Huawei and ZTE pose security threat, warns US panel

 
Charles Ding of Huawei Technologies and Zhu Jinyun of ZTE Officials from Huawei and ZTE have been questioned by US lawmakers as part of the probe

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Chinese telecom firms Huawei and ZTE pose a security threat to the US, a congressional panel has warned after an investigation into the two companies.

The two firms should be barred from any US mergers and acquisitions, according to a House Intelligence Committee report.

The panel says the firms failed to allay fears about their association with China's government and military.

Huawei and ZTE denied the accusations in front of the panel in September.

On Monday ZTE issued a statement insisting its equipment met all US standards and posed no threat.

'National security' fear

"ZTE has set an unprecedented standard for co-operation by any Chinese company with a congressional investigation," China's Xinhua news agency quoted the firm as saying.

Start Quote

Huawei and ZTE cannot be trusted”

End Quote House Intelligence report

Huawei's vice-president, William Plummer, said the latest accusations were "dangerous political distractions".

"Purporting that Huawei is somehow uniquely vulnerable to cyber mischief ignores technical and commercial realities, recklessly threatens American jobs and innovation, does nothing to protect national security."

While the House Intelligence report stopped short of calling for a boycott of the firms' mobile phone products, it was highly critical of the two companies.

"China has the means, opportunity and motive to use telecommunications companies for malicious purposes," the report says.

"Based on available classified and unclassified information, Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems."

The panel said their investigation had received credible allegations from current and former Huawei employees of bribery and corruption, discriminatory behaviour and copyright infringement.

Republican committee chairman Mike Rogers said they had passed on information to the FBI to investigate the allegations.

"We've come to the conclusion, unfortunately, they are not private entities," Mr Rogers said on Monday.

On Sunday, Mr Rogers delivered a blunt verdict to the 60 Minutes programme on US network CBS.

"If I were an American company today... and you are looking at Huawei, I would find another vendor if you care about your intellectual property, if you care about your consumers' privacy, and you care about the national security of the United States of America," he said.

Among the report's recommendations were to exclude any Huawei or ZTE equipment or component parts from being used by government contractors, as well both companies becoming "more transparent and responsive to US legal obligations".

China's Foreign Ministry urged the US to "set aside prejudices" regarding the two firms.

"Chinese telecoms companies have been developing their international business based on market economy principles," ministry spokesman Hong Lei said.

"Their investment in the United States embodies the mutually beneficial nature of Sino-American economic and trade relations."

Espionage fears

Huawei was started by Ren Zhengfei, a former member of the People's Liberation Army, in 1987.

House Intelligence Committee Chairman Mike Rogers and Representative Dutch Ruppersberger hold a news conference 8 October 2012 "We've come to the conclusion, unfortunately, they are not private entities," Mr Rogers (left) said

As the firm has grown to become one of the largest global players in the sector, fears about its ties with the Chinese military have frequently surfaced.

There have been concerns and allegations that it was helping China gather information on foreign states and companies, charges that the firm has denied.

Last year, its purchase of American computer company 3Leaf systems, was rejected by a US security panel.

Earlier this year, it along with ZTE, faced allegations that some of their equipment had been installed with codes to relay sensitive information back to China.

Senior executives from the two companies denied those allegations when they appeared before US lawmakers in September.

ZTE is also facing accusations it sold US telecoms equipment to Iran, in breach of US sanctions. Telecoms giant Cisco on Monday ended its relationship with ZTE, Reuters reported, after its equipment was included in the Tehran deal.

Political distraction?

This latest report comes in the midst of a US presidential campaign in which China has become a hot topic.

Both President Barack Obama and his Republican challenger Mitt Romney have pledged to increase the pressure on Beijing on issues ranging from China's currency policy to state subsidies for Chinese firms.

Earlier this month, Mr Obama signed an order blocking a deal by a Chinese firm, Ralls Corp, to acquire four wind farm projects near a US naval facility in Oregon.

It was the first foreign investment to be blocked in the US for 22 years.

The Chinese firm has since sued Mr Obama, alleging the US government overstepped its authority.

 

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  • rate this
    +1

    Comment number 290.

    @279
    No worries :)

    Since civil projects often have a substantial dollar value attached, all IT security should be regarded as important..bottom line, it is just as likely your security breach occurred via a 'trusted source' channel by accident (this applies to casual web users too), rather than the dark arts of international espionage..there is a lot of crime syndicate, keylogging malware about

  • rate this
    +3

    Comment number 289.

    BT chose Huawei kit for core of exchange modernisation.
    If US concerns are true, then the UK is deep in the mire.
    We will find out any Trojan horses if diplomatic relations go bad.
    Or if cyberwar heats up.

  • rate this
    0

    Comment number 288.

    WHY is the US so reliant on lil' ol' China IF the US is as GREAT as 99.9% of Americans think they are? It just beats the heck out of me! All I ever see in store is "Made in China"!
    OH! It's ALL to do with the rich investing in cheap labour and NOT giving a **** about their own country!
    God Help America!

