Front Burner - Why does Russia want Canadian tech for its war drones?

Episode Date: March 11, 2024

Orlan-10 drones are arguably one of Russia’s most important assets on the battlefield. Which is why the West has sanctions in place to keep the tech needed to build the drones out of Russian hands.So why do hacked emails show that a Russian arms dealer was seeking out parts made by Canadian tech companies? And how are Western parts ending up on the frontlines of Russia’s war with Ukraine?Today, Ben Makuch shares his CBC investigation.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Jamie Poisson. On the front line of Ukraine's war with Russia, soldiers have their eyes trained on the sky. That's the sound of Ukrainian soldiers shooting at Orlan-10 drones, arguably Russia's most important asset on the battlefield. They're fast, able to jam Ukraine's communication, and Canadian tech is being targeted by the Russian arms dealer that builds them.

That's despite sanctions by Canada and its allies to keep the tech out of Russia's hands. Today I'm authorizing additional strong sanctions and new limitations on what can be exported to Russia. Hundreds of permits are now being canceled and it is worth more than $700 million. This hideous and barbaric venture of Vladimir Putin must end in failure. So how is a Russian arms dealer skirting those sanctions? And how is the ubiquitous nature of technology in today's world changing the face of warfare? Today, I'm speaking with Ben McCoo.

He's a national security reporter for CBC. And he's going to tell us how a group of Ukrainian hackers exposed a Russian arms company targeting Canadian tech. Ben, hey, it is always great to have you. Thanks so much for coming back on the show. Thank you very much for having me. I'm glad to be back. I want to start with these pro-Ukrainian activist hackers who call themselves the cyber resistance. Who are they? What is their aim? As I understand it, they're sort of shadowing the way that they don't let me know everything,

but I've pieced it together from my own meetings with some of them. There's sort of a vast network of Ukrainians that span both the civilian worlds. I've met some of them that are directly in the military who are serving on front lines. It's sort of the idea that there's this loose group of hackers who are all going after separate targets. And that spans everything from the Russian propagandists, Russian arms companies like the Special Technology Center, anybody in the retinue of the Kremlin or the Russian national security establishment. And they basically try to hack any of these people and get information and supply to the government. Big military companies, which works in Russia, are our top targets. So the SDC was on the top of our list.

This is one of the biggest manufacturer of military equipment for Russia. And one of the other things that I think is worth noting is that in the post-Soviet world and post-Soviet countries like Ukraine and Russia and others, there was such a huge commitment to science and technology that after the fall and in their education systems, you had some of these very brilliant mathematicians and even just students who were really interested in it.

And that translated really well into being a hacker and understanding coding. So since probably 2004, early 2000s, we saw that there was so much activity coming out of Eastern Europe and post-Soviet countries where hackers were really active, both going after geopolitical targets, but also doing criminal network stuff like carting and going after major American corporations. And Ukraine was very much a hotbed of this. And I think when you saw the war in 2014 and the invasion of Crimea and then of Donbass, you had a lot of these types of individuals who rose up and started to support the government. And this cyber resistance is, in a long-winded way, it's sort of a product of that entire, all of the confluence of all of those things into one. It's such an interesting angle. I love this story. And I know that you've worked with some of these guys before, right? They've been sources.

What other things have people in this kind of loose network been able to reveal? So one story that I pursued in the summer, I was approached by a source in the Ukrainian military establishment and sort of a secretive section of it. And basically said some hackers I know, the cyber resistance, have provided documentation that Russia is using a mercenary network in Cuba to recruit Cuban men to go fight in Ukraine. And of course, we've known this is something that's real, that Russia's been looking to some of its allies to get its own fighters, because this war is a war of manpower as much as it's a war of technology and of drones and of artillery fire. And I got this cache of information, and it was over 100 passports, different documents that suggested that Russia was offering money to Cuban men to go over and fight. And I was able to verify it. And then after that, and actually, I had a pretty cool exchange, because part of it was they'd hacked a Russian military officer that

