HUAWEI UBC 
Huawei spends millions at Canadian university, but some professors fear US crackdown

At least three University of British Columbia professors have shunned Huawei funding because they fear being labelled ‘enemies of the US’, colleague says 

Huawei has continued to pour money into UBC projects, even after the arrest of Meng Wanzhou, as Canada’s allies tighten screws on the firm

Ian Young in Vancouver Published: 8 Jan, 2020

UBC President Santa Ono (left) and Huawei Canada Research President Christian Chua sign a 2017 deal for Huawei to provide C$3 million in umbrella funding to UBC researchers. Photo: CNW Group/Huawei Canada

Meng Wanzhou, Huawei’s chief financial officer, has said she might study for a doctorate in business administration at the University of British Columbia while on bail in Vancouver, as she undergoes a lengthy extradition process to face accusations of fraud in the US.


But at western Canada’s most prestigious university, some academics fear that connections to the Chinese tech firm could put them in peril, even as Huawei continues to spend millions on research there.

Since the arrest of Meng in December 2018, 18 new projects have been earmarked for Huawei funding at UBC, costing the company C$2.6 million (US$2 million), according to a spreadsheet provided by the university.

However, UBC engineering professor Lukas Chrostowski said he knew of at least three department colleagues who have refused to take part in Huawei-financed projects because they worry they will be swept up in US action against the firm.

If funding were to be cut off [from Huawei], then that is a major risk for academics in Canada UBC computer science professor Ivan Beschastnikh

His own work in photonics – the use of light to transmit and process data – is heavily funded by Huawei, including a C$900,000 (US$694,000) grant in January 2019. His other projects in recent years have received C$70,000 (US$54,000) from Huawei.

“You’ve got concerns – I’ve heard that because you are working with Huawei you would be labelled an enemy of the United States,” said Professor Chrostowski.

The fears come as Washington pressures Ottawa to follow its lead by banning Huawei from developing its national high-speed 5G internet infrastructure. US authorities have said that Huawei might imperil Canadian security – as well as that of its intelligence allies – by illicitly accessing state secrets or individuals’ private data.


UBC engineering professor Lukas Chrostowski is an expert in the field of silicon photonics, with some of his research funded by Chinese tech giant Huawei. Photo: UBC / Janis Franklin

Vancouver has meanwhile been at the centre of the Huawei story since Meng was arrested at its international airport a year ago, at US request. With Meng still under guard at her Vancouver mansion and the formal stage of her extradition hearing to begin on January 20, the city remains on the cutting edge of tensions between China and the West.

Chrostowski – who said he personally knew three UBC professors who refused to work with Huawei, but declined to name them – said he had been closely following Meng’s case, and he and his colleagues were well aware of the security fears around the firm.

But their own concern, he said, “is not with Huawei, the concern is with the United States”.

“The concern is that the United States has policies that change in time and it is difficult to predict what kind of actions the US government will take,” he said.

Huawei, the telecommunications giant, has committed or spent C$7.8 million (US$6 million) on UBC projects since 2017. Projects under way are devoted to cloud computing, the privacy and security of artificial intelligence, digital image forgery detection and silicon chip fabrication, among other topics.

That includes an umbrella grant of C$3 million signed in 2017 by UBC President Santa Ono and Huawei Canada Research President Christian Chuat in a ceremony flanked by Chinese and Canadian flags.

University students move in to campus accommodations at UBC in Vancouver in this 2015 file photo. Photo: Xinhua

UBC computer science professor Ivan Beschastnikh, whose recent projects have received C$420,450 in Huawei commitments, said the risk that a political decision would cut off such financing was “the biggest thing that I worry about”.

Other researchers were “biting their nails” waiting for a Canadian policy decision that could doom Huawei funding, Beschastnikh added. Because his own research was “tightly entwined with the fate of Huawei in Canada”, he said he was pursuing collaborations with other companies to hedge his bets.

The South China Morning Post sought comment from the lead researchers on all 32 UBC projects that have received Huawei funding since 2017. Of the 18 academics, only Chrostowski and Beschastnikh agreed to discuss their work and relationship with the firm.

“If funding were to be cut off [from Huawei], then that is a major risk for academics in Canada,” Beschastnikh said. “We need a heads up if this is going to happen. This can’t happen overnight.”

Fears of a Huawei ‘Trojan horse’

Nevertheless, critics of Canada’s government say it has been dragging its feet by failing to announce a strategy for handling Huawei, as allies such as the US, Australia and New Zealand ban it from 5G work or take other steps to mitigate potential security risks.

Instead, the Canadian Security Intelligence Service has issued vague warnings to universities about working with Huawei.

US President Donald Trump and his national security adviser Robert O'Brien. O’Brien has said Huawei would act as a “Trojan horse” if allowed to help build Canada’s 5G network. Photo: AP

Yet without an official policy framework, these “nebulous” intelligence briefings represented a challenge to academic freedom, said telecoms security expert Christopher Parsons, a senior research associate at the University of Toronto’s Munk School of Global Affairs and Public Policy.

Parsons said that the US was developing a “substantive firewall” of policies to limit what intellectual property US researchers could share with Chinese companies and institutions.

“In Canada we don’t have those directives. It’s not the fault of the universities. They’re following the law,” he said.

But he echoed the concerns of Chrostowski and Beschastnikh that, without policy guidance, academics in Canada risk running afoul of a US crackdown.

“They are put in a very challenging situation … Canadian researchers are engaged in research and sharing with Chinese companies including Huawei and it may turn out that those engagements run counter to US policies,” he said.

“That has implications for universities receiving status for their academics travelling in the United States. It could lead to broader socio-economic problems between Canada and the US.”

Gail Murphy, vice-president of research and innovation at UBC, said the university “is not aware of any restrictions regarding working with Huawei and will continue with its partnership with Huawei”.

She added it was up to faculty and student researchers to “choose whether or not they embark on research projects that are permitted within UBC policy”.

But looming over those decisions is the escalating US pressure.

You get Huawei into [the 5G network of] Canada or any other Western country, they’re going to know every health record, every banking record, every social media post Robert O’Brien, US national security adviser

In November, US national security adviser Robert O’Brien told a security forum in Halifax, Nova Scotia, that Huawei would act as a “Trojan horse” if allowed to help build Canada’s 5G network.

Even setting aside the risks to strategic intelligence, “you get Huawei into [the 5G network of] Canada or any other Western country, they’re going to know every health record, every banking record, every social media post”, O’Brien warned.

Huawei has repeatedly denied it poses any security risk to western countries.

Song Zhang, vice-president of research strategy and partnerships at Huawei Technologies Canada, said that Huawei had spent about C$650 million on research and development projects in Canada in the past decade, with about 10 per cent of that going to research partnerships, mostly at universities.

The Canadian Broadcasting Corporation reported in November that Huawei had made about C$56 million (US$43 million) in funding commitments to Canadian universities in recent years.

Working with Huawei was “a very natural thing” for Canadian researchers and not practically different to working with any other firm, he said.

