Huawei, ZTE Hit By House Intelligence Committee

Huawei-ZTE Investigative Report (FINAL)[1]The House Intelligence Committee has issued a detailed report on its investigation of Huawei and ZTE, the Chinese telecom equipment giants. It’s a professional and bipartisan piece of work, some 50 densely footnoted pages long.

In 2011, Huawei asked for an investigation so it could answer suspicions that it might enable Chinese interception of US communications. But when the House Intelligence Committee obliged, things quickly went downhill.

As the report makes clear, neither Huawei nor ZTE fully answered the committee’s questions or produced internal documents.  ZTE even went so far as to say that its internal documents couldn’t be released for fear of violating China’s state secrets laws. Predictably, this only confirmed the committee’s suspicions:

 ”To the extent ZTE cannot provide detailed and supported answers to the Committee because China’s laws treat such information important to the  security of the Chinese regime,  the Committee’s core concern that ZTE’s presence in the U.S. infrastructure represents a national-security concern is enhanced.”

But it is Huawei that comes in for the harshest treatment, perhaps because the company was even less cooperative than ZTE.  Although the committee manages to extract more information than anyone else about Huawei’s corporate organization, the committee judges Huawei’s overall response ”obstructionist” and describes some of its witness’s testimony as “obviously untrue.” Short of a referral for perjury, it’s hard to imagine a worse outcome.

The committee does not find a smoking gun showing that Chinese equipment is being used for surveillance, though its report explains why it would be hard to prove such suspicions. What the report does find are some troubling reports by Huawei employees, including a strong suggestion that Huawei is helping the Peoples Liberation Army to launch cyberattacks:

 The Committee also received internal Huawei documentation from former Huawei employees showing that Huawei provides special network services to an entity the employee believes to be an elite cyber-warfare unit within the PLA.  The documents appear authentic and official Huawei material, and the former employee stated that he received the material as a Huawei employee. These documents suggest once  again that Huawei officials may not have been forthcoming when describing the company’s R&D or other activities on behalf of the PLA.

The committee also heard from other whistleblowers, and its report refers charges of immigration, corruption, and intellectual property violations to the executive branch for investigation and possible prosecution. It’s likely that Huawei and ZTE are in for years of additional investigation.  

As if that weren’t enough punishment, the committee report comes one day after a harsh 60 Minutes story on Huawei covered much the same ground.

It’s been a tough week already for ZTE and Huawei. 

And it’s only Monday afternoon.

 

DISCLOSURE: My law firm currently represents Huawei in a patent dispute.  I have no involvement in the matter.