was doing the recruiting, which had his number in this cache and his email, actually was able to talk with that Russian officer that told me to go F myself NATO scum. Okay, okay. So after that, I was, I was very convinced this group was doing some pretty interesting work. And that it was it was legitimate. Because of course, anytime you get information as a reporter, you want to be able to review it and look it over and make sure it's real. And the source I, and I should say the source I have in the Ukrainian military, this is someone who's high up and who I've known for years and I trust, but you know, you want to go through things and make sure it's true and real. And after that, I said, look, if anything else comes up, let me know. And I'd be interested to see it. And then

I was approached that, would you be interested in seeing some information about a hacked Russian arms maker? And of course, like any enterprising national security reporter, I said, yes, give me So you go to Ukraine, right? You meet one of the hackers. And just give me a snapshot of what you find, what happens. The cyber resistance hacked an individual, an employee at this company called the Special Technology Center, which is a St. Petersburg-based arms maker. And they make the Orlan-10 drone and other things as well. They do communications networks. Their suggestions, they're also making missiles and different armaments of that variety

and then supplies them directly to the Russian military. They're also quite known for being connected to the GRU and the DNC hack. WikiLeaks released 20,000 hacked Democratic National Committee emails. Assange won't say where they got them, but two groups said to have hacked the DNC have been linked to the Russian military intelligence world. They were sanctioned in 2016 for their involvement in that. So this is an organization that's heavily connected

to the Russian intelligence spy industrial complex. The email account that was hacked had everything from target supply lists of different electronics from around the world. That's as far ranging as stuff from Texas Instruments, Panasonic. And then also was weird and as small as something like a Montreal-based AIM Tech, which is a pretty small tech company. After analyzing it, we found out some invoices with the Western companies, suppliers, maybe even some intermediate companies who helped Russians to buy different electronics and equipment from different countries.

And it also had emails asking for different things from different countries. And it also had emails asking for different things from different employees. It had conversations with front companies that would then go get a lot of these things because of the sanctions, companies like STC are using front companies to then go to Chinese distributors or different friendly countries to buy this stuff.

And it also included spreadsheets of lists and lists of semiconductors and capacitors and batteries and DC desync converters. Just tons of electronics that, I mean, to anybody else would seem like total nonsense, but if you put it all together, these are the types of things that can go inside, you know, an Orland 10 drone or any type of ammunition that's smart, that's fired from a network. Just to make, yeah, so just to make sure I totally understand what you're saying here is

the hacker hacks this email address for, I'm assuming, an employee at this company, the Special Technology Center, which makes these Orland drones, right? And there's all sorts of information in the email account that point to all the tech that is being targeted that one would need to make these drones, including tech from Canadian companies. Yes, precisely. But before we kind of dig a little bit more into, you know, how Russia might get that, I just do want to talk about two things. The first is what these drones are. So, you know, we're talking about the Orlan-10 a bunch in this conversation. And what does it do? And why is it so important to Russia's war effort? So the Orlan-10 is an intelligence, surveillance, and reconnaissance unmanned aerial vehicle. So that's in military parlance, that essentially means this thing spies really well.

It's something that goes with a camera, flies pretty quickly, and goes at medium altitude, which makes it a little bit hard to shoot down. It's used constantly by tons of Russian troops. And the major thing it does is targets. So it does targeting on frontline positions. It's sort of this harbinger of death. I had one friend of mine who's a war photographer, and she told me that when she was in Bakhmut, they heard the sound of an Orlan that kept following them. And then shortly thereafter, there was tons of artillery fire. This is something that's known to be an incredible asset of the Russian military in killing Ukrainian frontline troops.

