The United States' House Intelligence Committee, in a yearlong congressional investigation, claimed that the Chinese telecom giants Huawei and ZTE pose threat to national security and urged the Obama administration to restrict it from acquisitions and contracts with U.S. firms.
The committee said that the firms could not be free of influence from China, hence, are not trustworthy. "Based on available classified and unclassified information, Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems," the draft document said.
The investigation by the committee was launched last year amid fears that Beijing could use its fast-growing firms for cyber attacks or military espionage.
China's telecom equipment and handset maker and its rival Huawei have denied the allegations that their products threaten America's security, insisting that their only focus is on business and not politics.
In an emailed statement, Huawei Vice President William Plummer said more than 150 markets across the world respect and trust the integrity and independence of Huawei.
"Purporting that Huawei is somehow uniquely vulnerable to cyber mischief ignores technical and commercial realities, recklessly threatens American jobs and innovation, does nothing to protect national security, and should be exposed as dangerous political distractions," he added.
According to a statement from the Shenzhen-based ZTE, "Since April 2012, ZTE has presented the Committee with facts that demonstrate ZTE is China's most independent, transparent, globally focused publicly traded company." "ZTE's equipment is safe. In ZTE's Trusted Delivery Model, which ZTE offers all U.S. carriers, ZTE's equipment is evaluated by an independent U.S. threat assessment laboratory with oversight by U.S. government agencies," it stated on Monday.
According to the committee, both companies denied any ties with the Chinese government, but failed to give satisfactory answers over their relationship with Beijing. "China has the means, opportunity and motive to use telecommunications companies for malicious purposes," said the report.
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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