Executive Summary ................................................................................................... iv
Report............................................................................................................................... 1
I. The threat posed to U.S. national-security interests by vulnerabilities in the telecommunications supply chain is an increasing priority given the country’s reliance on interdependent critical infrastructure systems; the range of threats these systems face; the rise in cyber espionage; and the growing dependence all consumers have on a small group of equipment providers. ..................................... 1
A. China has the means, opportunity, and motive to use telecommunications companies for malicious purposes. ................................................................. 2
B. Suggested “mitigation measures” cannot fully address the threat posed by Chinese telecommunications companies providing equipment and services to United States critical infrastructure. ................................................................ 4
II. Investigation ............................................................................................................. 7
A. Scope of Investigation ..................................................................................... 7
B. Investigative Process ....................................................................................... 8
C. Investigative Challenges ................................................................................ 10
III. Summary of Findings ............................................................................................. 11
A. The Committee finds 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 Huawei fails to comply with U.S. laws. ........................................................ 12
i. Huawei did not provide clear and complete information on its corporate structure and decision-making processes, likely remains dependent on the Chinese government for support. .............................................................. 13
ii. Huawei failed to explain its relationships with the Chinese government, and its assertions denying support by the Chinese government are not credible. ..................................................................................................... 21
iii. Huawei admits that the Chinese Communist Party maintains a Party Committee within the company, but it failed to explain what the Party
ii
Committee does on behalf of the Party or which individuals compose the
Committee. ................................................................................................ 22
iv. Huawei’s corporate history suggests ties to the military, and Huawei failed
to provide detailed answers to questions about those connections. .......... 24
v. Huawei’s failure to provide information about the Chinese government’s
1999 investigation of the company for tax fraud exemplifies a company
that refuses to be transparent; the apparent ease with which Huawei ended
the investigation undermines Huawei’s assertion that the Chinese
government finds Huawei to be a disfavored telecommunications solutions
provider in China. ..................................................................................... 25
vi. Huawei failed to explain its relationships with western consulting firms,
and any claims that its success is on account of those relationships, rather
than support by the Chinese government, are not credible. ...................... 26
vii. Huawei failed to answer key questions or provide supporting
documentation for its claims to be financially independent of the Chinese
government. .............................................................................................. 27
viii. Huawei failed to provide sufficient details or supporting documentation on
its operations, financing, and management in the United States,
undermining its claims of being a completely independent subsidiary of
Huawei’s parent company in Shenzhen, China. ....................................... 29
ix. Evidence shows that Huawei exhibits a pattern of disregard for the
intellectual property rights of other entities and companies in the United
States. ........................................................................................................ 31
x. Huawei failed to provide details of its operations in Iran, though it denied
doing business with the government of Iran, and did not provide evidence
to support its claims that it complies with all international sanctions or
U.S. export laws. ....................................................................................... 32
xi. Huawei refused to provide details on its R&D programs, and other
documents undermine its claim that Huawei provides no R&D for the
Chinese military or intelligence services. ................................................. 33
xii. Former and current Huawei employees provided evidence of a pattern and
practice of potentially illegal behavior by Huawei officials. .................... 34
iii
B. ZTE failed to answer key questions or provide supporting documentation
supporting its assertions; instead, it asserted that answering the Committee’s
requests about its internal corporate activities would leave the company
criminally liable under China’s states-secrets laws. ...................................... 35
i. ZTE did not alleviate Committee concerns about the control of Chinese
state-owned enterprises in ZTE’s business decisions and operations. ..... 37
ii. ZTE maintains a Chinese Party Committee within the company, but has
not fully clarified how the Party Committee functions, who chooses its
members, and what relationship it has with the larger Chinese Communist
Party. ......................................................................................................... 40
iii. ZTE failed to disclose information about its activities in the U.S. ........... 42
iv. ZTE failed to provide any answers or evidence about its compliance with
intellectual property or U.S. export-control laws...................................... 42
v. ZTE failed to provide clear answers to Committee questions about its
R&D activities, particularly as they relate to any military or government
projects. ..................................................................................................... 43
Conclusion and Recommendations ................................................................................... 44
http://intelligence.house.gov/sites/intelligence.house.gov/files/documents/Huawei-ZTE%20Investigative%20Report%20%28FINAL%29.pdf
