Chinese telecom firm tied to spy ministry
CIA: Beijing funded Huawei
By
Bill Gertz
The Washington Times
Tuesday, October 11, 2011
A
U.S. intelligence report for the first time links
China’s largest telecommunications company to Beijing’s
KGB-like intelligence service and says the company recently received nearly a quarter-billion dollars from the
Chinese government.
The disclosures are a setback for
Huawei Technologies Co. Ltd.’s efforts to break into the U.S. telecommunications market. The company has been blocked from doing so three times by the
U.S. government because of concerns about its links to the
Chinese government.
The report by the
CIA-based Open Source Center states that
Huawei’s chairwoman,
Sun Yafang, worked for the
Ministry of State Security (
MSS)
Communications Department before joining the company.
The report on
Huawei’s board members states that
Ms. Sun used her connections at
MSS to help
Huawei through “financial difficulties” when the company was founded in 1987.
Based in part on Chinese media reports and
Huawei’s website, the report reveals that the
Beijing government paid
Huawei $228.2 million for research and development during the past three years.
Huawei’s links to the
Chinese military have been disclosed previously. The Open Source Center (OSC) report provides the first details of its links to
Chinese intelligence, which U.S. officials have said has been engaged in a massive effort to acquire secrets and economic intelligence from government and private-sector computer networks around the world.
According to U.S. officials, senior
Chinese government officials in recent months have pressed the
Obama administration to allow
Huawei to buy into the U.S. telecommunications market.
Bill Plummer, a spokesman for
Huawei’s U.S. subsidiary, declined to comment on the report because the company has not seen it. But he said
Ms. Sun’s biography published in the company’s most recent annual report “accurately describes her work experience.”
“
Huawei only sells commercial-grade solutions, and our sales to the
Chinese government account for less than 1 percent of our total sales,”
Mr. Plummer said.
Huawei USA stated in a letter to The Washington Times last year that, despite
U.S. government allegations,
Huawei is an “employee-owned” company, and
China's government and military do not hold any shares or control the company.
However, the
Pentagon’s latest annual report on the
Chinese military said
China’s industry, including
Huawei, is closely integrated with the
military. “Information technology companies in particular, including
Huawei,
Datang and
Zhongxing, maintain close ties to the PLA [People’s
Liberation Army],” the report says.
The new OSC report, dated Oct. 5, says Chinese media reported that
Huawei’s senior leaders have “connections” to the PLA.
Ms. Sun “used her ‘connections’ at the
Ministry of State Security to help
Huawei through financial difficulties ‘at critical moments’ when the company was founded in 1987,” the report says, quoting an item by the pro-Beijing Hong Kong broadcaster
Phoenix Satellite Television.
The OSC report states that
Huawei’s 2010 annual report failed to mention that
Ms. Sun, considered the most trusted aide to
Huawei founder
Ren Zhengfei, has ties to
MSS, fueling suspicions of “potential close links between
Huawei and the
Chinese government.”
Mr. Ren was identified in the report as having worked for
China's military from 1974 to 1983 in the engineering corps. The report says that
Mr. Ren is purportedly
China’s most influential business leader “who seldom mentions his military background in public.”
In April, a publication sponsored by China’s State Council newspaper reported that
Huawei received $36.8 million and $63.2 million in 2009 and 2010, respectively, from the
government for “domestic development, innovation, and research.”
The company also received $48.2 million and $80 million in 2009 and 2010 for “completing certain research projects.”
The report contradicts past statements by
Huawei officials that the company receives little or no government subsidies and instead relies on profits from its annual $28 billion in revenue for investments.
Michelle K. Van Cleave, the former national counterintelligence executive and a senior counterspy policymaker, said
China continues to view the United States as its main strategic enemy and is expanding aggressive intelligence operations here.
“Big companies like
Huawei are business giants, but they’re also stalking horses for
Chinese intelligence,”
Ms. Van Cleave said. “They can provide both cover and entree for intelligence operations.”
China’s agents are targeting sensitive U.S. technologies through lawful purchase, theft and guile, including acquisitions and investments, she said.
“Two years ago, [Britain’s domestic intelligence service] MI-5 warned that equipment installed by
Huawei in British Telecom’s networks could be used to disrupt critical services like power and transportation,”
Ms. Van Cleave said. “The same could be true here if we don’t watch our backs.”
Kenneth deGraffenreid, former deputy national counterintelligence director, said
China’s strategic-technology acquisition efforts are similar to those used by the Soviet Union during the Cold War.
“But unlike the Soviets, the Chinese use companies that appear on the surface not related to the
government, but they are,”
Mr. deGraffenreid said. “All these Chinese companies are part of state ministries,
MSS or [military intelligence], and have interlocking structures and personnel.”
Mr. deGraffenreid said the
U.S. government needs greater efforts to prevent strategic losses to
China, including tighter technology controls and better counterspy activities.
According to a classified May 25, 2007, State Department cable, made public by the anti-secrecy website WikiLeaks, the sister of Chinese Rear Adm. Liu Zhuoming “was involved in arms sales to foreign countries through
Huawei and other military or quasi-military companies on whose boards she sat.”
Currently, there are no women named Liu on the
Huawei board, according to the OSC report.
A 2009 State Department cable from Beijing stated that
Huawei planned to double its U.S. workforce that year. The company, headquartered in Shenzen,
China, planned to have facilities in 10 U.S. cities.
Huawei USA’s first headquarters office was in Plano, Texas. Other
Huawei locations in the U.S. include Chicago, Dallas, Denver, Philadelphia, San Diego and Seattle, as well as Santa Clara, Calif.; Walnut Creek, Calif.; San Antonio; and New Jersey.
The company also has set up joint research labs with Microsoft Corp., Hewlett-Packard Co., Qualcomm, Texas Instruments Inc. and Infineon Technologies, the July 2009 cable said.
A June 2009 cable quoted
Huawei Vice President Tang Xinbing as saying a deal to buy the U.S. telecommunications company 3Com in 2008 was withdrawn because the Treasury Department-led Committee on Foreign Investment in the United States was expected to block the sale.
As a result,
Huawei increased its lobbying efforts in Washington in an attempt to dispel what Mr. Tang said was the mistaken impression that
Huawei is owned by the
Chinese military, the cable said.
A September 2009 cable quoted Chinese Vice Minister of Finance Zhu Guangyao as saying that the blocking of the
Huawei-3Com merger “roiled” Chinese leaders.
Mr. Ren is quoted in a March 21, 2008, cable from the U.S. Consulate in Guangzhou as denying the company had close ties to the
military or government.
According to
Mr. Ren, if
Huawei had military and government connections, “it would be in the real estate industry, where it could make quick, easy money.”
Chinese telecom firm tied to spy ministry - Washington Times