What this thing does is helps target in real time. And that is an incredibly important thing in war and an incredibly important thing in this war in Ukraine. incredibly important thing in this war in Ukraine. And this company, the Special Technology Center, STC, they are making these drones that are being used in the war with Ukraine, right? They're the ones making the Orlon-10. I mean, you can actually go to their website, if you're not blocked from seeing it, and in their offered products, but on their front page, you see this little Orlon-10 image going across the screen. It's that important to them. It's that well known for them. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem.

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50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. Looking at all the documents and the emails that you see from the hack, you know, contracts worth, you know, millions of rubles and a target list of electronics made in Western countries, rubles and a target list of electronics made in Western countries, including, as you mentioned, Canadian companies, Montreal-based AimTech and Expo. I know, and I want to be very clear here,

we don't have any evidence that they knowingly sent this tech to Russia. But what is this technology and what is it used for in the drones? Like, what does it do? What is it actually? There's a global microchip shortage. And a lot of this stuff deals with similar things. It's stuff that creates circuit boards, it's stuff that creates anything that makes weapons smart, that can communicate with a network. So it's stuff like a DC-DC power converter, which is, as I understand it, not an engineer, but it helps for power supply in electronics. But a lot of the stuff that's being targeted is stuff that allows anything to be smart on a network. So it's almost like household products that we know, anything, right you have like a baby monitor that's smart. There's a lot of electronics in there that could be used and then taken and put into

a Russian missile or a drone. So all the stuff that's being targeted is semiconductors, capacitors, microchips, stuff that goes into electronics that can then be communicative with a network. Now, in terms of the actual stuff that AIM Tech and Expo produced, sort of a mixed bag of power converters and lab equipment that helps calibrate electronics. So without getting into too much, with too much nuance, this stuff is very useful to a weapons company that's trying to make and test its weapons and then produce them. Do we have evidence of any of this technology from Western countries being actually found in

downed drones? Like, are the Ukrainians opening up the drones and finding any of this stuff in there? Yes. So the Orlon has been one specific type of drone that's been shot down pretty often and has been deconstructed and there is western electronics inside of it specifically aimtech and expo we have not seen any any evidence of that but i have seen inside of this hacked cache there's invoices for aimtech gear that STC's already seen to have purchased, and this is back in 2022. Expo as well, there's obviously, there's evidence to suggest

that it's been bought and purchased already. Expo says that it does not sell its solutions into Russia, but has no visibility to any potential alternate means of supply via other entities or countries. AIMTECH says its products are neither designed nor intended for military or aerospace applications. But it's also very tough to know how all this stuff is being used and whether or not it's in that specific drone that's shot down.

Because obviously these drones are everywhere. They're shot down all over Ukraine, but you also go and recover them. You can't recover every single one. And they're making them constantly, right? This is the thing about drones in this modern war. They're being shot down and remade or produced at an exponential rate, which also means that they're just getting trashed

at an exponential rate. But the Ukrainian government and the Ukrainian military has made a very concerted effort to gather a lot of this stuff and show, and I think now it's specifically missiles, because they really want to show how much the high-value armaments require Western electronics, to show that this is happening. Because to them, as aid gets held up in Congress, you see some of these electronics in Russian weapons. And I think the Ukrainian perspective is, well, they're getting the stuff and we're not even getting the stuff. Right. So how do we bridge that gap?

And I think it's an incredibly important issue. This is Russian Ambassador to Canada, Oleg Stepanov. doubt that my country is going to use or try to use or try to find sources for that production in the West. I believe in our defense, production were quite self-sufficient. This is the kind of stuff that sanctions are designed to stop, right? Like to stop Russia from making drones that are hurting the Ukrainians. So how is it that this Western tech is able to get there? How is that even happening? It's what STC does and other companies like it. They're not the only ones. They go and they have front companies. So it's another Russian enterprise or another Chinese enterprise or a Hong Kong enterprise or a Turkish enterprise or some sort of company that's not sanctioned that then goes and buys these products in a friendly country like China, like Hong Kong.