Zhang said the rapid evolution of “negative pressures” on Huawei in Canada and the arrest of Meng had come as a “huge surprise” to him. “But we quickly realised, this is part of global politics that is beyond any individual’s control,” he said.

“Canada has always been a very open environment. That’s the underlying strength. Ultimately that gives me confidence.”

In the 10 years that Zhang has worked at Huawei, its Canadian R and D team had grown from a staff of 40 to 50 to about 1,000. Zhang said Canada held particularly importance as a global talent centre for Huawei, because the firm was no longer welcome in the US.

Huawei founder Ren Zhengfei, Meng’s father, told The Globe and Mail last month that Huawei was moving its US research centre to Canada in response to American sanctions, which he claimed made it impossible to even call or email staff in the US. In June, the firm said it had cut hundreds of jobs at its Silicon Valley centre.

Considering the restrictions Huawei faced in the US, Zhang said, it would not be surprising to see even more focus on Canada in the future.

That prospect will likely depend on whether Canada eventually follows Washington’s lead and takes a harder line on Huawei, and with its China policy in general.

Other voices in Canada have been trying to counter the US drumbeat. The waters of the Canada-China relationship had been “muddied” by former officials, now working for companies using Huawei products, making policy suggestions that reflected business interests, said Parsons of the Munk School.

Huawei clash with US ‘inevitable’, says tech giant’s founder Ren Zhengfei

“These are people with money in the game,” he said.

He pointed specifically at former deputy prime minister John Manley, now a director of telecom firm Telus, who last month called for a “prisoner exchange”: in return for China releasing the Canadians Michael Kovrig and Michael Spavor, who are being held on accusations of espionage, Canada could free Meng, Manley suggested.

Telus uses Huawei equipment in its infrastructure and is the Canadian firm most exposed to the impact of any ban on its gear.

“It is increasingly pressing that the Canadian government figure out broadly what its strategy is towards China,” Parsons said. “Part of that includes how they are going to deal with Huawei.”

Canada has always been a very open environment. That’s the underlying strength. Ultimately that gives me confidence Song Zhang, vice-president of research strategy and partnerships at Huawei Technologies Canada

Canadian researchers and Huawei alike deserved clarity, he said: the government had been “kicking the can down the road for more than a year and a half”.

Compared with its Five Eyes intelligence allies – the US, Britain, Australia and New Zealand – “Canada is the laggard” in addressing the Huawei situation, said Parsons.

Washington has introduced a range of sanctions on Huawei, effectively banning it from 5G networks in the US by prohibiting federal contractors from working with the firm and putting it on an export blacklist. Top US universities have frozen funding links with Huawei as a result.

Australia and New Zealand last year followed Washington’s lead by banning Huawei from 5G projects on security grounds.

Britain has deferred a decision on a possible ban, but last month Prime Minister Boris Johnson said the key criterion would be that it not “prejudice our ability to cooperate with other Five Eyes security partners”. The University of Oxford has already banned grants and donations from Huawei.

“The Americans have been very clear – both in the current and former [US] administrations – that if Canada allows the adoption of Huawei technology into our 5G networks, that will have possible substantive, perhaps irreparable, consequences for the types of information the Americans are willing to share with Canada,” Parsons said.

“If Canada loses that, we will go increasingly blind in the world.”

Meng’s ‘shadow’ looms over researchers

Meng, whose lawyer relayed her musings about studying for a PhD during her bail hearing in December 2018, has not yet been reported on UBC’s sprawling campus, about 8km from her C$13.6 million home on the west side of the city.

But her presence is felt in other ways.

Engineering professor Chrostowski said Meng’s arrest had “cast a shadow” over UBC researchers’ US interactions.

“Last summer the US imposed restrictions on who is able to work, and under what circumstances, with Huawei … so now we have restrictions where we can’t use US technology in the research we do with Huawei,” he said.

His C$900,000 neuromorphic computing project, launched just a month after Meng’s arrest, involves machine-learning using photonic processors.

Intellectual property generated by the research will be owned jointly by Huawei and UBC, although the university is not allowed to sell the technology to Huawei’s rivals for a window of several years, said Chrostowski. (Other partnerships involved Huawei as part of a consortium of tech firms, including US-based companies.)

The funding comes from Huawei Canada, “not Huawei China”, he stressed. “That’s an important distinction because Huawei Canada operates under the laws of Canada … any time we share information they have to ask us if it’s OK to share it with China. The information stays in Canada unless we agree to having it exported.”

Chrostowski’s relationship with Huawei dates back to 2011, when he met Huawei staffers at a course on silicon photonics he was teaching.

He said Huawei did not just finance research but was “highly involved” in previous joint projects – describing his first 2014 project with the company, he said that meetings were held every two weeks or monthly with a team of Huawei researchers.

UBC computer science professor Ivan Beschastnikh's recent projects have received C$420,450 (US$324,000) in Huawei funding. Photo: UBC

He said these were all Canadian citizens, ex-employees of Nortel scooped up by Huawei after the Canadian firm, once a world leader in telecoms technology, collapsed in 2009.

The demise of Nortel coincided with the rise of Huawei. In 2012, a former Nortel security adviser accused Huawei of having benefited from years of Chinese hacking of the Canadian firm; Huawei’s founder Ren has denied any role in Nortel’s collapse.

Asked whether he worried that Huawei posed a potential security risk to Canada, Chrostowski said: “I have been given assurances [by Huawei] that Huawei is not stealing information and data from Canadian users.”

He added: “I don’t have any reason to doubt that.”

Canada’s view of China worsens as Huawei, detention rows drag on
12 Dec 2019

Computer scientist Beschastnikh has worked as principal investigator on four Huawei-financed projects at UBC since 2017. Topics have included optimising cloud data storage, finding bugs in cloud software and designing “peer to peer” machine learning that does not depend on a single centralised service or company.

He said his software-related topics were “in the clear” compared to hardware research, where security concerns about Huawei were focused. He had made it a condition of working with Huawei – and other firms – that resultant code be open source and available for public scrutiny.

Security concerns about Huawei were largely due to “fundamental weaknesses of the internet infrastructure we have created”, said Beschastnikh, with internet service providers having full control of how information was routed.

“So there’s a technical concern about the infrastructure that leads to these problems with power – power relationships at a nation-state level,” he said.

Previously, he said, the US had enjoyed a hegemony on the designs that underpinned the internet, and he believed some security concerns about Huawei were linked to protecting that hegemony. “Once you have a monopoly, you don’t want to give that up.”

Beschastnikh said that the computer science department at UBC had held discussions about the risks involved with Huawei funding. Ultimately, he felt “totally confident that the security risks [of working with Huawei] are mitigated by working on open source and staying away from certain topics”.

“A lot of the discussion [about Huawei] is very high level, nation-state level. But there’s a story to be told about the individual researchers who [are] biting their nails because the funding situation could be put in jeopardy.”


