Evidence of Huawei Spying, Former Intelligence Chief Says

Michael Hayden, also the former head of the U.S. National Security Agency (NSA), said in an interview with the paper that Huawei had "shared with the Chinese state intimate and extensive knowledge of the foreign telecommunications systems it is involved with".

"I think that goes without saying," he was quoted as saying.

The newspaper reported Hayden said intelligence agencies have hard evidence of spying activity by the world's No. 2 telecoms equipment maker. It did not detail that evidence.

Huawei, founded in 1987 by former People's Liberation Army officer Ren Zhengfei, has repeatedly denied being linked to the Chinese government or military or receiving financial support from either.

Hayden is a director of Motorola Solutions, which provides radios, smart tags, barcode scanners and safety products. Huawei and Motorola Solutions Inc had previously been engaged in intellectual property disputes for a number of years.

Huawei Global Cyber Security Officer John Suffolk described the comments made by Hayden as "tired, unsubstantiated defamatory remarks" and challenged him and other critics to present any evidence publicly.

"Huawei meets the communication needs of more than a third of the planet and our customers have the right to know what these unsubstantiated concerns are," Suffolk said in a statement emailed to Reuters. "It's time to put up or shut up."

The report came a day after Britain announced it would review security at a cyber centre in southern England run by Huawei to ensure that the British telecommunications network is protected.

In October 2012, the U.S. House of Representatives' Intelligence Committee urged American firms to stop doing business with Huawei and ZTE Corp., warning that China could use equipment made by the companies to spy on certain communications and threaten vital systems through computerized links.

The Australian government has barred Huawei from involvement in the building of its A$37.4 billion ($34.25 billion) National Broadband Network.

(Reporting By Jane Wardell; Editing by Paul Tait)

Huawei to Open Research Center in Finland

PARIS — Huawei Technologies, a Chinese maker of telecommunications equipment, said on Monday that it planned to open a research and development center in Helsinki next year, accelerating its investments in Europe, where its business is expanding rapidly.

The move illustrates a trans-Atlantic difference in attitudes toward Huawei. The company has been largely shut out of the United States market for network gear because of Congressional concerns about possible security threats — fears the company insists are unfounded.

While Huawei has faced difficulties in some European markets, like France, it has done better elsewhere. Huawei employs more than 7,000 people in the region, and it says that total could double in the next three to five years. Huawei already has a research center in Italy and is studying the possibility of opening one in Spain. It also recently announced a $2 billion investment in Britain.

The planned center in Helsinki, involving an investment of 70 million euros, or about $90 million, will work on smartphone development, including features like user interfaces and power management, the company said. When the center opens next year, it will employ 30 people, but this could grow to 100 over the next five years, the company said.

The announcement is a plus for the Finnish technology industry, which has been suffering from the woes at Nokia. The company was once the world’s biggest cellphone maker, but its market share has fallen sharply in recent years.

“The open and innovative environment in Finland,” Huawei said, “is an ideal place for Huawei to strengthen our global R.& D. capabilities for devices, creating opportunities for both Huawei and the Finnish telecommunications industry.”

Huawei has been known mostly for its network equipment, but the company is pushing to make a name for itself with its handsets.

Mobile devices accounted for 22 percent of its revenue last year, an increase of 37 percent. That compares with growth of 12 percent for the overall business.

U.S. Panel Calls Huawei and ZTE ‘National Security Threat’

The House Intelligence Committee said that after a yearlong investigation it had come to the conclusion that the Chinese businesses, Huawei Technologies and ZTE Inc., were a national security threat because of their attempts to extract sensitive information from American companies and their loyalties to the Chinese government.

The companies sell telecommunications equipment needed to create and operate wireless networks, like the ones used by Verizon Wireless and AT&T. Many of the major suppliers of the equipment are based outside the United States, creating concerns here about the security of communications.

Those concerns are most acute about Huawei and ZTE because of their close ties to the Chinese government, which the committee said has heavily subsidized the companies. Allowing the Chinese companies to do business in the United States, the report said, would give the Chinese government the ability to easily intercept communications and could allow it to start online attacks on critical infrastructure, like dams and power grids.

The release of the report comes as both presidential candidates have spoken of the importance of United States ties with China and have promised to act strongly on Chinese currency and trade practices that are damaging to American business interests.

Mitt Romney, the Republican presidential candidate, has called repeatedly during his campaign for a more confrontational approach to China on business issues, although he has focused his warnings more on Chinese currency market interventions than on the activities of the nation’s telecommunications companies.

