US committee: Huawei and ZTE "cannot be trusted"

 

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By Reuters and Barry Collins

Posted on 8 Oct 2012 at 08:49

China's top telecoms equipment makers should be shut out of the US market because potential Chinese state influence on them poses a security threat, a US intelligence committee has recommended.

The US House of Representatives' Intelligence Committee said the pair "cannot be trusted to be free from foreign state influence", based on its 11-month investigation of the two firms.

The US panel's draft report faulted both Huawei and ZTE for failing to satisfy its requests for documents, including detailed information about formal relationships or regulatory interaction with Chinese authorities.

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

US companies thinking about buying from Huawei should "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," panel chairman Mike Rogers said in comments broadcast late on Sunday on the CBS News program 60 Minutes.

The panel said it received credible allegations from unnamed industry experts and current and former Huawei employees suggesting Huawei, in particular, may be guilty of bribery and corruption, discriminatory behaviour and copyright infringement.

The committee plans to refer such allegations to the Justice Department and Department of Homeland Security, according to the draft made available to Reuters. "US network providers and system developers are strongly encouraged to seek other vendors for their projects," it said.

The document cited what it called long-term security risks supposedly linked with the companies' equipment and services. But it did not provide detailed evidence, at least not in an unclassified version. A classified annex provides "significantly more information adding to the committee's concerns," the draft said.

"Cannot be trusted"

Based on classified and unclassified information, Huawei and ZTE, which are both based in Shenzhen, China, "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 document said.

Huawei and ZTE are rapidly becoming "dominant global players" in the telecommunications market, which is intertwined with computerised controls for electric power grids; banking and finance systems; gas, oil and water systems; and rail and shipping, it noted.

Employee-owned and unlisted Huawei is the world's second-biggest maker of routers, switches and telecoms equipment by revenue after Sweden's Ericsson. ZTE ranks fifth. In the global mobile phone sector, ZTE is fourth and Huawei sixth.