U.S. Congress probe finds Chinese telecom firms ZTE and Huawei pose security risks

Washington, DC, United States (4E) – A U.S. congressional panel reported that Chinese telecom companies ZTE and Huawei pose a security threat to the country.

The two telecom giants failed to properly cooperate with an investigation and did not explain enough their relationship with the Chinese government as well as business interests in the U.S., according to a draft committee report by the House Intelligence panel which is scheduled to be released on Monday.

The panel recommended in its report that the two companies must not be allowed to enter into any merger and acquisition with U.S. firms. ZTE and Huawei are two of the world’s biggest telecom networking equipment manufacturers.

The House probe found “credible” reports of illegal activities by Huawei — through statements from former and currents employees — that included bribery and corruption and violations of U.S. immigration laws.

The report says that they have classified and unclassified information suggesting that Huawei and ZTE are influenced by a foreign state hence posing a security threat to the U.S. and its systems.

The report did not provide complete details or the names of the accusers, but it will be referred to various federal agencies such as the Department of Justice and Homeland Security.

Huawei’s operations in the U.S. earned about $1.3bn in sales in 2011, higher from the $760mn recorded in the previous year. A huge chunk of their U.S. revenue came from smartphone and tablet computer sales. ZTE has not disclosed information about their U.S. sales.

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