Who is JW00237? Secret Canada campaign to ban Huawei’s ‘spies’
6 Mar 2019

Exclusive: Huawei hid business operation in Iran after Reuters reported links to CFO

LONDON/DUBAI (Reuters) - China’s Huawei Technologies acted to cover up its relationship with a firm that had tried to sell prohibited U.S. computer gear to Iran, after Reuters in 2013 reported deep links between the firm and the telecom-equipment giant’s chief financial officer, newly obtained internal Huawei documents show.


FILE PHOTO: Huawei Technologies Chief Financial Officer Meng Wanzhou leaves her home to attend a court hearing in Vancouver, British Columbia, Canada May 27, 2020. REUTERS/Jennifer Gauthier/File Photo

Huawei has long described the firm - Skycom Tech Co Ltd - as a separate local business partner in Iran. Now, documents obtained by Reuters show how the Chinese tech titan effectively controlled Skycom. The documents, reported here for the first time, are part of a trove of internal Huawei and Skycom Iran-related business records - including memos, letters and contractual agreements - that Reuters has reviewed.

One document described how Huawei scrambled in early 2013 to try to “separate” itself from Skycom out of concern over trade sanctions on Tehran. To that end, this and other documents show, Huawei took a series of actions - including changing the managers of Skycom, shutting down Skycom’s Tehran office and forming another business in Iran to take over tens of millions of dollars worth of Skycom contracts.

The revelations in the new documents could buttress a high-profile criminal case being pursued by U.S. authorities against Huawei and its chief financial officer, Meng Wanzhou, who is also the daughter of Huawei’s founder. The United States has been trying to get Meng extradited from Canada, where she was arrested in December 2018. A Canadian judge last week allowed the case to continue, rejecting defense arguments that the U.S. charges against Meng do not constitute crimes in Canada.

A U.S. indictment alleges that Huawei and Meng participated in a fraudulent scheme to obtain prohibited U.S. goods and technology for Huawei’s Iran-based business via Skycom, and move money out of Iran by deceiving a major bank. The indictment alleges that Skycom was an “unofficial subsidiary” of Huawei, not a local partner.

Huawei and Meng have denied the criminal charges, which include bank fraud, wire fraud and other allegations. Skycom, which was registered in Hong Kong and was dissolved in 2017, is also a defendant. At one point, Huawei was a shareholder in Skycom but, according to corporate filings, sold its stake more than a decade ago.

The newly obtained documents appear to undermine Huawei’s claims that Skycom was just a business partner. They offer a behind-the-scenes look at some of what transpired at the two companies inside Iran seven years ago and how intertwined the companies were. The documents are variously written in English, Chinese and Farsi.


Huawei declined to comment for this story.

China’s foreign ministry said the United States was politicizing economic and trade issues, which is not in the interest of Chinese or American firms. “We urge the United States to immediately stop its unreasonable suppression of Chinese firms including Huawei,” it said. It referred specific questions about this story to Huawei.

‘NORMAL BUSINESS PARTNERSHIP’

Reuters reported in March that Huawei had produced internal company records in 2010, including two packing lists, that showed it was directly involved in sending prohibited U.S. computer equipment to Iran. Huawei declined to comment on that story, citing ongoing legal proceedings.

(To read the March report, click here)

The newly obtained documents show that Huawei’s efforts to obscure its relationship with Skycom began after Reuters reported in December 2012 that Skycom had offered to sell at least 1.3 million euros worth of embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator in late 2010. In January 2013, a second Reuters report described how Huawei had close financial ties and other links to Skycom, including the fact that Meng had served on Skycom’s board of directors between February 2008 and April 2009.

(To read the December 2012 report, click here)


(To read the January 2013 report, click here)

In its response at the time to the Reuters reporting, Huawei said Skycom was one of its “major local partners” and that the relationship between Huawei and Skycom was “a normal business partnership.”

But a newly obtained Huawei internal document from the Chinese company’s Iran office, dated March 28, 2013, indicates Huawei controlled Skycom. The document in Chinese stated: “In consideration of trade compliances, A2 representative office is trying to separate Skycom and Huawei.” A2 was Huawei’s code for Iran, according to the U.S. indictment.

The document also noted that Huawei had installed one of its own employees to manage Skycom in Iran “to urgently avoid the risks of media hype.” Huawei had made an “urgent decision” to appoint Hu Mei as Skycom’s general manager in Iran, effective March 10, 2013, the document noted. Hu was a director of Skycom and was also listed as a Huawei employee in an internal Huawei directory.

The document detailed how Huawei quickly recognized a flaw in putting Hu in charge of Skycom. Hu was based at Huawei’s headquarters in China, and the job required dealing with business matters on the ground in Iran, the document stated. So, Huawei decided to appoint instead “a Chinese employee based in Iran” to manage Skycom’s Tehran office, the document shows.

Huawei decided to name Song Kai, deputy representative of its Iran office, to run Skycom in Iran. He was informed of the decision in an internal Huawei message that was reviewed by Reuters. “Please update your resume,” Song was instructed.

The message said that the change had been approved by a man named Lan Yun, who was identified as the “chief representative” of Huawei’s Iran office.

Hu, Song and Lan couldn’t be reached for comment.

POWERPOINT PRESENTATION

In response to the Reuters articles of 2012 and 2013, several Western banks questioned Huawei about its relationship with Skycom. They included HSBC Holdings PLC, where both Huawei and Skycom held bank accounts.

HSBC declined to comment for this story.

In August 2013, Meng met with HSBC’s deputy head of global banking for the Asia-Pacific region. She is accused in the U.S. indictment of making “numerous misrepresentations regarding Huawei’s ownership and control of Skycom.”

Meng gave a PowerPoint presentation during the meeting that said Skycom was merely “a business partner of Huawei.”

The newly obtained documents show that Huawei soon became directly involved in shutting Skycom down.

In a letter dated Nov. 2, 2013, Song, the Huawei employee appointed to manage Skycom, told a major Iranian client that Skycom “has decided to annul and terminate its business activities and dissolve the branch company in Iran.” Song’s letter was addressed to a vice president of Iran’s largest mobile-phone operator, Mobile Communication Co of Iran, or MCCI.

MCCI couldn’t be reached for comment.


The next day, Skycom, MCCI and a new Huawei company - Huawei Technologies Service (Iranian) Co Ltd - signed an agreement. It stated that Skycom planned to transfer its contracts to the new Huawei entity. The agreement listed eight contracts worth a total of 44.6 million euros (about $50 million), with about 34.6 million euros remaining on them. Any money owed to Skycom was to be paid to the Huawei entity upon completion of the contracts.

“All the parties promise that this three-way contract remains confidential,” it stated.

Exclusive: Newly obtained documents show Huawei role in shipping prohibited U.S. gear to Iran

LONDON (Reuters) - China’s Huawei Technologies, which for years has denied violating American trade sanctions on Iran, produced internal company records in 2010 that show it was directly involved in sending prohibited U.S. computer equipment to Iran’s largest mobile-phone operator.

Two Huawei packing lists, dated December 2010, included computer equipment made by Hewlett-Packard Co and destined for the Iranian carrier, internal Huawei documents reviewed by Reuters show.

