Canadian companies should not work with Chinese telecommunications giant Huawei, a former security adviser at Nortel warns.

Brian Shields, who was the senior systems security adviser at failed Canadian telecommunications company Nortel, says working with Huawei is too big a risk. Shields alleges Huawei spent years hacking into Nortel's system and stealing information so it could compete with Nortel on world markets.

"These kind of things are not done by just average hackers. I believe these are nation-state [kinds] of activity," he told the CBC's Greg Weston, blaming China for the hacking.

"It was on behalf of Huawei and ZTE and other Chinese companies that could have used this information to compete against us in the marketplace. It gave them a strategic advantage. How can you survive when you have a competitor basically right there knowing all your moves, what you're doing, what you see as the future products?" Shields said.

The U.S. intelligence committee warned in a report Monday of the risk of spying that comes with working with Huawei and another Chinese telecommunications firm, ZTE. The committee said U.S. regulators should block attempted mergers and acquisitions by the firms, and that the government should avoid using components from those firms in their systems.

The head of the U.S. intelligence committee, Mike Rogers, told CBC News that Canada should also be wary.

The world’s second-largest telecommunications equipment supplier, Huawei is already providing high-speed networks for Bell Canada, Telus, SaskTel and Wind Mobile.

'It can't be trusted'

Shields says Canadians should be reluctant to let the company build systems and provide parts to companies here.

There's too great a potential for monitoring or breaking into companies with otherwise good security — or even the government, he says, "because the telecom's backbone that's being used to provide this communication, the hardware or software that's running, it can't be trusted."

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Chinese telecommunications giant Huawei has won key contracts to upgrade networks in Canada. (Isaac Brekken/Associated Press)

The federal government is trying to build a secure network after three departments were hacked in 2010. It's not yet known whether Huawei will bid on the contract, but a spokesman for the prime minister hinted on Tuesday that there were national security considerations that could block some companies from a project like that. He wouldn't say whether the government would block Huawei from bidding.

Shields says the company shouldn't be allowed to bid on such a project.

"I have no doubt they can break into any Fortune 500 company if they allow their employees to use the internet. You cannot keep these guys out. It's not possible," he said.

A U.S. spokesman for Huawei says it's a globally trusted company.

Shields admits he has no proof Huawei was behind the hacking of Nortel. He says there were system infiltrations coming from around the world, but any time information was downloaded, the hack came from China.

Public Safety Minister Vic Toews said Thursday that the government is concerned about the security of Canada's internet and infrastructure.

"I can tell you that the issue that has been raised by the Americans has also been raised in Canada and among many of our allies, including Great Britain," Toews said.

'Downward slide'

In a separate interview airing Thursday on CBC Radio's As It Happens, Shields alleges Huawei spent 10 years hacking into Nortel's system. He's now advising Canadian companies not to work with the Chinese company.

"Absolutely they should not. If they care about the core infrastructure of the Canadian communications, this is a huge risk," Shields said.

"Remember, they've got this Communist Party over there right in their corporate offices. What are these people doing? Why is it such a close relationship with the Chinese government?"

Shields says there was a major change in the economic environment, which he believes was due to the hacking, which allowed Nortel's competitor to use information it otherwise wouldn't have had access to.

"When 2000 came along, then it was a downward slide. And that coincidentally is the year when Huawei started selling on the international market. How coincidental," Shields said.

Shields has previously blamed Chinese hackers for Nortel's demise.

The U.S. and Australia have both banned Huawei from major infrastructure projects.

With files from Greg Weston