Huawei Named Chinese Spy by Ex-CIA Head

Huawei Named Chinese Spy by Ex-CIA Head
By Peter Suciu
E-Commerce Times
Part of the ECT News Network
07/22/13

Chinese firms have been suspected before of spying for their home nation, but this time a prominent U.S. figure says he's aware of concrete evidence of Huawei's activities in that vein. "Almost every company in China is owned by the government one way or another," said analyst Alan Webber. "The line bleeds over between government and private company in China, and it is a huge gray area."

There is hard evidence that Chinese Huawei Technologies has spied for the Chinese government, former U.S. CIA and NSA head Michael Hayden asserted in a recent interview.

The company -- now the world's largest telecommunications equipment maker -- poses an unambiguous national security threat to both Australia and the United States, Hayden said in an interview with The Australian Financial Review.

The Chinese firm has shared extensive knowledge of foreign telecommunications systems, Hayden said. He did not, however, disclose in detail the nature of the evidence.

Hayden is currently principal at the Chertoff Group, a security consultancy, as well as a professor at George Mason University School of Public Policy. He did not respond to our request to comment for this story.

'Put Up or Shut Up'

Huawei was founded in 1988 by ex-military officer Ren Zhengfei as a private company. Today, as a multinational corporation, it has more than 140,000 employees with R&D facilities in China, the United States, Germany, Sweden and Russia.

The company has strongly denied the allegations that it has spied for Beijing.

"Huawei is a world-leading, proven and trusted ICT company,' said Huawei Global Cyber Security Officer John Suffolk in a statement provided to the E-Commerce Times by company spokesperson Jannie Luong. "These tired, unsubstantiated defamatory remarks are sad distractions from real-world concerns related to espionage -- industrial and otherwise -- that demand serious discussion globally.

"Once again, we challenge the individuals and organizations that make these accusations to present the evidence publicly," Suffolk added. "If they will not publish them, they should be taken for what they are: a distraction. 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."

It's time to "put up or shut up," he said.

The Chinese Connection

Huawei is not the only Chinese firm that has been at the center of allegations of spying for the Chinese government, however. In October of last year the United States House of Representatives' intelligence committee urged American firms to stop doing business with not just Huawei but also ZTE.

At the time, the committee warned that the Chinese government could use equipment supplied by these firms to spy on certain communications and even threaten vital systems.

In Australia, it wasn't just warnings; there, the government barred Huawei from involvement in building a national broadband network.

"Almost every company in China is owned by the government one way or another," Alan Webber, industry analyst and managing partner at the Altimeter Group, told the E-Commerce Times. "It also depends on what your definition of spying is.

"The line bleeds over between government and private company in China, and it is a huge gray area," added Webber, "but we need to ask: Would a U.S. company turn over information to the CIA or NSA? It is possible. Corporations have been used for cover for government agencies."

'Reason to Be Suspicious'

Given that Chinese firms have been at the center of past allegations, it's perhaps not all that surprising that Huawei is at the center of it again.

"There is certainly reason to be suspicious of Huawei, although the report earlier this year from Congress provided no smoking gun," said Jon Lindsay of the University of California Institute on Global Conflict and Cooperation. "Australia and the UK have also taken action to restrict investment in the company.

"There may be more that's classified we don't know, but there is at least some legitimate circumstantial grounds for suspicion," Lindsay told the E-Commerce Times. "Denials are normal from China, even when the evidence is more convincing than in the case of Huawei."

That said, however, Huawei is a global company and must remain globally competitive, Lindsay pointed out.

"Moreover, it likely has incentives to limit the level of blatant interference that the Chinese government makes for the purpose of espionage," he noted -- "all the more so as the controversy increases."

Conflicts of Interest?

Also worth noting, meanwhile, is that Hayden is on the board of directors at Motorola Solutions, which produces radios, smart tags, barcode scanners and safety products.

In the past, Motorola Solutions and Huawei have been engaged in intellectual property disputes.

"This news is really undercut by Hayden's affiliation with Motorola," Jeffrey Silva, senior policy director for telecommunications, media and technology at Medley Global Advisors, told the E-Commerce Times. "This could give Huawei something to counter with. In this case, the perception has somewhat become a reality."

'The Market Imperatives'

Of course, spying has been part of diplomacy and international relations for years. Yet while the trade craft continues to evolve, so, too, do the players. An especially complicating factor these days is what happens when the corporate interests of large, multinational corporations aren't compatible with those of their home nations.

"Even if there is Chinese government tampering in Western supply chains through Huawei equipment, there are real limits to what could potentially be done," said Lindsay. "Huawei has to ensure that its equipment works reliably well almost all the time if it is to put its equipment into position where it can make money, let alone support Chinese collection.

"If you are a company in the business of mass-producing standardized commodity equipment, how are you supposed to target it against particular targets for espionage?" Lindsay concluded. "Market imperatives tend to really limit the potential for Huawei's involvement in meaningful espionage."