Another Huawei document, dated two months later, stated: “Currently the equipment is delivered to Tehran, and waiting for the custom clearance.”

The packing lists and other internal documents, reported here for the first time, provide the strongest documentary evidence to date of Huawei’s involvement in alleged trade sanctions violations. They could bolster Washington’s multifaceted campaign to check the power of Huawei, the world’s leading telecommunications-equipment maker.

The United States is trying to persuade allies to avoid using Huawei equipment in their next-generation mobile telecommunications systems, known as 5G. Separately, U.S. authorities are battling Huawei on a legal front.

The newly obtained documents involve a multi-million dollar telecommunications project in Iran that figures prominently in an ongoing criminal case Washington has brought against the Chinese company and its chief financial officer, Meng Wanzhou. The daughter of Huawei’s founder, Meng has been fighting extradition from Canada to the United States since her arrest in Vancouver in December 2018. Huawei and Meng have denied the charges, which involve bank fraud, wire fraud and other allegations.

The documents, which aren’t cited in the criminal case, provide new details about Huawei’s role in providing an Iranian telecom carrier with numerous computer servers, switches and other equipment made by HP, as well as software made by other American companies at the time, including Microsoft Corp, Symantec Corp and Novell Inc.

A U.S. indictment alleges that Huawei and Meng participated in a fraudulent scheme to obtain prohibited U.S. goods and technology for Huawei’s Iran-based business, and move money out of Iran by deceiving Western banks. The indictment accuses Huawei and Meng of surreptitiously using an “unofficial subsidiary” in Iran called Skycom Tech Co Ltd to obtain the prohibited goods.

“Huawei could thus attempt to claim ignorance with respect to any illegal act committed by Skycom on behalf of Huawei, including violations of” U.S. sanctions laws, the indictment states. Skycom, which Huawei has described as a local business partner in Iran, is named as a defendant. Records in Hong Kong, where Skycom was registered, show the firm was liquidated in June 2017.

The newly obtained records reviewed by Reuters show that another Chinese company, Panda International Information Technology Co, which isn’t named in the U.S. indictment, was also involved in acquiring hardware and software for the Iranian project. Panda International has longstanding ties to Huawei and is controlled by a Chinese state-owned company.

“Due to ongoing legal proceedings, it is not appropriate for Huawei to comment at this time,” a Huawei spokesman said in response to questions about the newly obtained documents. “Huawei is committed to comply with all applicable laws and regulations in the countries and regions where we operate, including all export control and sanction laws and regulations of the UN, U.S., and EU.”

China’s foreign ministry said that “the United States, without presenting any evidence, has been over-generalizing the concept of national security and abusing its state power to unreasonably suppress specific Chinese firms.” It referred questions about the Huawei documents to the company.


PACKING LISTS

The U.S. indictment cites articles by Reuters in 2012 and 2013 which reported that Skycom had offered in late 2010 to sell at least 1.3 million euros worth of embargoed HP computer equipment to Mobile Telecommunication Co of Iran. The Iranian mobile provider is variously known as MCI and MCCI.

MCI’s parent company is Telecommunication Co of Iran. At the time, TCI was controlled by a consortium whose largest stakeholder was a company controlled by the elite Islamic Revolutionary Guard Corps. Another stakeholder was Setad, an organization controlled by Supreme Leader Ayatollah Ali Khamenei.

The earlier Reuters reports were based on a partial price list included in a Huawei and Skycom proposal in October 2010 to expand MCI’s customer billing system. Huawei had provided MCI’s original billing system, which wasn’t keeping pace with MCI’s growing customer base. The price list was marked with Huawei’s logo and stamped “SKYCOM IRAN OFFICE.”

At the time, Huawei said it ultimately never delivered the HP goods to Iran. A Huawei spokesman told Reuters in 2012 that the price list was a “bidding document” submitted by Skycom and that “Huawei has never provided the equipment … nor done so through Skycom.”

But the newly obtained documents - more than 100 additional pages related to the project - show that Huawei was involved in sending at least some of that U.S. equipment to Iran. The documents are variously written in English, Chinese and Farsi.

One internal document showed that Huawei was deeply involved in the MCI expansion project. It states that on September 25, 2010, MCI asked Huawei to start the project. “The equipment contract was signed,” the document states, without providing details.

The documents also include a “Bill of Quantity Quotation,” a 2010 proposal that listed the equipment needed for the project. It was produced by Huawei and includes HP gear, as well as server software made then by Microsoft, Symantec and Novell.

The documents also include two packing lists that were dated December 7 and December 13, 2010, with Huawei’s logo at the top. The name Huawei also appears in the lists’ metadata – computer information about the documents’ creation.

The packing lists, which include some prohibited HP equipment, provided extensive details of 340 shipping cases, such as weights and sizes, with ultimate destinations in the major Iranian cities of Tehran, Shiraz and Mashhad.

The packing lists include numerous HP servers, switches and disk arrays, as well as Microsoft Windows Server 2003 and SQL Server 2000 software.

SALE ‘PROHIBITED’

Reuters did not have access to other transport records, such as customs and delivery forms, specifying which equipment reached MCI. But a later Huawei document stated that equipment for the telecom expansion project had arrived in Iran.

MCI did not respond to a request for comment.

A spokesman for Hewlett Packard Enterprise said: “Our contract terms prohibited the sale of these products to Iran, and required that our partners comply with all applicable export laws and regulations. This remains true today.”

Microsoft did not answer questions about the legality of shipping its server software to Iran. Symantec, now called NortonLifeLock Inc, declined to comment. The current owner of the Novell software didn’t respond to a request for comment.

Some of the newly obtained documents suggest Huawei may have used Panda International to purchase hardware and software.

The records include a signed equipment contract between MCI and Panda International that included more than $10 million worth of equipment for the billing system project, although it doesn’t specify all of the gear. According to the contract, which references an invoice from September 2010, MCI was to pay Panda International through China Construction Bank’s branch in the city of Shenzhen – the location of Huawei’s headquarters.

Panda International is controlled by China Electronics Corp, a Chinese state-owned tech company. According to Panda International’s website, Panda has a “long and deep history with Huawei” that began in 2007.

People familiar with the matter told Reuters that Huawei regularly used Panda International to ship equipment to customers in Iran and Syria.

Panda International, China Electronics and China Construction Bank did not respond to requests for comment.

In 2014, the U.S. Department of Commerce added Panda International to its “Entity List” - a roster of companies effectively banned from doing business with U.S. firms. The department said Panda International may have attempted “to export items to destinations sanctioned by the United States.”

The documents reviewed by Reuters show that Huawei was involved in the equipment contract between Panda International and MCI.

A letter from MCI to Huawei with a handwritten date in July 2011 reported a series of problems with the installation of HP racks and other equipment in Shiraz related to the Panda International contract.

Two years later, a joint letter signed by officials from Huawei and MCI in October 2013 confirmed that “problems and shortcomings” under the equipment contract “were resolved by Huawei.”

