The report, which comes as a result of an 11 month investigation, instructs US intelligence to stay focused on Huawei and ZTE’s efforts to expand in the country and inform private sector companies of the potential espionage threat they pose.
Despite being ranked second in the world in terms of sales of telecoms equipment, Huawei only draws 4% of its sales from the US, while fifth ranked ZTE only draws 2 to 3% of its total from the country, mostly from smartphone sales.
This is because of continued government opposition towards the two companies, which have long been held in suspicion of espionage. Australia has also banned both vendors from participating in its National Broadband Network project.
In the report both companies were faulted for failing to satisfy requests for documents, including information about their relationship with the Chinese government.
The chairman of the panel leading the investigation, Dutch Ruppersberger, said in stinging comments broadcast on the “60 minute” news programme on Sunday that US companies considering Huawei should find another vendor if they care about their intellectual property, consumer privacy and national security.
Among the findings of the investigation were “credible allegations” from industry experts and current and former Huawei employees suggesting bribery, corruption, discriminatory behavior and copyright infringement, according to Reuters. Although no detailed information was given.
These are to be referred to the US Justice Department and Department of Homeland Security.
The draft report also said that China’s government had the "means, opportunity and motive" to use Huawei and ZTE for its own ends and called for an inter-agency government group to block acquisitions, takeovers or mergers involving the two companies.
Both Huawei and ZTE have repeatedly denied the allegations of espionage, and at a hearing in September denied any involvement with the Chinese government.
Huawei described the allegations made in the report as baseless and told Reuters in a statement that they“ignore technical and commercial realities, recklessly threaten American jobs and innovation, do nothing to protect national security, and should be exposed as dangerous political distractions from legitimate public-private initiatives to address what are global and industry-wide cyber challenge.”
