Australia/Israel & Jewish Affairs Council

New Huawei allegations - Iranian partner breaching US sanctions

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There are new allegations regarding the Chinese telecommunication company Huawei, with Reuters reporting that an Iranian partner of Huawei, Soda Gostar Persian Vista, last year tried to sell embargoed American antenna equipment to an Iranian firm.

Reuters reported:

"The buyer - an Iranian mobile-phone operator - says it canceled the deal with Huawei when it learnt the items were subject to sanctions and before any equipment was delivered. Huawei, the world's second-largest telecoms equipment maker, uses products from a U.S. company, Andrew LLC, in some of the systems it sells. Documents reviewed by Reuters show that Soda Gostar Persian Vista, a Tehran-based supplier of Huawei equipment in Iran, had offered to sell to MTN Irancell 36 cellular tower antennas made by Andrew for 14,364 euros. The equipment was to be delivered in Tehran on February 3, 2012, to ‘Huawei warehouse ready for installation,' according to a MTN Irancell purchase order dated November 30, 2011.

Huawei, based in Shenzhen, China, has an agreement with CommScope Inc. in Hickory, N.C. - which owns Andrew - to purchase Andrew antennas and other equipment and use the products in Huawei systems, according to CommScope. The Andrew antennas were part of a large order for Huawei telecommunications gear that MTN Irancell had placed through Soda Gostar, the documents show. Washington has banned the sale of U.S. technology to Iran for years. Huawei said in a statement that it complies with U.S. law and also requires third parties like Soda Gostar ‘to follow applicable laws and regulations.'  This month, the U.S. House Intelligence Committee criticized Huawei for failing 'to provide evidence to support its claims that it complies with all international sanctions or U.S. export laws.'"

Reuters also claims that it has documented how "China has become a backdoor way for Iran to obtain embargoed U.S. computer equipment." Huawei has denied the allegations in the Reuters report.

However, this latest report of breaching US sanctions, may further undermine Huawei's concerted efforts to improve its image in Australia, following an Australian government decision in March this year to block Huawei from bidding on its National Broadband Network (NBN) due to national security risks - see previous blog posts here and here. The Australian Security Intelligence Organisation advised the government that Huawei's involvement in the NBN could compromise national security due to the rise of cyber hacking by the Chinese Government and the view that Huawei could provide a helping hand to the Chinese government or at least be vulnerable to pressure.

Last week, Chairman of Huawei Australia John Lord was interviewed by the Age and dismissed the security concerns regarding Huawei. The Age report illustrates Huawei's strategic attempts to clean up its image, which includes the recruitment of high profiles Australians including former foreign affairs minister Alexander Downer, and former Victorian Premier John Brumby, as well as Lord himself - a former admiral in the Royal Australian Navy.

The Age reported:

"After leaving military service 10 years ago, after serving three tours of duty in Vietnam including a seven-month stint on HMS Brisbane, he [Lord] has been entrusted with a monumental task of convincing his former colleagues in the national security establishment that Huawei is not a cyber security threat.

It is an uphill battle that is no less difficult than defeating the ghost-like Vietcong. Huawei has been accused of being a national security threat by the US and has been unofficially excluded from the $36 billion national broadband project on the advice of ASIO, Australia's domestic spy agency.

Although no publicly available evidence has emerged to indict Huawei, the company must dispel the strong suspicion it has links to the People's Liberation Army, which has been fighting a secret cyber war with the US, according to numerous reports from America.

Huawei's charm offensive includes help from Australia's longest serving foreign minister, Alexander Downer, and the former Labor premier of Victoria John Brumby.

Lord had not even heard of the company when he got an early morning phone call from a former colleague on behalf of Huawei in November 2010, asking him to be a director on its local board.

He was reluctant to accept the offer in the first few months and wondered about the potential impact on him and his position at the time as the chairman of a defence company.

But he agreed to join after seven months of intensive due diligence, including talking to his former military and civilian colleagues in Canberra and the imperial chief executive of Huawei, Ren.

The former admiral said not all his friends supported his decision to join a Chinese company, including his former officer corps..."

Earlier in the month Lord also wrote an article in the Australian Financial Review dismissing the recommendations of a US congressional report (released on October 8) that found that Huawei was a cyber security risk to the US, as "protectionist propaganda for commercial advantage".

However, Lord has yet to explain why Huawei did not sufficiently cooperate with the year-long US investigation, and in particular why it did not provide information on Huawei's "corporate structure, history, ownership, operations, financial arrangements, or management", according to the Congressional report. This information is vital if Huawei is going to set the record straight, particularly following reports that the Chinese Communist Committee has offices in Huawei's headquarters, as mentioned in a recent US 60 Minutes report.

Nor has Lord addressed the allegations reported in the Wall Street Journal last year that Huawei enabled the Iranian regime to track Iranian dissidents during the Green revolution through telecommunications technology, resulting in deaths and torture of dissidents.

Similar concerns were raised by Federal Member for Melbourne Ports Michael Danby, who discussed Huawei's "surprise appearance before Australia's public hearing of the Parliamentary Joint Committee on Intelligence and Security" in the Australian on October 26:

"Testimony at the public hearing in Canberra was more polite than in Washington, but no less pointed. Senator Mark Bishop and independent MP Andrew Wilkie established that Huawei is a major telephony provider to the regime in Iran. Clearly this is UN sanction busting. Australian senators recounted the crude boasts of Huawei salesmen that their equipment would assist Tehran leaders in intercepting and monitoring Iran's population.

Most importantly, in little noticed admissions to the public hearing last month of the Australian intelligence committee, Huawei admitted that a Communist Party cell had an advisory and technical role in the leadership of the firm. This is precisely the main allegation made in The Economist's cover story "The Company That Spooked the World" and then in Washington.

Huawei executives who were not subpoenaed to appear before the Australian parliamentary intelligence committee hearing agreed their company was designated by the Chinese government as a ‘national champion' and a major operator in one of China's seven ‘strategic sectors'. A ‘national champion' in China means market domination is assured through protectionism, taxation subsidies and generous access to "soft loans" - in Huawei's case, to the tune of $30 billion.

Concerns about security implications of allowing Huawei to bid for the spinal telephony of Western countries has been a focus of security concerns not just in Australia, the US and India. Now there seems to be serious rethinking in Britain and Germany. Britain's Parliamentary Intelligence and Security Committee, headed by Malcolm Rifkind, former conservative foreign minister, has confirmed the company will be re-examined. The Guardian quoted him in contradiction to Downer's blandishments as saying: ‘The committee is reviewing the whole presence of Huawei in regards to critical national infrastructure and whether this should give rise to concern.' Rifkind explained his committee would be looking at the contract between Huawei and British Telecom, and whether the Chinese telecom's deep involvement in British telephony was a security concern.

Germany's national research and education network, Deutsches Forschungsnetz, has denied Huawei the right to bid for upgrading the German network, again following Australia's lead on security...

In a generous mood, one might forgive Downer for his loyalty to a successful employer, but any reasonable analysis of Huawei's record of setbacks with international security and legislative bodies suggests he has merely chosen to look the other way. We mustn't listen to former politicians such as Schroeder, Downer or John Brumby, who are backing a horse called ‘Self Interest'."

Lord truly does have his work cut out for him if he is to achieve his goal of repairing Huawei's image in Australia, as more and more material on the company comes to light. The latest reports linking Huawei to breaching US sanctions on Iran will not help.

Sharyn Mittelman

 

 

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