---30---

The Trump administration is warning allies to stay away from Huawei — but not everyone's listening

insider@insider.com (Isobel Asher Hamilton),Business Insider•January 13, 2020
 

Trump Ren Zhengfei
AP/Evan Vucci/Vincent Yu/Business Insider composite


The US and Chinese phone giant Huawei are at each other's throats.


America claims Huawei is used as a backdoor for the Chinese government to spy. Huawei denies this.


The US has been lobbying allies to reject Huawei's 5G technology, but not everyone's listening.




For over a year the US has been in a political dogfight with Chinese tech giant Huawei over claims the company acts as a proxy for the Chinese government to spy.

Although US officials have long cautioned against the company, tensions heightened in December 2018 when Huawei CFO Meng Wanzhou was arrested in Canada, and subsequently indicted by the US for alleged bank and wire fraud. Meng and Huawei deny any wrongdoing, and the CFO is currently fighting extradition to the US.

Read more: What you need to know about Meng Wanzhou, a Chinese tech founder's daughter whose arrest could set fire to US-China relations

Initially, Huawei struck a conciliatory tone, with CEO Ren Zhengfei (who is also Meng Wanzhou's father) breaking a long press silence to call Donald Trump a "great president." Since then, however, a fight has erupted between the company and the Trump administration, with Huawei denying any claims of spying and accusing the US of orchestrating Meng Wanzhou's arrest for political reasons.

The US has been furiously lobbying its allies to freeze out Huawei's 5G network equipment, citing national security concerns. Secretary of State Mike Pompeo warned allied countries in mid-February 2019 that it would be "more difficult" for the US to partner with countries that didn't distance themselves from Huawei.

President Trump ramped up the pressure yet further in May last year by signing an executive order declaring a national emergency over "threats against information and communications technology and services," a move expected to precede a ban on US businesses buying equipment from Huawei. Since then the company has received three 90-day licenses, so the blacklisting has yet to fully kick in.

Still America continues to lobby against the company, but its efforts have been met with mixed success. Here is a run-down of how allies have reacted.

Britain
 

Boris Johnson
Spencer Platt/Getty Images

Multiple reports surfaced on April 24 that Prime Minister Theresa May had given the order allowing Huawei to build "non-core" parts of the UK's 5G infrastructure.

The Financial Times reported in February that the British government decided it could "mitigate the risks" associated with using Huawei's 5G technology, and in the same month head of GCHQ Jeremy Fleming said the UK had to be wary of the security threats posed by Chinese tech companies.

In March, Britain's government-led board in charge of vetting Huawei criticised the company's mobile network equipment for "major [security] defects," but added that it did not believe the defects were the result of state interference, but rather poor engineering.

The UK delayed making a decision on whether to exclude Huawei from its 5G network on July 23, a move which Huawei Vice President Victor Zhang said gave the company "confidence." Culture Secretary Jeremy Wright said the government was "not yet in a position" because of a lack of clarity from the US.

In January 2020 the US ratcheted up the pressure on the UK. Mike Pompeo met with Foreign Secretary Dominic Raab in Washington to discuss Huawei, and a delegation of US officials were sent to Britain to push for a total ban.

In the midst of the fresh onslaught of US lobbying head of MI5 Andrew Parker told the Financial Times he wasn't worried about the US cutting Britain off from intelligence-sharing.

In an interview with the BBC, Huawei CEO Ren Zhengfei hinted that the UK could benefit from the vacuum left by the US.

"We will invest even more in the UK. Because if the US doesn't trust us, then we will shift our investment from the US to the UK on an even bigger scale," he said.

Canada

justin trudeau
Lintao Zhang/Getty Images

Canada's relationship with the US has been a major factor in its battle with Huawei. In December 2018, Huawei CFO Meng Wanzhou was arrested in Vancouver. The Canadian government approved Meng's extradition in March, prompting rage from China. Meng is suing Canada over her arrest, claiming her rights were violated.

On the issue of 5G however, Canada's stance remains uncertain. Sources told Bloomberg in January that the Canadian government was conducting a security review, and was months away from reaching a decision about whether to restrict or ban Huawei.

China's ambassador to Canada Lu Shaye issued a warning in January, saying he believed there would be "repercussions" if the country froze Huawei out. Just before Trump signed the executive order declaring a national emergency, Canada's Public Safety Minister Ralph Goodale told reporters:

"We obviously pay careful attention to what our allies are saying and doing. Some have expressed views, others have not... We'll take all that into account, but we want to make the very best decision for Canada with respect to the technology and also on national security. Our national security will not be compromised."

Huawei has also been on a PR charm offensive. the New York Times reported in February 2019 that Huawei was trying to woo Canada, becoming a prominent sponsor of the sports show "Hockey Night."

Germany
 

Angela Merkel
Dario Pignatelli/Reuters

Several unnamed German officials told The Wall Street Journal in February 2019 that Germany was leaning towards allowing Huawei to take part in building 5G networks in the country.

Officials told the Journal that the agreement was preliminary, and still had to be approved by the full cabinet and Parliament, which won't happen for several weeks.

The Wall Street Journal then reported in March that the US ambassador had upped the pressure on Germany. In a letter to the country's economics minister, the ambassador warned that if the country allowed Huawei or other Chinese partners to take part in its 5G plans, the US would have to reduce the amount of information it shares with German security forces.

Just days later, Chancellor Angela Merkel said that Germany would set its own security standards for 5G.



Japan
 

Shinzo Abe
Shizuo Kambayashi/AP

Japan effectively banned Huawei, along with fellow Chinese tech company ZTE, from winning any government contracts back December 2018, shortly after CFO Meng Wanzhou was arrested in Canada. The Washington Post reported at the time that Japan's three biggest telecom operators planned to follow suit.

India
 

Narendra Modi
REUTERS/Wolfgang Rattay

A Wall Street Journal report from February 2019 suggested that the US is not having much luck in convincing India to freeze Huawei out.

Read more: The US is having a tough time persuading the world's biggest democracy to ditch Huawei

"Huawei is today at the frontier on 5G and so can't be ignored," an unnamed Indian official told the Journal. The same official added that India would select 5G vendors on its own terms, "not under pressure" from the US.

India is a rapidly expanding online market, and will be a major win for Huawei if it can start selling its 5G kit in the country, and conversely a huge blow to the US.

United Arab Emirates

Sheikh Abdullah bin Zayed Al Nahyan and Mike Pompeo.JPG
Andrew Harnik/Pool via REUTERS

The United Arab Emirates, a major ally of the US in the Middle East, announced in February 2019 that it will deploy a 5G network built by Huawei this year, signifying a major setback in America's lobbying efforts.

An unnamed American official told the Wall Street Journal that the US will watch the UAE-Huawei partnership closely.

Poland
 

Mike Pence and Polish President Andrzej Duda
REUTERS/Kacper Pempel

After Polish security services arrested a Chinese Huawei employee on allegations of spying in January 2019, both Huawei and the US seem to have stepped up their game in courting the country.

A month later US Vice President Mike Pence praised the country for its commitment to "protecting the telecoms sector from China."

Poland is considering excluding Huawei, and the company has been furiously trying to win back favor, even offering to build a "cybersecurity center" there.