  • rate this
    +6

    Comment number 287.

    The US is a sovereign, independent state. It can do whatever it wants to protect the American people and its interests. Quit whining Chinese people and red commie supporters. Deal with it.

  • rate this
    +1

    Comment number 286.

    Election time and Obama, believes that we can make nice with the world, borrow 40% of our money from China, speak to Russia off mic, demand from the euro; “no problems until after the election” without any repercussions, a nightmare!
    1 poster put it, China does not play nice. Well better to face that monster now. Obama is on a mission to be more like the world, we left Europe for a reason.

  • rate this
    +1

    Comment number 285.

    Sorry; my previous submission should have been marked @Lamna Nasus. Also... porbeagle shark? With a knowledge of intelligence matters? Should we humans be concerned?

  • rate this
    +7

    Comment number 284.

    This is NOT about protectionism. If it was, the U.S would be cutting ties with Swedish owned Ericcson and French owned Alcatel. This is about protecting national interests from a company that is ultimately controlled by an outside government known for massive cyber attacks. Maybe they should crack down on copyright infringements and their own unfair trade practices before whining to the U.S. gov..

  • rate this
    +4

    Comment number 283.

    It's about time the US took a strong stand on internal public and private sector security. Let's build our own systems with US technology and get back into a leading, position in science and manufacturing, for the health of our country and the world. China has never been shy about stealing patens, art, or technology why should they be believed now. Again, it is about time!

  • rate this
    +3

    Comment number 282.

    You damn right the US is denying access to our markets! Anyone in the world with half a brain would do the same thing! Does the cold war, tienimen square, illegal additives to food sources, copyright infringements, illegal replication of American products, money laudering& counterfeiting and communism ring a bell to you. China has a long history of illegal and unscrupulous practices.

  • rate this
    0

    Comment number 281.

    forchina

  • rate this
    +4

    Comment number 280.

    This USA panel has every right to make these recommendations, especially after a year long investigation. If China doesn't like it, then they can sell their junk elsewhere. I am sick of any whining from a country that practices anything but free market pratices.

  • rate this
    +1

    Comment number 279.

    Precautions were taken, but it was necessary to share data with the other companies. I am retired and was working as a contractor for an entirely civil project. No compromise of any sensitive data, but still of concern. My aim was to highlight the different approaches taken by companies in the UK and those abroad, and why it is appropriate to be careful; as you have. Thanks!

  • rate this
    +3

    Comment number 278.

    @271
    As a former Intelligence Officer, you should have the contacts to find out how and why the hack occurred and what was copied..indeed if you where in Pakistan and working with Huawei, I would have thought it would be a priority..seems rather slack to assume attempts to compromise IT will not be made..routinely check kit accordingly, always use counter measures and don't use 'loan' IT kit, no?

  • rate this
    -1

    Comment number 277.

    A wake up call to China, the US and Australia are ganging up on China made high tech products.

    And the iPhone in China is a spy device, used by the US govt.to spy on the Chinese companies that do business with the US.

  • rate this
    +2

    Comment number 276.

    Elements within China have been at the forefront of Industrial espionage for technology transfer and spying for secrets for the last decade or so, so you'd have to be absolutely daft to allow Chinese companies to install their cheaper tech into your infrastructure and systems.

  • rate this
    +1

    Comment number 275.

    If we give everything to the Chinese, we won't have to worry about them hacking into the White House or Pentagon anymore. They have shown they are not to be trusted. Bad enough to ship so many jobs to them, but to take the ones we have left will spark demand for many political changes here. Europe take note.

  • rate this
    0

    Comment number 274.

    "273.Naple
    12 Minutes ago

    US spends 3 times the amount compared to China; because of the red tape amassed in our 'democratic' world. Without the red tape the US would be paying considerably less."

    I'd like to see the evidence for that.

  • rate this
    0

    Comment number 273.

    268. donnocha
    This is about security, how can BBC not get this, and the above statement is untrue:
    http://en.wikipedia.org/wiki/List_of_countries_by_research_and_development_spending

    [Link 2]

    US spends 3 times the amount compared to China; because of the red tape amassed in our 'democratic' world. Without the red tape the US would be paying considerably less.

  • rate this
    +1

    Comment number 272.

    Here's an interesting blog from Smartplanet, regarding R&D expenditure.

    http://www.smartplanet.com/blog/business-brains/united-states-will-lead-2011-r-d-funding-china-now-no-2/12616

  • rate this
    +3

    Comment number 271.

    I worked for a month in Pakistan and Huawei was one of the companies I worked with. Later, during the same trip, my PC was accessed externally and data copied from it. As a former UK intelligence Officer, I am sure the hacking occurred. Whether this company was involved or not I do not know, so I make no accusations, but someone did it...

 

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