Chinese telecom firms grilled over links

Sept. 17, 2012 at 4:21 PM
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WASHINGTON, Sept. 17 (UPI) -- Troubled Chinese telecom firms Huawei and ZTE are facing congressional questioning in the United States after running into problems elsewhere over allegations they are too close to the Chinese government, are secretly subsidized and don't flinch from bribing to get a deal.

The charges are similar to those U.S. firms have frequently faced in dealings abroad but Huawei and ZTE are under fire for suspected close links with Beijing that are seen in Washington as a national security risk.

Appearing before congressional committees, Huawei and ZTE executives denied the allegations but their troubles are far from over. The companies have been locked out of tendering in Australia and faced bribery charges in the Middle East.

Congressional hearings also focused on allegations the companies stole trade secrets from U.S. and other telecommunications and technology companies, including Cisco. Both deny the charges.

Huawei and ZTE ran into problems over their security credentials before their executives appeared at Congress.

Huawei Senior Vice President Charles Ding in a statement denied charges of intelligence links with Beijing.

"It would be immensely foolish for Huawei to risk involvement in national security or economic espionage," Ding said. "Huawei has not and will not jeopardize our global commercial success nor the integrity of our customers' network for any third party, government or otherwise, ever."

ZTE Senior Vice President for North America and Europe Zhu Jinyun also stressed the company's independence from Beijing.

Analysts said the Chinese businessmen's questioning at Congress capped a period of increasing tensions between China and the United States over trade issues. The companies are seeking to enter telecommunications markets that are directly linked to high security sectors, from business and finance to data transmission and transfer operations and the utilities.

The Chinese executives' appearance before congressional committees couldn't have come at a worse time for their companies. China's currency and economic policies are fair game in an increasingly fraught political campaign for the November elections.

House Intelligence Committee Chairman Mike Rogers, R-Mich., said information obtained from overseas provided the committee with "a reason to question whether the companies are tied to the Chinese government or whether their equipment is as it appears."

He said the companies "provide a wealth of opportunities for Chinese intelligence agencies to insert malicious hardware or software implants into critical telecommunications components and systems."

Skepticism about Chinese companies entering the U.S. telecoms and security market isn't new. In 2008 Huawei and Bain Capital gave up a joint bid for U.S. network equipment maker 3Com after the Committee on Foreign Investment in the United States raised objections.

Ding said the company had no intention of leaving the U.S. market despite the latest setbacks.

Both Huawei and ZTE have headquarters in Shenzhen, China.

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