Australia
 

Scott Morrisson
AP Photos/Rod McGuirk

Australia banned Huawei and ZTE from supplying tech for the country's networks in August 2018. In response, China said Australia was using "various excuses to artificially erect barriers," and called on it to "abandon ideological prejudices and provide a fair competitive environment for Chinese companies."

New Zealand
 

Jacinda Ardern
REUTERS/Arnd Wiegmann/File Photo

In November 2018, New Zealand blocked Huawei's 5G technology. Its intelligence agency shot down a proposal from one of the country's biggest telecom carriers Spark to use Huawei equipment in its 5G network, citing "significant security risks."

The following February Huawei reacted by taking out full-page ads in New Zealand newspapers saying "5G without Huawei is like rugby without New Zealand," trying to draw a parallel between its own 5G tech and New Zealand's All Blacks rugby team.

By November 2019 Huawei had managed to wangle its way back in. Spark announced Huawei as one of its preferred 5G vendors alongside Samsung and Nokia, per Nikkei Asian Review.

The European Union
  

Julian King EU Commission
Alexandros Michailidis/Shutterstock

The European Commission released its recommendations to member states on March 26, 2019 regarding the security of 5G networks — and its advice did not include banning Huawei. It recommended that member states conduct their own risk assessments by the end of June 2019.

Commissioner Julian King told reporters that Europe needs to reach its own conclusions about 5G security, "not because anybody else has suggested that we need to do this or because we are reacting to steps taken anywhere else," CNN reported.

Huawei praised the Commission's advice, saying it was "objective and proportionate."

However the Commission did not rule Huawei out as a threat entirely. Vice President Andrus Ansip told reporters:

"We have some kind of specific concerns connected with some producers, so everybody knows I'm talking about China and Huawei... Do we have to worry about this, or not? I think we have to be worried about this."

---30---

China's Huawei blames global chip shortage on U.S. sanctions

Sam Shead 

CNBC

4/12/2021


Huawei rotating chairman Eric Xu said "the U.S. sanctions is the main reason why we are seeing panic stockpiling of major companies around the world."

Huawei itself has built up a stockpile of chips to try to ensure its business — focused on telecoms equipment and consumer electronics — can continue as normal.

Huawei also announced that it is planning to invest $1 billion into self-driving and electric car research and development as it looks to compete with the likes of Tesla, Apple, Nio and Xiaomi

.

© Provided by CNBC The U.S. flag and a smartphone with the Huawei and 5G network logo are seen on a PC motherboard in this illustration taken January 29, 2020.

Huawei said Monday that U.S. sanctions on the company are partly to blame for the ongoing global chip shortage that's the subject of a White House conference on Monday.

Eric Xu, Huawei's rotating chairman, said the sanctions imposed over the last two years on the Chinese tech company are, "hurting the global semiconductor industry" because they have "disrupted the trusted relationship in the semiconductor industry."

Speaking to analysts in Shenzhen at Huawei's Analyst Summit, Xu said: "The U.S. sanctions is the main reason why we are seeing panic stockpiling of major companies around the world."

He added: "Some of them never stockpiled anything, but because of the sanctions they are now having three months or six months of stockpiles."

Huawei itself has built up a stockpile of chips to try to ensure its business — focused on telecoms equipment and consumer electronics — can continue as normal.

Some companies in other industries, such as the automotive sector, have been forced to temporarily shut down operations as a result of the chip shortage. U.S. auto executives and tech leaders were scheduled to meet remotely with President Joe Biden on Monday.

Until recently, the semiconductor supply chain "was running on the assumption that it should be flexible with zero stockpiles," said Xu, one of three Huawei executives who take turns as chairman.

"That's why the panic stockpiling in recent days has added to the supply shortage of global semiconductor industry," he said. "That has disrupted the whole system. Clearly the unwarranted U.S. sanctions against Huawei and other companies are turning into a global and industrywide supply shortage."

The U.S. imposed sanctions on Huawei after accusing it of building backdoors into its equipment that could be exploited by the Chinese Communist Party for espionage purposes.

In 2019, Huawei was put on a U.S. blacklist called the Entity List. This restricted American companies from exporting certain technologies to Huawei. Google ended up cutting ties with Huawei, meaning the Chinese giant could not use Google's Android operating system on its smartphones. Last year, the U.S. moved to cut Huawei off from key chip supplies it needs for its smartphones.

Huawei strongly denies the U.S. allegations.

$1 billion into self-driving cars

Huawei is pursuing new avenues after the sanctions imposed by the Trump administration left its once-leading smartphone business in tatters, while also hindering progress in its semiconductor and 5G businesses.

Xu said he doesn't expect the Biden administration to change the rules any time soon and the company is investing in new areas like health care, farming, and electric cars to try to mitigate the impact of being blacklisted by the U.S.

"We believe, we'll continue to live and work under the entity listing for a long period of time," he said. "The overall strategy as well as the specific initiatives for Huawei are all designed and developed in a way that the company would be able to survive and develop while staying on the entity list for a long time."

Huawei said Monday it plans to invest $1 billion into self-driving and electric car research and development as it looks to compete with the likes of Tesla, Apple, Nio and Xiaomi.

Xu claimed that Huawei's self-driving technology already surpasses Tesla's as it allows cars to cruise for more than 1,000 kilometers (621 miles) without human intervention. Tesla's vehicles can't do more than 800 kilometers and drivers are meant to keep their hands on the wheel for safety purposes.

Huawei will initially partner with three automakers on self-driving cars including BAIC Group, Chongqing Changan Automobile Co and Guangzhou Automobile Group. The company's logo is likely to be put on cars in the same way that Intel's logo is put on some computers.

"Once self-driving is achieved, we're able to disrupt all of the related industries, and we think that in the foreseeable future, namely in the next decade, the biggest opportunity and breakthrough will be from the automobile industry," Xu said.

After sanctions, Huawei turning to businesses less reliant on high-end U.S. tech

© Reuters/GONZALO FUENTES

 Huawei logo at Huawei Technologies France in Boulogne-Billancourt

SHENZHEN, China (Reuters) -Chinese telecoms equipment maker Huawei Technologies is making business resilience its top priority with a push to develop its software capabilities as it seeks to overcome U.S. restrictions that have devastated its smartphone business.

Huawei was put on an export blacklist by former U.S. President Donald Trump in 2019 and barred from accessing critical technology of U.S. origin, affecting its ability to design its own chips and source components from outside vendors.

The ban put Huawei's handset business under immense pressure.

The company harbours "no expectation" of being removed from the Entity List under the administration of U.S. President Joe Biden, and is now looking to develop other lines of business after spending the last year in survival mode, the company's rotating chairman Eric Xu said on Monday.

"We cannot develop our strategy based on either a groundless assumption or on unrealistic hopes, because if we do that, and if we cannot be taken off from the entity list, it's going to be extremely difficult for the company," Xu said in a Q&A on the launch of the company's annual summit for analysts.

