The following is part three of a five part series about Huawei, the Chinese telecom giant. I wrote this paper while I was working on my Master’s Degree at Penn State and believe that is relevant today given the simmering tensions with China. In my opinion, this paper is a tangible example of the Non-Kinetic War that China is waging against us that we previously discussed here. Click the links for Part 1 and Part 2. Today we will discuss U.S. security concerns, International concerns, Espionage and U.S. Prosecutors.

Security Concerns

“Intelligence agencies in the United States have said American citizens shouldn’t use Huawei phones, and US government agencies are banned from buying the company’s equipment. Security concerns have caused problems in the United Kingdom. New Zealand and Australia have barred Huawei equipment from its 5G mobile networks.” (Horowitz, 2018) Mike Pompeo the US Secretary of State, cautioned against Huawei, stating, “If a country adopts this and puts it in some of their critical information systems, we won’t be able to share information with them.” (Vaswani, 2019) “The U.S. has said Huawei equipment could provide backdoors for the Chinese government into American networks.” (Kharpal, 2019) “In 2012, Huawei and ZTE Corp, another Chinese telecom company, were the subjects of an investigation that looked into whether their equipment could pose a threat to US interests. That report by US Congress concluded that “Huawei did not fully cooperate with the investigation and was unwilling to explain its relationship with the Chinese government or Chinese Communist Party, while credible evidence exists that it fails to comply with US laws.”” (Al Jazeera, 2018) A BBC article summarizes the security concerns that “In principle, controlling the technology that sits at the heart of vital communications networks gives Huawei the capacity to conduct espionage or disrupt communications during any future dispute, particularly as more things, from autonomous vehicles to domestic appliances, become connected to the internet.” (2019)

International Security Issues

Citing security concerns from using Huawei technology for critical infrastructure, the U.S., other members of the Five Eyes, whose intelligence agencies share information on a large scale, and other countries have begun to limit or ban the use of Huawei technology. (Al Jazeera, 2018) Some of the international concerns are:

• “The U.K.’s Huawei Cyber Security Evaluation Centre (HCSEC) Oversight Board issued a report which said that it “continued to identify concerning issues in Huawei’s approach to software development bringing significantly increased risk to U.K. operators.”” (Doffman, 2019)
• “Polish authorities arrested a sales director of Huawei Technologies Co. and charged him with conducting espionage on behalf of China.” (Hinshaw, Strumpf and Tofimov, 2019)
• Australia “banned equipment suppliers “likely to be subject to extrajudicial directions from a foreign government”. Huawei was not mentioned by name, but Danielle Cave of the Australian Strategic Policy Institute says the company posed a national security risk because of its government links.” (Vaswani, 2019)
• Japan will also “halt government purchases of equipment from Huawei and ZTE. Citing unnamed sources, Reuters says the decision was motivated by a need to beef up the country’s defenses against “intelligence leaks and cyber-attacks.” (Jonnalagadda, 2018)
• New Zealand’s spy agency, the Government Communications Security Bureau (GCSB) blocked its top telecom firm, Spark, from using Huawei equipment for its 5G mobile network stating that if implemented, it would “raise significant national security risks” and “that a significant network security risk was identified.” (Pham, 2018)

US lawmakers and numerous federal departments are pressuring various universities and institutions of higher education to do the same:

• “Huawei Technologies, the private global Chinese tech giant, and Confucius Institute, a Beijing-linked body that promotes China’s language and culture, have been targeted by for very different reasons, but the American government believes both undermine its interests.” (Delaney, 2019)
• MIT has suspended collaboration with Chinese companies like Huawei and ZTE due to recommendations from Homeland Security official’s determination of a National Security risk. (Hruska, 2019)
• “Stanford University, University of California’s flagship Berkeley campus, and other schools made their decisions to cut ties with Huawei and “has established a moratorium on new engagements, gifts, affiliate membership fees and other support from Huawei”” (Delaney, 2019)
• “Princeton cut new funding ties with Huawei last year, said Ben Chang, the school’s director of media relations, and in January “informed Huawei we would not accept the third and final $150,000 instalment of a gift in support of computer-science research, which was our only active Huawei-supported project”. (Delaney, 2019)
• “Harvard no longer has relationships with Huawei after the company’s funding of two faculty members ended.” (Delaney, 2019)
• “The University of Illinois at Urbana-Champaign, University of Chicago, University of California-Los Angeles, Massachusetts Institute of Technology – all cited by Huawei as HIRP collaborators.” (Delaney, 2019)

