Huawei Faces New Charges And “Smoking Gun” Report

Two new blows against Chinese network equipment giant Huawei landed this week, in the form of additional U.S. legal charges and reports of “smoking gun” evidence that the company’s products constitute a serious security risk. Reuters’ Karen Freifeld reported on the new indictment on Thursday:

In the indictment, which supersedes one unsealed last year in federal court in Brooklyn, New York, Huawei Technologies Co was charged with conspiring to steal trade secrets from six U.S. technology companies and to violate a racketeering law typically used to combat organized crime.

It also contains new allegations about the company’s involvement in countries subject to sanctions. Among other accusations, it says Huawei installed surveillance equipment in Iran that was used to monitor, identify, and detain protesters during the 2009 anti-government demonstrations in Tehran.

[…] There are no new charges against Meng in the superseding indictment.

[…] “The indictment paints a damning portrait of an illegitimate organization that lacks any regard for the law,” U.S. Senate Intelligence Committee chairman Richard Burr and vice chairman Mark Warner said in a joint statement.

[…] At the same time, the United States is weighing new regulations to stop more foreign shipments of products with U.S. technology to Huawei. [Source]

Defense officials are said to have argued against further restrictions on the basis that they could starve U.S. suppliers of sales revenue needed to fund R&D, but have now reportedly dropped this objection.

NPR’s Noel King and Jim Zarroli discussed the indictment news on Morning Edition:

KING: How much of the information in this indictment is stuff we haven’t seen before?

ZARROLI: Well, most of it has already come out. There is some new detail, for instance, about Huawei’s dealings with Iran and North Korea. […] It quotes emails in which the two countries are referred to by codes. This would be – now, this kind of commercial activity with Iran would be a violation of American sanctions. The indictment says that the banks did business – that the banks that did business with Huawei asked about what was going on, and Huawei officials lied. And then when Huawei found out that U.S. officials were investigating it, it allegedly arranged to transfer employees who knew about what was happening back to China.

KING: Jim, if we already knew a lot of this already, why is the Trump administration coming out with this indictment now?

ZARROLI: Well, this is part of a campaign by the administration to put the squeeze on Huawei. The company makes a lot of the telecom equipment used to provide countries with Internet service. U.S. National Security Adviser Robert O’Brien just said that Huawei has a kind of backdoor in its equipment. It lets it spy on Internet users in other countries. And the U.S. has been pressuring American allies not to buy Huawei equipment. The administration also bars American companies from selling to Huawei. So the U.S. really sees Huawei as a long-term security threat. [Source]

The Wall Street Journal’s Bojan Pancevski and Deborah Ball reported comments from both sides at a major security conference this week:

John Suffolk, a Huawei senior vice president, dismissed the charges against the company as meritless, saying they were predominantly recycled from civil disputes over the past 20 years that had been litigated and settled.

“They are hoping that if they throw enough mud, some of the mud will stick,” Mr. Suffolk said at the Munich Security Conference.

Just as Mr. Suffolk’s briefing was under way, senior U.S. officials pushed back against Huawei’s defense in a press conference of their own.

“Over the last couple of years there’s been more than enough evidence of the way the Chinese government has been using its national champions so really the onus is on Huawei now: They have to show they are a trustworthy partner, they have to separate themselves from the Chinese government,” said Robert B. Blair, U.S. special representative for international telecommunications policy. [Source]

The article also included follow-up on another report by Pancevski this week on alleged “smoking gun” evidence of Huawei illegally retaining access to law enforcement surveillance capabilities on foreign cellular networks. From the WSJ:

The U.S. kept the intelligence highly classified until late last year, when U.S. officials provided details to allies including the U.K. and Germany, according to officials from the three countries. That was a tactical turnabout by the U.S., which in the past had argued that it didn’t need to produce hard evidence of the threat it says Huawei poses to nations’ security.

When telecom-equipment makers sell hardware such as switching gear, base stations and antennas to cellphone carriers—which assemble the networks that enable mobile communication and computing—they are required by law to build in ways for authorities to tap into the networks for lawful purposes.

