Westinghouse's data stolen despite big deal with China

Just as Westinghouse Electric Co. and a Chinese government-owned nuclear company were hashing out the details of a major technology transfer that would bring new nuclear reactors to the growing Asian country, the Chinese government was stealing information about those reactors and Westinghouse's strategy for the negotiations, according to an indictment filed Monday in U.S. District Court of Western Pennsylvania.

Unlike the other companies targeted by five Chinese military hackers identified by the Department of Justice on Monday, Westinghouse had signed an agreement to voluntarily share all of the technology behind its new generation AP1000 reactor with its Chinese partners.

The first batch of records, about 75,000 documents, was transferred in 2010. Westinghouse and the State Nuclear Power Technology Corp. are building four AP1000 reactors in China, a deal estimated to yield billions of dollars for Westinghouse and its contractors.

In 2010, as Westinghouse and China began talking about building more plants, the hackers intercepted internal discussions between Westinghouse's former CEO Aris Candris and about a half dozen other top-level decision makers, the indictment claimed. The correspondence dealt with strategy for negotiating a deal and concerns that the Chinese might one day become a competitor to Westinghouse in nuclear technology.

Over the next two years, the indictment said, Westinghouse had at least 1.4 gigabytes of information stolen from its computers. That's roughly equivalent to 700,000 pages of e-mails and attachments.

Westinghouse spokeswoman Sheila Holt said the company wasn't expecting the indictment and couldn't comment on it before thoroughly reviewing it.

China's stated nuclear ambition is to cut its teeth on AP1000 reactors; use that experience and technology to advance its own next-generation pressurized water reactor; bring all manufacturing capacity in-house; and then become a global nuclear supplier. The country already has designed a reactor, known as the CAP1400, which is based on Westinghouse's AP1000 technology.

Westinghouse's complete technology transfer was a critical component of its deal with China in 2007 to bring the AP1000 to a country that has gained an unsavory reputation for how it deals with intellectual property.

According to a diplomatic cable from April 2008, accessed through WikiLeaks, the Shanghai Consulate wrote to U.S. officials after a meeting with Westinghouse that the company, forced to promise a full technology transfer, had "adopted the view that the AP1000 project is a true partnership with China, and that transferring technology would result in a better relationship with China and result in future power plant sales."

Danny Roderick, Westinghouse's CEO, earlier this year predicted that in 30 to 35 years, there would be as many nuclear plants in China alone as there are total in the world today -- about 435.

"China is a huge market for us," Mr. Roderick told the Pittsburgh Post-Gazette in January.

He also talked about the challenges Westinghouse faces competing against state-owned nuclear companies.

"We have to be sometimes competitors to those foreign state companies and sometimes we're suppliers," he said.

Monday's indictment chronicled several incidents where hackers stole information from Westinghouse about product specifications and took company network credentials that would give them more access to sensitive files.

"Such specifications would enable a competitor to build a plant similar to the AP1000 without incurring significant research and development costs associated with designing similar pipes, pipe supports, and pipe routing systems," the document said.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.

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