Report............................................................................................................................... 1
I. The threat posed to U.S. national-security interests by vulnerabilities in the telecommunications supply chain is an increasing priority given the country’s reliance on interdependent critical infrastructure systems; the range of threats these systems face; the rise in cyber espionage; and the growing dependence all consumers have on a small group of equipment providers. ..................................... 1
A. China has the means, opportunity, and motive to use telecommunications companies for malicious purposes. ................................................................. 2
B. Suggested “mitigation measures” cannot fully address the threat posed by Chinese telecommunications companies providing equipment and services to United States critical infrastructure. ................................................................ 4
II. Investigation ............................................................................................................. 7
A. Scope of Investigation ..................................................................................... 7
B. Investigative Process ....................................................................................... 8
C. Investigative Challenges ................................................................................ 10
III. Summary of Findings ............................................................................................. 11
A. The Committee finds 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 Huawei fails to comply with U.S. laws. ........................................................ 12
i. Huawei did not provide clear and complete information on its corporate structure and decision-making processes, likely remains dependent on the Chinese government for support. .............................................................. 13
ii. Huawei failed to explain its relationships with the Chinese government, and its assertions denying support by the Chinese government are not credible. ..................................................................................................... 21
iii. Huawei admits that the Chinese Communist Party maintains a Party Committee within the company, but it failed to explain what the Party
ii
Committee does on behalf of the Party or which individuals compose the
Committee. ................................................................................................ 22
iv. Huawei’s corporate history suggests ties to the military, and Huawei failed
to provide detailed answers to questions about those connections. .......... 24
v. Huawei’s failure to provide information about the Chinese government’s
1999 investigation of the company for tax fraud exemplifies a company
that refuses to be transparent; the apparent ease with which Huawei ended
the investigation undermines Huawei’s assertion that the Chinese
government finds Huawei to be a disfavored telecommunications solutions
provider in China. ..................................................................................... 25
vi. Huawei failed to explain its relationships with western consulting firms,
and any claims that its success is on account of those relationships, rather
than support by the Chinese government, are not credible. ...................... 26
vii. Huawei failed to answer key questions or provide supporting
documentation for its claims to be financially independent of the Chinese
government. .............................................................................................. 27
viii. Huawei failed to provide sufficient details or supporting documentation on
its operations, financing, and management in the United States,
undermining its claims of being a completely independent subsidiary of
Huawei’s parent company in Shenzhen, China. ....................................... 29
ix. Evidence shows that Huawei exhibits a pattern of disregard for the
intellectual property rights of other entities and companies in the United
States. ........................................................................................................ 31
x. Huawei failed to provide details of its operations in Iran, though it denied
doing business with the government of Iran, and did not provide evidence
to support its claims that it complies with all international sanctions or
U.S. export laws. ....................................................................................... 32
xi. Huawei refused to provide details on its R&D programs, and other
documents undermine its claim that Huawei provides no R&D for the
Chinese military or intelligence services. ................................................. 33
xii. Former and current Huawei employees provided evidence of a pattern and
practice of potentially illegal behavior by Huawei officials. .................... 34
iii
B. ZTE failed to answer key questions or provide supporting documentation
supporting its assertions; instead, it asserted that answering the Committee’s
requests about its internal corporate activities would leave the company
criminally liable under China’s states-secrets laws. ...................................... 35
i. ZTE did not alleviate Committee concerns about the control of Chinese
state-owned enterprises in ZTE’s business decisions and operations. ..... 37
ii. ZTE maintains a Chinese Party Committee within the company, but has
not fully clarified how the Party Committee functions, who chooses its
members, and what relationship it has with the larger Chinese Communist
Party. ......................................................................................................... 40
iii. ZTE failed to disclose information about its activities in the U.S. ........... 42
iv. ZTE failed to provide any answers or evidence about its compliance with
intellectual property or U.S. export-control laws...................................... 42
v. ZTE failed to provide clear answers to Committee questions about its
R&D activities, particularly as they relate to any military or government
projects. ..................................................................................................... 43
Conclusion and Recommendations ................................................................................... 44
http://intelligence.house.gov/sites/intelligence.house.gov/files/documents/Huawei-ZTE%20Investigative%20Report%20%28FINAL%29.pdf