President Obama has also taken a tougher stance on China recently. Late last month, Mr. Obama, through the Committee on Foreign Investment, ordered a Chinese company to divest itself of interests in four wind farm projects near a Navy base in Oregon where drone aircraft training takes place. It was the first time a president had blocked such a deal in 22 years.

The Obama administration has also filed a case at the World Trade Organization in Geneva accusing China of unfairly subsidizing its exports of autos and auto parts, the ninth trade action the administration has brought against China.

“We have a process that is not aimed at one specific company but using all the assets and parts of U.S. government aimed at protecting our telecommunications and critical infrastructure,” a senior White House official said.

The report was released on Monday morning at a news conference held by

Representative Mike Rogers, Republican of Michigan, the chairman of the House Intelligence Committee, and Representative C. A. Ruppersberger of Maryland, the top Democrat on the committee.

They said that the United States government should be barred from doing business with Huawei and ZTE and that American companies should avoid buying their equipment.

The report said the committee had obtained internal documents from former employees of Huawei that showed it supplied services to a “cyberwarfare” unit in the People’s Liberation Army.

The United States government, the report said, should go through the Committee on Foreign Investment in the United States, an interagency panel that reviews the national security implications of foreign investments, to carry out its recommendations. It also said that committee should block any mergers and acquisitions involving the Chinese companies and American businesses.

In the course of the investigation, the House committee said it had uncovered evidence of economic espionage — and officials said on Monday that they planned to hand over the evidence to the F.B.I.

Former and current employees for Huawei, the report said, told investigators for the committee that the company had committed “potential violations” in the United States related to immigration, bribery, corruption and copyright infringement.

Huawei has been the focus of criticism and security warnings for years, including by the Defense Department. Its expansion plans in the United States have faced resistance from Congress over questions about its ties to the military in China.

Huawei denies being financed to undertake research and development for the Chinese military, and its executives have repeatedly insisted that they have nothing to hide. The company issued an open letter to the United States government in February 2011, asking for an inquiry to clear up what it characterized as misperceptions about its history and business operations.

Michael S. Schmidt reported from Washington and Christine Hauser from New York. Keith Bradsher contributed reporting from Hong Kong, and Quentin Hardy from San Francisco.

Huawei, Chinese Telecom Company, Finds Warmer Welcome in Europe

Declaring that Britain was “open for business,” Mr. Cameron announced that his guest, Ren Zhengfei, the chief executive of Huawei, had agreed to expand the company’s already sizable operations in Britain with an investment of £1.2 billion, or $2 billion.

Given the typically close cooperation between the United States and Britain on security issues, the trans-Atlantic divide over Huawei and another Chinese equipment provider, ZTE, is striking. On Monday, the Intelligence Committee of the U.S. House of Representatives branded the companies security threats and raised the possibility that their gear could be used to spy on American interests if used in U.S. telecommunications networks.

Huawei has rejected the allegations as “little more than an exercise in China bashing and misguided protectionism.”

By contrast, said Roland Sladek, a spokesman for Huawei, “Europe is almost like a second home market for us.”

And for good reason. Huawei means jobs and investment for Britain and, more broadly, for Europe. The company already has 800 employees in Britain and a research center in Ipswich. The investment announced by Mr. Ren is expected to create 700 jobs in five years and additional technical centers in the country. In all, the company has about 7,300 employees in Europe.

Mr. Cameron’s government said it had no plans to change its relationship with the Chinese company in the wake of the U.S. committee’s recommendations. But in a trust-but-verify approach to the partnership, Huawei set up a Cyber Security Evaluation Center two years ago in Banbury, England. There, its engineers work alongside officials of Government Communications Headquarters, a British spy agency, to vet Huawei equipment for use in Britain.

“We recognize, of course, that no systems can be completely invulnerable, but by working together we can mitigate some of the risks,” said a spokesman for the Cabinet Office in London, who asked not to be identified as a matter of government policy.

Huawei counts as its customers many of the biggest telecommunications companies in Europe, including BT and Vodafone of Britain, Telefónica of Spain and Everything Everywhere, a partnership between France Télécom and Deutsche Telekom in Britain. The company’s equipment is in high demand, analysts say, as those companies scramble to roll out next-generation wireless broadband networks.

