ZTE and Huawei are a Security Threat to the U.S., Congressional Panel Warns

Tensions with China's government are already at an uncomfortable level, but who would have guessed that they would trickle into mobile? Yet that's exactly what's happening, following an investigation by a congressional panel into Chinese telecom firms Huawei and ZTE. According to the resulting House Intelligence Committee report, the two firms pose a security threat to the U.S. and therefore shouldn't be allowed to engage in any mergers or acquisitions within our country's borders.

Before launching a formal investigation, the congressional committee said it performed a preliminary review, which set off red flags in terms of available information about the Chinese telecommunications sector, the histories of Huawei and ZTE, and their potential ties to the Chinese government and military. The underlying fear is that either or both telecommunication firms could pass on sensitive data and intelligence services to the Chinese government, which is "already known to be a major perpetrator of cyber espionage."

Huawei Building

"Despite hours of interviews, extensive and repeated document requests, a review of open-source information, and an open hearing with witnesses from both companies, the Committee remains unsatisfied with the level of cooperation and candor provided by each company," the report states. "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. Furthermore, neither company provided detailed information about its operations in the United States. Huawei, in particular, failed to provide thorough information about its corporate structure, history, ownership, operations, financial arrangements, or management. Most importantly, neither company provided sufficient internal documentation or other evidence to support the limited answers they did provide to Committee investigators."

The congressional committee also claims that it received tips from both industry experts and past and present Huawei employees suggesting that the company may be violating U.S. laws already.

At the end of the day, the report recommends the U.S. should be suspicious of Chinese telecommunication companies seeking entry into the U.S. market, especially when it comes to using their equipment in U.S. government systems.

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