at Bloomberg dot net. The supervising producer of The Big Take is Vicky Bergalina. Our senior producer is Catherine Fink. Our producers
are Moe Barrow and Michael Falero. Hilde Garcia is our engineer. Our original music was composed by Leo Sidrin. I'm West Kesova. We'll be back tomorrow with another big take.