House Intelligence Members Disappointed by Chinese Telecom Executives’ Answers

House Intelligence Committee members said they remain skeptical and frustrated about the response from Chinese telecom firms Huawei and ZTE to their investigation into whether the companies posed a security threat to the U.S. The committee has been investigating whether the Chinese government is using the companies as agents to commit espionage and threaten critical U.S. infrastructure (CD Nov 18 p5). The committee called in executives from both companies Thursday -- Charles Ding, Huawei’s senior vice president, and Zhu Jinyun, ZTE’s senior vice president for North America and Europe -- to answer questions under oath they think the companies haven’t properly responded to during the investigation.

"I am a little disappointed today,” said committee Chairman Mike Rogers, R-Mich. “I was hoping for a little more transparency in the answers given today. ... Other inconsistencies worry me greatly."

Ding and Zhu repeated their companies’ past statements they don’t use their products to help the Chinese government spy or steal information from U.S. entities. “China’s government has never made such a request,” Zhu said through a translator. “We expect the Chinese government never to make such a request of ZTE. If such a request were made, ZTE would be bound by U.S. law.”

The committee had requested information on the companies’ governance and ties to the Chinese government. It had not gotten some of that information because of issues with China’s laws on state secrets, Rogers said. Both companies describe themselves as privately owned entities. Rogers noted that both have established Chinese Communist Party committees and pressed both executives on how the committees affect company governance. Any company that does business in China must establish such a committee, Ding said, noting that American companies like WalMart and General Motors also established party committees for their Chinese divisions. Ding and Zhu said their companies’ party committees have no influence on company governance. “I have not seen a single occasion where the party committee has participated in business decisions,” Ding said.

Ding and Zhu expressed concern that the allegations of spying had hurt their companies’ ability to grow their business in the U.S. A Huawei-commissioned report released Aug. 30 criticized the committee’s investigation for not referencing some of the incidents and sources the upcoming report will use to criticize the companies. The report heavily referenced McCarthyism, leading with an Edward R. Murrow quote that ended in the line, “We must remember always that accusation is not proof” (http://xrl.us/bnpnmk). The committee will get into full specifics in an unclassified final report on its investigation, which is set to be published in October, Rogers told reporters. There also will be a classified version of the report, he said. “We have given them a full opportunity to answer questions,” Rogers said. “And candidly, we have gotten very poor responses, if [not] no responses at all.”

The two companies could vastly improve their ability to add business in the U.S. if China’s government didn’t engage in cyber attacks, said Ranking Member Dutch Ruppersberger, D-Md. “That is their major problem,” he said. “And if there is a connection with [China’s] Communist government, that concerns us."

Lawmakers pressed Ding and Zhu on specific incidents involving their products. Rogers said that sources in the committee’s investigation have revealed incidents where products from both companies were found to have possible backdoors for spying. Ding denied that any “backdoors” existed in Huawei equipment and said he’s unaware of reported incidents where anomalies in code on Huawei products could open up such backdoors. A similar incident in a ZTE product was a software bug, Zhu said. “These are the types of bugs that you find at all types of high-tech companies,” he said. “I want to emphasize that a bug is not a backdoor.” Rogers said in response that he thought the ZTE “bug” was intentionally designed into the product. “One person’s bug is yet another’s backdoor,” he said.