The company will invest more in businesses that are less reliant on advance process techniques, Xu said, highlighting the company's intelligent driving business, in which he said the company would invest more than $1 billion this year.

The company's autonomous driving technology allows cars to travel over 1,000 kilometers, overtaking Tesla in that area, Xu said.

Xu said Huawei was working with three domestic carmarkers on sub-brands that will be designated 'Huawei Inside' models.

In February, Reuters reported that Huawei planned to make electric vehicles under its own brand, which Huawei denies. [L1N2KnW0F9]

Xu said that U.S. action against Huawei had damaged trust across the semiconductor industry, and contributed to global chip shortages as Chinese companies rushed to stockpile three to six months worth of semiconductors last year, fearing similar action against them.

The combined demand from the Chinese market for chip supplies that are not affected by U.S. rules or which could be compliant with U.S. rules would lead companies to invest in chips and also eventually supply Huawei, Xu said.

"If that can be done, and if our inventory level can help Huawei to last to that time, then that will help us to address the problems and challenges we face."

Xu also said the global rollout of 5G telecoms networks had "exceeded expectations."

Last year, the company saw a modest 3.2% rise in its annual profit as overseas revenues declined due to pandemic-related disruption and the impact of the U.S. sanctions, it said last month.

(Reporting by David Kirton. Writing by David Kirton and Tony Munroe. Editing by Ana Nicolaci da Costa and Mark Potter)

Huawei, Meng face new US charges of trade secrets theft

MEANWHILE CANADA IS WHERE THE HUAWEI TRIAL IS TAKING PLACE
TO SEND THE CFO, CURRENTLY UNDER HOUSE ARREST, TO THE USA FOR 
TRIAL THERE AS THE US ADDS MORE PHONY CHARGES. CANADA IS ACTING LIKE THE FRONT ENTRANCE MAT FOR TRUMP'S PHONY WAR ON CHINA/HUAWEI

by Rob Lever

US criminal charges allege the Chinese tech giant Huawei engaged in a "decades-long" effort to steal trade secrets from American companies

Chinese tech giant Huawei has been hit with fresh US criminal charges alleging a "decades-long" effort to steal trade secrets from American companies.

A US indictment unsealed in New York alleges Huawei and its proxies conspired "to misappropriate intellectual property" from six US firms as part of a strategy to grow and become the world's largest telecom equipment maker.

The new charges, including a federal racketeering allegation, add to an indictment unsealed in January 2019 that alleged Huawei stole trade secrets from US carrier T-Mobile.

The indictment names Huawei and several subsidiaries, as well as the company's chief financial officer Meng Wanzhou, who has been arrested in Canada over a related probe into Huawei's violations of US sanctions.

Huawei called the latest charges "unfounded and unfair" and predicted the case would be dismissed.

"This new indictment is part of the Justice Department's attempt to irrevocably damage Huawei's reputation and its business for reasons related to competition rather than law enforcement," the company said.

"The 'racketeering enterprise' that the government charged today is nothing more than a contrived repackaging of a handful of civil allegations that are almost 20 years old."

Huawei, one of the world's largest tech firms, has been blacklisted by Washington amid concerns over its ties to the Chinese government and intelligence services.

The sanctions are aimed at blocking Huawei from getting any US telecom equipment contracts and prevent the transfer of American technology to the Chinese firm.

But on Thursday the US Commerce Department delayed the implementation of some sanctions for an additional 45 days, saying it would help avoid disruption for certain telecom firms as they seek alternatives to Huawei.

'Long-running deception'

The new 16-count indictment says Huawei employed a "long-running practice of using fraud and deception to misappropriate sophisticated technology from US counterparts," a Justice Department statement said, without naming the American companies.

"Huawei's efforts to steal trade secrets and other sophisticated US technology were successful," according to the statement, which said the company "obtained nonpublic intellectual property relating to internet router source code, cellular antenna technology and robotics" to gain an "unfair competitive advantage" over rivals.

Huawei chief financial officer Meng Wanzhou, under house arrest in Canada pending an extradition request from the United States, has been indicted on new US criminal charges

According to the indictment, Huawei entered into confidentiality agreements with US tech firms and then violated those deals.

Huawei is accused of recruiting employees of other companies and "directing them to misappropriate their former employers' intellectual property."

The indictment also claims Huawei used "proxies" such as professors working at research institutions to steal trade secrets and "launched a policy instituting a bonus program to reward employees who obtained confidential information from competitors."

The fresh charges come amid heightened US-China trade tensions and efforts by Washington to keep Huawei from obtaining contracts for 5G, or fifth-generation wireless networks.

China on Friday repeated previous allegations that the US treatment of Huawei amounted to "economic bullying."

"We urge the US to immediately cease its unreasonable oppression of Chinese enterprises," a foreign ministry spokesman said.

According to the 56-page indictment, Huawei is also accused of using its subsidiaries around the world to conceal its dealings with Iran and North Korea, which are subject to US sanctions.

Meng, arrested in late 2018, is under house arrest in Canada pending a ruling on whether she will be extradited to face charges in the United States.

Meng is accused of lying to HSBC bank about Huawei's relationship with its Iran-based affiliate Skycom, putting the bank at risk of violating US sanctions against Tehran.

The US administration has had mixed results in persuading allies to steer clear of Huawei for 5G networks.

France announced Thursday it would not bow to American pressure to exclude Huawei from supplying equipment for its 5G networks, though the Chinese firm could be subject to restrictions.

Last month the EU and UK both released guidelines saying that governments should avoid dependence on "high risk" suppliers of 5G equipment when building their next-generation mobile networks, but stopped short of banning any one vendor outright.

Huawei pleads not guilty to trade secrets charges in Seattle

---

© 2020 AFP

COLD WAR 2.0

Exclusive: U.S. probes China’s Huawei over equipment near missile silos; Nebraska silos may be affected

By Todd Epp

Smartphone with a Huawei logo is seen in front of a U.S. flag in this illustration taken September 28, 2021. REUTERS/Dado Ruvic/Illustration/File Photo.

WASHINGTON, July 21 (Reuters) – The Biden administration is investigating Chinese telecoms equipment maker Huawei over concerns that U.S. cell towers fitted with its gear could capture sensitive information from military bases and missile silos that the company could then transmit to China, two people familiar with the matter said.

Authorities are concerned Huawei (HWT.UL) could obtain sensitive data on military drills and the readiness status of bases and personnel via the equipment, one of the people said, requesting anonymity because the investigation is confidential and involves national security.

The previously unreported probe was opened by the Commerce Department shortly after Joe Biden took office early last year, the sources said, following the implementation of rules to flesh out a May 2019 executive order that gave the agency the investigative authority.

The agency subpoenaed Huawei in April 2021 to learn the company’s policy on sharing data with foreign parties that its equipment could capture from cell phones, including messages and geolocational data, according to the 10-page document seen by Reuters.

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The Commerce Department said it could not “confirm or deny ongoing investigations.” It added that: “protecting U.S. persons’ safety and security against malign information collection is vital to protecting our economy and national security.”

Huawei did not respond to a request for comment. The company has strongly denied U.S. government allegations that it could spy on U.S. customers and poses a national security threat.

