Intelligence Leaders Warn Businesses: Hang Up on Chinese Telecoms
The national security threat is too great — and the House probe could also bring charges for immigration violations, bribery and corruption, and copyright infringement.
October 8, 2012 - 2:49 pm
Huawei, founded by a former officer in the People’s Liberation Army, maintained that it’s “no different from any start-up enterprises in Silicon Valley.”
“ZTE has set an unprecedented standard for cooperation by any Chinese company with a congressional investigation,” said a statement from the other company under scrutiny. “Since April 2012, ZTE has presented the Committee with facts that demonstrate ZTE is China’s most independent, transparent, globally focused publicly traded company.”
Rogers and Ruppersberger’s bipartisan initiative aside, the Democratic National Committee jumped on the story in a campaign-flavored tweet: “House GOP warns about risks of doing business with a Chinese tech firm that once partnered with Bain Capital.”
The Bush administration, citing national security concerns, rejected 2007 and 2008 attempts by a team of Bain and Huawei to take electronics manufacturer 3Com private.
Huawei and its espionage risk were the subject of a 60 Minutes segment last night, providing the perfect frame for the release of today’s committee report.
“The United States should view with suspicion the continued penetration of the U.S. telecommunications market by Chinese telecommunications companies,” the Intelligence report noted.
The report also recommended that the Committee on Foreign Investments in the United States block acquisitions, takeovers, or mergers involving Huawei and ZTE “given the threat to U.S. national security interests.”
It also said this should not be the end of the probes: “Committees of jurisdiction within the U.S. Congress and enforcement agencies within the Executive Branch should investigate the unfair trade practices of the Chinese telecommunications sector, paying particular attention to China’s continued financial support for key companies.”
“Committees of jurisdiction in the U.S. Congress should consider potential legislation to better address the risk posed by telecommunications companies with nation-state ties or otherwise not clearly trusted to build critical infrastructure. Such legislation could include increasing information sharing among private sector entities, and an expanded role for the CFIUS process to include purchasing agreements.”
Rogers mentioned that the Judiciary and Energy and Commerce committees could take up such bills.
Ruppersberger put in a plug for the cybersecurity bill, which stalled in the Senate over GOP objections but may be enacted through executive order.
Rogers, a former FBI agent, said the committee will be transferring some information validated by his staff to the bureau tomorrow — and hinted at scandal to come.
“As a young agent, I wish somebody would have handed me this case, I’ll tell you that,” he said. “It’s serious enough that rose to the level of enough to be mentioned in this particular report. It was an American case. It was a case — a clear case of bribery in order to get a contract here in the United States.”
Both committee leaders denied that there was any campaign angle in releasing the report when they did.
“This is a bipartisan investigation. We both announced this investigation. We both had a Republican and Democrat investigator. There was no ounce of this — there was — there’s not a bit of light between Dutch and I on this investigation or our investigators,” Rogers said.
“The bottom line is that we don’t want Huawei and ZTE, especially if they are connected to the Chinese government with the camel’s nose in the tent,” Ruppersberger said.
The only mention of China from the White House today was criticism of Mitt Romney for his “striking,” in the words of traveling campaign press secretary Jen Psaki, China-lite foreign policy speech at the Virginia Military Institute today.
“We do not take these recommendations lightly,” Ruppersberger stressed. “This is not trade protectionism masquerading as national security.”