Intelligence Committee Says Chinese Technology Giant Threat To National Security

(Newsroom America) -- The U.S. House Intelligence Committee has issued a report saying Chinese telecom firms Huawei and ZTE pose a threat to national security and the two firms should be barred from any US mergers and acquisitions.

Huawei, a global Fortune 500 company, has responded saying the report employs "many rumors and speculations to prove non-existent accusations" and claimed the real purpose of the investigations was to obstruct Chinese ICT companies entering the US market.

In February 2011, Huawei Technologies Company published an open letter to the U.S. Government denying security concerns with the company or its equipment, and requesting a full investigation into its corporate operations, which sparked the intelligence committee investigation.

The Committee’s main goal was to better understand the level of risk posed to the United States as these companies hope to expand in the United States.

It said it remains unsatisfied with the level of cooperation and candor provided by each company.

"Neither company was willing to provide sufficient evidence to ameliorate the Committee’s concerns. Neither company was forthcoming with detailed information about its formal relationships or regulatory interaction with Chinese authorities. Neither company provided specific details about the precise role of each company’s Chinese Communist Party Committee," it said in the report.

The Committee said it found that the companies failed to provide evidence that would satisfy any fair and full investigation.

"Although this alone does not prove wrongdoing, it factors into the Committee’s conclusions below. Further, this report contains a classified annex, which also adds to the Committee’s concerns about the risk to the United States. The investigation concludes that the risks associated with Huawei’s and ZTE’s provision of equipment to U.S. critical infrastructure could undermine core U.S. national-security interests."

The Committee made four recommendations:

* The United States should view with suspicion the continued penetration of the U.S. telecommunications market by Chinese telecommunications companies.

* Private-sector entities in the United States are strongly encouraged to consider the long-term security risks associated with doing business with either ZTE or Huawei for equipment or services.

* Committees of jurisdiction within the U.S. Congress and enforcement agencies within the Executive Branch should investigate the unfair trade practices of the Chinese telecommunications sector, paying particular attention to China’s continued financial support for key companies.

* Chinese companies should quickly become more open and transparent, including listing on a western stock exchange with advanced transparency requirements, offering more consistent review by independent third party evaluators of their financial information and cyber-security processes, complying with U.S. legal standards of information and evidentiary production, and obeying all intellectual-property laws and standards.

Huawei responded to the report saying the United States is a country ruled by law, where all charges and allegations should be based on solid evidence and facts.

"The report conducted by the House Permanent Select Committee on Intelligence (the Committee), which took 11 months to complete, failed to provide clear information or evidence to substantiate the legitimacy of the Committee's concerns," it said.

Huawei said it adopted a transparent approach in providing information to ensure the results were fact-based and unbiased, hoping the Committee's objective review of its business activities and the global cyber security issue could clarify the misperception of Huawei.

"However, despite our best effort, the Committee appears to have been committed to a predetermined outcome."

It said the report does not address the challenges faced by the ICT industry.

"Almost every ICT firm is conducting R&D, software coding and production activities globally; they share the same supply chain, and the challenges on network security is beyond a company or a country. The Committee's report completely ignored this fact. We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the US market."

(C) Newsroom America 2012