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The Chinese embassy in Washington did not respond to the specific allegations. In an emailed statement, it said: “The U.S. government abuses the concept of national security and state power to go all out to suppress Huawei and other Chinese telecommunications companies without providing any solid proof that they constitute a security threat to the U.S. and other countries.”

Reuters could not determine what actions the agency might take against Huawei.

Eight current and former U.S. government officials said the probe reflects lingering national security concerns about the company, which was already hit with a slew of U.S. restrictions in recent years.

For a timeline on the U.S. government’s trade restrictions on Huawei please click https://graphics.reuters.com/USA-CHINA/HUAWEI-TIMELINE/zgvomxwlgvd/

If the Commerce Department determines Huawei poses a national security threat, it could go beyond existing restrictions imposed by the Federal Communications Commission (FCC), the U.S. telecoms regulator.

Using broad new powers created by the Trump administration, the agency could ban all U.S. transactions with Huawei, demanding U.S. telecoms carriers that still rely on its gear quickly remove it, or face fines or other penalties, a number of lawyers, academics and former officials interviewed by Reuters said.

The FCC declined to comment.

U.S.-CHINA TECH WAR

Huawei has long been dogged by U.S. government allegations it could spy on U.S. customers, though authorities in Washington have made little evidence public. The company denies the allegations.

“If Chinese companies like Huawei are given unfettered access to our telecommunications infrastructure, they could collect any of your information that traverses their devices or networks,” FBI Director Christopher Wray warned in a speech in 2020. “Worse still: They’d have no choice but to hand it over to the Chinese government, if asked.”

Reuters could not determine if Huawei’s equipment is capable of collecting that sort of sensitive information and providing it to China.

“If you can stick a receiver on a (cellphone) tower, you can collect signals and that means you can get intelligence. No intelligence agency would pass an opportunity like that,” said Jim Lewis, a technology and cybersecurity expert at the Center for Strategic and International Studies (CSIS), a Washington D.C.-based think tank.

One move to address the perceived threat was a 2019 law and related rules forbidding U.S. companies from using federal subsidies to buy telecoms equipment from Huawei. It also tasked the FCC with compelling U.S. carriers that receive federal subsidies to purge their networks of Huawei equipment, in return for reimbursement.

But the so-called “rip and replace” deadline to remove and destroy Huawei equipment completely will not kick in until mid-2023 at the earliest, with additional opportunities for companies to seek extensions. And reimbursements will only reach 40% of the total requested for now.

TOWERS NEAR MISSILE SILOS

Cell towers equipped with Huawei gear that are close to sensitive military and intelligence sites have become a particular concern for U.S. authorities, according to the two sources and an FCC commissioner.

Brendan Carr, one of the FCC’s five commissioners, said that cellphone towers around Montana’s Malmstrom Air Force Base – one of three that oversee missile fields in the United States – ran on Huawei technology.

In an interview this week, he told Reuters there was a risk that data from smartphones obtained by Huawei could reveal troop movements near the sites: “There’s a very real concern that some of that technology could be used as an early warning system if there happened to be, God forbid, an ICBM missile strike.”

Reuters was unable to determine the exact location or scope of Huawei equipment operating near military facilities. Individuals interviewed by Reuters pointed to at least two other likely cases in Nebraska and Wyoming.

Crystal Rhoades, a commissioner at Nebraska’s telecoms regulator, has flagged to media the risk posed by the proximity of cell towers owned by Viaero to intercontinental ballistic missile (ICBM) silos in the western part of the state.

ICBMs carry nuclear warheads to targets thousands of miles away and are stored in underground silos near military bases. The Nebraska cell towers are near a missile field overseen by F.E. Warren Air Force Base in neighboring Wyoming.

Viaero provides mobile telephone and wireless broadband services to about 110,000 customers in the region. It said in a 2018 filing to the FCC opposing the commission’s efforts at curbing Huawei’s expansion that approximately 80% of its equipment was manufactured by the Chinese firm.

That gear could potentially enable Huawei to glean sensitive information about the sites, Rhoades told Reuters in June.

“An enemy state could potentially see when things are online, when things are offline, the level of security, how many people are on duty in any given building where there are really dangerous and sophisticated weapons,” Rhoades said.

Rhoades said in July that she had not been updated on rip and replace efforts by Viaero in more than two years, despite requesting updated information from the company in recent weeks.

At the time of last contact, the company said it would not begin removal efforts until the FCC money became available.

The FCC advised companies on Monday how much of their funding requests it can reimburse.

Viaero did not respond to multiple requests for comment. Huawei also declined to comment.

In Wyoming, then CEO of rural carrier Union Wireless, John Woody, said in a 2018 interview with Reuters that the company’s coverage area included ICBM silos near the F.E. Warren Air Force Base and that its equipment included Huawei switches, routers and cell sites.

Last month, Eric Woody, John’s son and acting CEO, said “virtually all the Huawei gear Union purchased remains in our network.” He declined to say whether the towers close to the sensitive military sites contain Huawei equipment.

F.E. Warren Air Force Base referred comment on the Huawei equipment to the Pentagon. The United States Strategic Command, which is responsible for nuclear operations, said in a statement to Reuters: “We maintain constant awareness of activities near our installations and sites.” It noted that “any concerns are on a whole of government level” but declined to provide further details on what those concerns are.

NEW POWERS AGAINST FOREIGN ADVERSARIES

Rick Sofield, a former DOJ official in the national security division who reviewed telecoms transactions, said the Commerce Department probe could give additional bite to the FCC’s crackdown but there was nothing new in targeting Huawei.

“The U.S. government’s concerns regarding Huawei are widely known so any information or communications technology company that continues to use Huawei products is assuming the risk that the U.S. government will come knocking,” said Sofield, who represents U.S. and foreign companies facing U.S. national security reviews. He said he has not worked for Huawei.

The Commerce Department is using authority granted in 2019 that allows it to ban or restrict transactions between U.S. firms and internet, telecom and tech companies from “foreign adversary” nations including Russia and China, according to the executive order and related rules.

The two sources familiar with the Huawei investigation and a former government official said Huawei was one of the Biden administration’s first cases using the new powers, referred to Commerce in early 2021 by the Justice Department.

The Justice Department referred requests for comment by Reuters to Commerce.

The subpoena is dated April 13, 2021, the same day that Commerce announced a document request was sent to an unnamed Chinese company under the new powers.

It gives Huawei 30 days to provide seven years’ worth of “records identifying Huawei’s business transactions and relationships with foreign entities located outside of the United States, including foreign government agencies or parties, that have access to, or that share in any capacity, U.S. user data collected by Huawei.”

Noting that the “focus of this investigation is the provisioning of mobile network and telecommunications equipment…by Huawei in the United States,” it also asks Huawei for a complete catalog of “all types of equipment sold” to “any communications provider in the United States,” including names and locations of the parties to the sale.

Reporting by Alexandra Alper; Additional reporting by Diane Bartz; Editing by Chris Sanders and Lisa Shumaker