ZTE’s European telecommunications clients include KPN of the Netherlands. In Sweden ZTE is working with Hutchison Whampoa of Hong Kong on a high-speed wireless network.

As the world’s second-largest supplier of telecommunications network equipment, after Ericsson of Sweden, Huawei generated only 4 percent of its $32.4 billion in revenue in 2011 in the United States. In Europe, Huawei has gotten a friendlier welcome. Europe accounted for nearly 12 percent of its revenue last year, and sales in the region rose 26 percent last year, more than twice the company’s worldwide growth rate.

BT, which uses Huawei gear in the metal-clad sidewalk boxes where local telephone lines are fed into the company’s network, considers Huawei a “trusted equipment supplier,” the company said.

“We find them to be good value and high quality — that’s why they have been chosen as a supplier in a fiercely competitive international market,” BT added.

The company declined to comment on whether it had received any requests from U.S. officials to stop doing business with Huawei. The Cabinet Office spokesman said he was unaware of any such pressure.

“We don’t see this as an issue that affects our relationship,” he said.

U.S. Panel Calls Huawei and ZTE ‘National Security Threat’

The House Intelligence Committee said that after a yearlong investigation it had come to the conclusion that the Chinese businesses, Huawei Technologies and ZTE Inc., were a national security threat because of their attempts to extract sensitive information from American companies and their loyalties to the Chinese government.

The companies sell telecommunications equipment needed to create and operate wireless networks, like the ones used by Verizon Wireless and AT&T. Many of the major suppliers of the equipment are based outside the United States, creating concerns here about the security of communications.

Those concerns are most acute about Huawei and ZTE because of their close ties to the Chinese government, which the committee said has heavily subsidized the companies. Allowing the Chinese companies to do business in the United States, the report said, would give the Chinese government the ability to easily intercept communications and could allow it to start online attacks on critical infrastructure, like dams and power grids.

The release of the report comes as both presidential candidates have spoken of the importance of United States ties with China and have promised to act strongly on Chinese currency and trade practices that are damaging to American business interests.

Mitt Romney, the Republican presidential candidate, has called repeatedly during his campaign for a more confrontational approach to China on business issues, although he has focused his warnings more on Chinese currency market interventions than on the activities of the nation’s telecommunications companies.

President Obama has also taken a tougher stance on China recently. Late last month, Mr. Obama, through the Committee on Foreign Investment, ordered a Chinese company to divest itself of interests in four wind farm projects near a Navy base in Oregon where drone aircraft training takes place. It was the first time a president had blocked such a deal in 22 years.

The Obama administration has also filed a case at the World Trade Organization in Geneva accusing China of unfairly subsidizing its exports of autos and auto parts, the ninth trade action the administration has brought against China.

“We have a process that is not aimed at one specific company but using all the assets and parts of U.S. government aimed at protecting our telecommunications and critical infrastructure,” a senior White House official said.

The report was released on Monday morning at a news conference held by

Representative Mike Rogers, Republican of Michigan, the chairman of the House Intelligence Committee, and Representative C. A. Ruppersberger of Maryland, the top Democrat on the committee.

They said that the United States government should be barred from doing business with Huawei and ZTE and that American companies should avoid buying their equipment.

The report said the committee had obtained internal documents from former employees of Huawei that showed it supplied services to a “cyberwarfare” unit in the People’s Liberation Army.

The United States government, the report said, should go through the Committee on Foreign Investment in the United States, an interagency panel that reviews the national security implications of foreign investments, to carry out its recommendations. It also said that committee should block any mergers and acquisitions involving the Chinese companies and American businesses.

In the course of the investigation, the House committee said it had uncovered evidence of economic espionage — and officials said on Monday that they planned to hand over the evidence to the F.B.I.

Former and current employees for Huawei, the report said, told investigators for the committee that the company had committed “potential violations” in the United States related to immigration, bribery, corruption and copyright infringement.

Huawei has been the focus of criticism and security warnings for years, including by the Defense Department. Its expansion plans in the United States have faced resistance from Congress over questions about its ties to the military in China.

Huawei denies being financed to undertake research and development for the Chinese military, and its executives have repeatedly insisted that they have nothing to hide. The company issued an open letter to the United States government in February 2011, asking for an inquiry to clear up what it characterized as misperceptions about its history and business operations.

Michael S. Schmidt reported from Washington and Christine Hauser from New York. Keith Bradsher contributed reporting from Hong Kong, and Quentin Hardy from San Francisco.