U.S. Lawmakers Expand Probe to Chinese Companies’ Dealings

Two U.S. lawmakers asked Chinese telecommunications companies Huawei Technologies Co. and ZTE Corp. (000063) for details about their business dealings as part of an investigation into how their expansion may affect U.S. security.

House Intelligence Committee Chairman Mike Rogers, a Michigan Republican, and the committee’s top Democrat, C.A. “Dutch” Ruppersberger of Maryland, sent letters dated yesterday to high-ranking officials of both companies.

The letters, made public today, seek details about the company’s ownership, their operations in the U.S., what funding they receive from the Chinese government and what connections they have with Chinese government officials.

“I remain concerned about the national security threat posed by the potential expansion of Huawei and ZTE into our telecommunications infrastructure,” Rogers said in a statement today. “We must get to the bottom of these issues before the companies have further access to our market.”

The House Intelligence Committee began an investigation last year “to review the threat posed to U.S. national security interests by telecommunications companies with potential ties to the Chinese government,” according to a committee statement.

Specifically, Rogers and Ruppersberger asked for details about Huawei’s interactions during the past 15 years with five management consulting firms, including International Business Machines Corp. (IBM), Accenture Plc (ACN), and PricewaterhouseCoopers LLP.

Chinese Officials

They also asked about the company’s interactions with Chinese government agencies and officials during the past five years.

In a May 23 meeting, Huawei officials told the lawmakers that the company maintains “a Party Committee,” according to the letter. The letter asked about “the roles, responsibilities and authorities” of the Party Committee.

The letter asked Huawei to provide details “for every contract for goods or services provided in the United States.”

The lawmakers asked both companies if they have “ever been ordered by the Chinese government to perform a task or seek information on behalf of the government?” They also asked the companies if any employees “ever attempted to obtain private information from an individual, company or government” through their company’s network or equipment.

Philippines Contract

With regard to ZTE, the lawmakers asked what role, if any, the company had “in the investigation against Philippine officials -- including former President Gloria Macapagal-Arroyo -- for accepting bribes to push through a $330 million (USD) government contract.”

“Did ZTE provide any kickbacks?” the lawmakers asked. In the letter, they also questioned whether ZTE sold “highly sophisticated surveillance technology” to the Iranian government.

Bill Plummer, Huawei’s vice president for external affairs, said the company would cooperate in answering the lawmakers’ questions and is “committed to continuing to be open and transparent.”

“It’s a great opportunity to once again put the facts on the table,” Plummer said in a telephone interview. “Once the facts are fully understood and fairly treated, we can all move on to the real challenges we face.”

ZTE spokesman Mitch Peterson said in an e-mail that the company “is committed to remaining transparent, candid and cooperative throughout this inquiry.”

To contact the reporter on this story: Chris Strohm in Washington at cstrohm1@bloomberg.net

To contact the editor responsible for this story: Katherine Rizzo at krizzo5@bloomberg.net

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