These companies also are required to make sure they themselves can’t gain access without the consent of the network operator. Only law-enforcement officials or authorized officials at carriers are allowed into these “lawful interception interfaces.” Such access is governed by laws and protocols in each country.

[…] Some German officials came away […] convinced by the U.S. intelligence, according to a senior official familiar with the meeting. A confidential memo written by the German Foreign Office and seen by The Wall Street Journal states that Mr. Pottinger provided “smoking gun” evidence that Huawei equipment posed a spying risk. The memo was first reported by the German newspaper Handelsblatt. Mr. Pottinger didn’t respond to requests for comment. [Source]

The evidence, on the other hand, did not dissuade Britain from announcing late last month that it would allow Huawei a limited role in its deployment of next-generation 5G networks, though it did designate the company a “high risk” vendor barred from sensitive roles and subject to market share caps elsewhere. The decision attracted widespread criticism, notably from former Australian signals intelligence chief Simeon Gilding. In a blog post for the Australian Strategic Policy Institute, Gilding wrote that the Australian Signals Directorate had concluded it was not possible to adequately mitigate the risk “that hostile intelligence services could not leverage their national vendors to gain access to our 5G networks.” Although Huawei’s founder Ren Zhengfei has insisted that he would not allow Chinese authorities to use his company this way, many regard such refusal as implausible given legal requirements and, more importantly, the underlying political reality they embody.

Britain’s position also came up at the Munich Security Conference, The Guardian’s Patrick Wintour reports:

There have been reports of a highly charged phone call between Boris Johnson and Donald Trump in the wake of the UK decision. Johnson has postponed a planned visit to the US until the summer, citing the pressure of domestic work, but also reflecting the tensions between the two allies.

At a briefing in Munich, Robert Blair, the White House special representative for international telecommunications policy, said Britain needed to take a “hard look” at its decision to use equipment made by Huawei, which officials in Washington say is a security risk – charges the company denies.

Blair said Washington was looking to develop a partnership with the telecoms industry to provide alternatives to Huawei’s technology.

He said a partnership was “very different from buying shares with taxpayers’ money”. Blair stressed that the UK decision, even if not reversed, would not lead to an end to intelligence cooperation between the close allies, but added that it might require the US to rethink how it shares data. [Source]

Blair’s comments on industry partnerships follow discussion of how the U.S. might boost Huawei’s European competitors Nokia and Ericsson, if not by buying control of them (as Attorney General William Barr proposed last week), then perhaps through assistance with R&D costs or customer financing. The American campaign to dissuade or deter other Western countries from letting Huawei in on 5G has struggled partly in the face of claims that there is little alternative.

Canada, deeply entangled in the battle by its detention of Huawei’s CFO and founder’s daughter, has yet to announce a decision. Military officials are reportedly urging a ban, but one major carrier has said it plans to start building its own 5G network incorporating Huawei equipment this year.

In a statement responding to the WSJ’s “smoking gun” report, Huawei counterattacked both the newspaper and U.S. authorities:

As evidenced by the Snowden leaks, the United States has been covertly accessing telecom networks worldwide, spying on other countries for quite some time. The report by the Washington Post this week about how the CIA used an encryption company to spy on other countries for decades [link] is yet additional proof.

US allegations of Huawei using lawful interception are nothing but a smokescreen – they don’t adhere to any form of accepted logic in the cyber security domain. Huawei has never and will never covertly access telecom networks, nor do we have the capability to do so. The Wall Street Journal is clearly aware that the US government can’t provide any evidence to support their allegations, and yet it still chose to repeat the lies being spread by these US officials. This reflects The Wall Street Journal’s bias against Huawei and undermines its credibility.

[…] Huawei is only an equipment supplier. In this role, accessing customer networks without their authorization and visibility would be impossible. We do not have the ability to bypass carriers, access control, and take data from their networks without being detected by all normal firewalls or security systems. In fact, even The Wall Street Journal admits that US officials are unable to provide any concrete details concerning these so-called “backdoors.” [Source]

At Lawfare, Stanford University’s Dr. Herb Lin suggested grounds for skepticism in the contrast between the claim that unauthorized access “would be impossible” and a Huawei official’s comment in the WSJ article that it was merely “extremely implausible and would be discovered immediately.”


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