Espionage

Does Huawei have a history of potential espionage? “In 2006, Beijing pledged $200m to build the [African Union] headquarters. Completed in 2012, everything was custom-built by the Chinese – including a state-of-the-art computer system. For several years, the building stood as a proud testament to ever-closer ties between China and Africa. Trade has rocketed over the past two decades, growing by about 20% a year, according to international consultancy McKinsey. China is Africa’s largest economic partner.” (Vaswani, 2019) Then, French newspaper Le Monde Afrique reported in January 2018 that the African Union’s computer system had been compromised. “The newspaper, citing multiple sources, said that for five years, between the hours of midnight and 0200, data from the AU’s servers was transferred more than 8,000km away – to servers in Shanghai. This had allegedly continued for 1,825 days in a row… It was also reported that microphones and listening devices had been discovered in the walls and desks of the building, following a sweep for bugs.” (Vaswani, 2019) Huawei was “the main supplier of information and communication technology systems to the AU headquarters.” (Vaswani, 2019)

U.S. Prosecutors

U.S. prosecutors announced multiple charges against Huawei, including “money laundering, bank fraud, wire fraud and conspiracy. Huawei was also charged with conspiracy to obstruct justice. A separate indictment from Washington state accused Huawei, Skycom and Meng [Wanzhou, Huawei’s CFO] of stealing trade secrets from the telecommunications company T-Mobile” in 2014. (Vaswani, 2019) It’s has been alleged that a US employee of Huawei attempted to steal T-Mobile’s robotic arm with the intent to send it to China. “Huawei claimed that the employee had been acting alone, and the case was settled out of court in 2014. But the latest case is built on email trails between managers in China and the company’s US employees, linking Huawei management to the alleged theft.” (Vaswani, 2019) In addition, “the indictment also details evidence of a bonus scheme from 2013, offering Huawei employees financial rewards for stealing confidential information from competitors.” (Vaswani, 2019) “This is not the first time that Huawei has been accused of stealing trade secrets. Over the years companies like Cisco, Nortel and Motorola have all pointed the finger at the Chinese firm.” (Vaswani, 2019) The following is a summary of the eight ways Huawei employed to “spy and lie” on T-Mobile outlined in the U.S. indictment by Bruce Sussman of Secure World, a cyber security publication:

1. Continued pressure on U.S. based engineers to send back proprietary information.
2. Huawei employees take pictures and send back specifications for the robot arm.
3. S. based engineers were under such pressure that they requested other Huawei engineers to come to complete the theft.
4. Huawei China sends additional engineers to reconnoiter the Seattle T-Mobile lab.
5. T-Mobil bans two Huawei employees from the lab for improper access.
6. A Huawei engineer steels the robot arm, takes pictures and sends back specifications.
7. Huawei tried to cover up the theft by stating the employees were acting on their own.
8. Huawei offers bonuses for stealing proprietary information. (2019)

In addition to the internal emails that reveal bonus structures for stealing proprietary information, it has been reported that “the Chinese government has a strategy of compelling its citizens who work in the US to cooperate with its corporate espionage schemes by using the leverage it has over their “social credit scores” — which they and their families back home in China need to be able to buy and sell and get along in daily life.” (Dreher, 2019) If true, as the major telecommunications company in China Huawei must be complicit in such activities.

Tomorrow, we will cover Chinese Law, Huawei’s CFO, and Recommendations.