I mean, obviously Hong Kong's in China, but in Hong Kong or Turkey or other places that Kazakhstan, for example, has been another place that's been known to front companies purchase things for. And by the way, it's not just electronic. It's a lot of different stuff. And there was one contract that literally was with a front company. And it said to the STC employee, here's the list of the six things we need from the foreign countries that have applied sanctions against Russia. So it's very obvious that even those front companies understand their role in how this works. And most of this stuff, like I said, is coming from China. Because obviously China and Russia are allied to some extent.

And a lot of Canadian and American and Western businesses do a lot of business in China. Canadian and American and Western businesses do a lot of business in China. So that is basically the murkiness and the network that creates this problem. Now, of course, sometimes it's not even as simple as one front company. Evidence suggests some of it is like five front companies that then buy it. That's interesting. So it's very much a merry-go-round. Is there any way to do anything about that? Or is it... So one thing that experts have said is that basically if one...

There's an allied coalition right now that is supporting Ukraine with weapons. If that coalition is strong enough and is trusting enough, which it should be, anytime one of those countries finds, let's say, a distributor or front company and then applies sanctions to it, every other country should in tandem apply sanctions to that company as well. So that's one way of doing it. Now, that hasn't happened. Obviously, I mentioned earlier, like, STC wasn't sanctioned by Canada till 2022. It had been sanctioned by the US for

the DNC Act in 2016. So you see the lag. Right. Countries have to communicate more, there has to be much more coordination on sanctioning. Okay. The other thing too, is to hold companies accountable. From what I understand, it's a little bit of a hands-off approach. Well, we sold it to a company in China. We've adhered to all export and import national security rules. So it's not really in our hands. We didn't intend to do that. But I think there needs to be a little bit more pressure put on those companies,

or at least that's what experts are saying. The only way to stop it is to hit those companies in their bank accounts. And Ben, I guess as we wind this conversation down a little bit, the other thing I'm thinking about is that this tech, it seems so widely available despite the sanctions. And because of that, how is it changing how wars are fought and won? and won. The thing I've noticed is that whether it's tech, ammunition, specifically tech, a lot of this stuff is just, you can buy it as like a consumer good. I mean, the amount of times I've heard that there was some guy in Ukraine who was like a wedding photographer who used a wedding photographer's drone, who was then converted into a drone operator with almost the same drone. And it just shows you that so much of this stuff,

you can just buy at Best Buy and send it over. And a lot of people are. A lot of people are sourcing money, especially in Ukraine and abroad, the diaspora, are sourcing electronics and things that are being used in the front line from consumer goods. So a lot of this, that's sort of what makes it difficult is that, so then you have that layer of it. So there's consumer goods. There's also a layer of it where there's like industrial goods and those

aren't protected. There's stuff like tractor companies that are being targeted for their electronics, you know, because these are incredibly useful. Once you make a tractor smart, it can drive at a certain pace with a certain payload and a certain strength.

You can convert that pretty easily to a tank, right? Like what was secret 10 years ago or top secret 25 years ago is now you can buy it, you know, buy your local technology store. Yeah, that's so interesting. And not only that, I mean, there's stuff like, and people think that, you know, armor, for example,

like armor on front lines, there was a shortage. So what did people do? They started buying armor from different parts of the world and sending it over. In places like Canada and the US, which, by the way, you can't do that. You need like an import-export license to do it. But this is the thing, is that consumer goods are everywhere.

You can get them, and especially electronics. This is a tough ecosystem to police. And as much as the Ukrainian side is getting it, the Russian side's also doing the same thing. Ben, thank you so much for this. This was great. It's always nice to have you.

Thank you for this. Thanks so much for this. This was great. It's always nice to have you. Thank you for this. Thanks so much for having me. All right, that's all for today. I'm Jamie Poisson. Thanks so much for listening. Talk to you tomorrow. For more CBC Podcasts, go to cbc.ca slash podcasts.