Telcordia Hire 'Not CFIUS Compliant,' ex-Employee Suit Says; Company Denies That

Telcordia disputed the “meritless” allegations and said it expects to be vindicated in court. The FCC, which conditionally chose Telcordia as LNPA, couldn’t verify the accuracy of the allegations, but said it takes them seriously, had notified national security partners and would take any actions needed to secure the numbering database.

Meanwhile, a partially redacted version of the LNPA master service agreement (MSA) that North American Portability Management negotiated with Telcordia (also called iconectiv) was filed by NAPM and posted, along with other lengthy documents, in FCC docket 09-109 Tuesday. NAPM originally submitted a completely redacted MSA under an FCC protective order, but LNPA incumbent Neustar and others asked it to be made public (see 1604120038 and 1604210037). “Because the contract was improperly withheld, we are just now getting a look at it,” a Neustar spokesperson emailed. “It is hundreds of pages long. This only further emphasizes the need for the Commission to ensure that interested parties have an appropriate opportunity for review -- and reaffirms the value of transparency in this complex transition.” A draft FCC order to approve the MSA is pending.

Former iconectiv employee Michael Stern filed his suit against Telcordia/iconectiv, Ericsson and others March 28 in Superior Court of New Jersey Law Division, Middlesex County. The suit was sent to the FCC April 13 by an unidentified party and posted Monday by the Office of General Counsel.

Stern's suit noted that the FCC in 2015 recommended iconectiv be the next LNPA, and it also said CFIUS requires cases involving government contractors to comply with DOD security regulations. Those include special obligations for “contractors working with classified information or technology, if, like iconectiv, they become subject to foreign ownership, control or influence,” the suit said.

The suit said Stern was employed by iconectiv June 2013-November 2015, when he was “unlawfully terminated.” It said Stern received positive job reviews, including initially from a new supervisor, defendant Sean Taylor, vice president-network operations, in summer 2015. To fill positions he created, Taylor began hiring employees he previously knew but who lacked qualifications, undermining iconectiv operations, the suit said. That led Stern to question Taylor’s “loyalty to the company and his ability to adhere to company policies, procedures and pertinent laws,” it said. After Stern underwent back surgery in August and took two months of leave, Taylor "inundated" him with work demands over Stern's objections, it said.

Stern learned from other employees that one new hire "was not CFIUS compliant," the suit said. The individual "would ultimately be in charge of and given access to the Company’s servers and electronic storage," the suit said. “Plaintiff was concerned that the foregoing would be an outright violation of Ericsson's agreement under the National Security Act of 2007, would risk iconectiv's ability to continue operations of several Subject Telcordia Products (STP's) in the United States and that the violation would disqualify iconectiv from entering into" the LNPA contact, it said.

Stern’s position was downgraded after he instructed another complaining employee to approach Taylor about the concerns, and Taylor retaliated further against Stern after he returned to work, the suit said. Outlining “Plaintiff’s Whistleblower Activity,” the suit said Stern discussed the situation with iconectiv President Richard Jacowleff, and noted “there was an individual who was wrongfully permitted to gain access to the restricted applications/data and that iconectiv was therefore not CFIUS compliant, and that such non-compliance would risk the LNPA contract.” Stern identified the individual and said Taylor had “impermissibly authorized clearance despite” Stern’s prior objections, the suit said. Despite receiving assurances there would be no retaliation, Stern was terminated by Taylor Nov. 9, it said. The suit alleged the termination violated public policy and a New Jersey state law protecting “conscientious employees,” while inflicting emotional distress. It asked for a jury trial.

Telcordia investigated the allegations and found them "meritless,” outside counsel John Nakahata of Harris Wiltshire said in a response posted Tuesday that noted conversations with aides to FCC Chairman Tom Wheeler and other commissioners. “Telcordia’s investigation concluded that the individuals hired during the time in question met all applicable obligations. Telcordia is committed to upholding its obligations, and takes seriously any allegations with respect to those obligations. Telcordia strongly disputes all the allegations in the complaint, and believes it will be vindicated in court.”

The FCC can’t verify the accuracy of the allegations but takes them “very seriously,” a commission spokesman said Tuesday. “We have notified our federal national security partners and are thoroughly reviewing the matter. We will take all necessary action to ensure the security of the numbering database.” A spokesperson for the Department of the Treasury, which chairs CFIUS, declined comment, noting: “By law, information filed with CFIUS may not be disclosed by CFIUS to the public.”

The FCC had noted the CFIUS review in its order conditionally choosing Telcordia as the next LNPA. The commission also noted Neustar allegations that Telcordia could as LNPA use foreign software to run the Number Portability Administration Center/Service Management System (NPAC/SMS), and use NPAC software in foreign countries, posing risks to U.S. LNP security. “Telcordia responds that the ‘U.S. NPAC will be built in America from the ground up,’ and declares that it ‘will not use foreign code in the U.S. NPAC nor will it use U.S.[-developed] code elsewhere in the world.’ It continues that Telcordia employees working on NPAC/SMS systems will be U.S. citizens who will be closely screened, vetted, trained, and supervised,” the FCC order said in paragraph 125.