White House Denies Clearing Huawei of Spying Charges

U.S. accusations of spying against China’s Huawei have riveted the global business community. With the manufacturing of products increasingly outsourced to China, the implications of communications gear retrofitted for spying is much wider. So when Reuters reported that the “White House review finds no evidence of spying by Huawei,” many news agencies ran the story, even after the White House released a clarification. Within 24 hours in an October 18 statement to eWeek, the White House issued a denial that it has cleared Huawei or any other Chinese technology vendors of spying.

Either way, the basic facts of the investigation into spying by Chinese technology companies as reported by Channelnomics and summarized below remain accurate.

Huawei was the subject of an 18-month spying investigation by the U.S. House Permanent Select Committee on Intelligence. The report culminated in a recommendation that U.S. businesses not do business with Huawei or ZTE Corp., concluding that while the investigation has no direct evidence of spying by the Chinese companies, the data of companies hooked up to their communications equipment could be at potential risk of being accessed by Chinese intelligence concerns. Security experts differ on whether the security "holes" are intentionally incorporated into the technology for espionage purposes or simply "poor security quality control."

Contrary to media reports, the White House denies clearing Huawei of the spying charges in a separate report:

“The Reuters report based solely on anonymous sources, is not correct: the White House has not conducted any classified inquiry that resulted in clearing any telecom equipment supplier, including Huawei,” principal deputy White House press secretary Josh Earnest said in the statement. “In fact, last October, Huawei was excluded from taking part in the building of America’s interoperable, wireless network for first responders due to IS government national security concerns.”

The House Committee on Intelligence was more forthright about communicating security risks posed by Chinese technology companies. Specifically, the report cites concerns over the potential for the Chinese equipment vendor to attack or disrupt U.S. communications, and obtain intelligence information on government activities and economic interests.

Unfortunately for Huawei, the espionage reports are receiving wide media coverage. Investigative news program 60 Minutes was especially critical of Huawei, digging up past allegations of stealing intellectual property from Cisco and Nortel Networks. The news show stated that Communist government officials have offices in Huawei’s Shenzhen corporate headquarters. Longstanding suspicions of Chinese military links originating from Huawei founder Rem Zhengfei’s past career as a Chinese military officer were also restated.

The allegations have surfaced while Huawei has been promoting its data networking equipment in a bid to take more of Cisco’s market share. A number of parties have come to Huawei’s defense, including senior U.S. executive William Plumber, the China Commerce Ministry and Chinese analysts who accuse Cisco of starting the rumors, a charge the network gear maker denies in a letter to the Washington Post. Huawei contends its fate was predetermined, stating that the Congressional report “failed to provide clear information or evidence to substantiate the legitimacy of the committee’s conclusions.”

Huawei is feeling the backlash of the accusations around the globe, including a loss of business opportunities in Australia, Canada, the U.S. and New Zealand. A potential security risk is cited as a major reason for not doing business with a foreign vendor by 70% of those surveyed in a Channelnomics poll, while an equal number of respondents stated that foreign competition is healthy for the U.S. economy. The United Kingdom, meanwhile, has given Huawei a vote of confidence, backed by U.K. Prime Minister David Cameron’s office. In exchange, Huawei’s British friends are benefiting from the telecoms equipment vendor’s generosity. The Chinese company is building a $1 billion headquarters near London where it plans to spend another $1 billion with U.K. suppliers and manufacturers. (CL) Link