Craig Eisele on …..

March 27, 2012

BAD WEEK for Huawei Technologies of China

Filed under: Uncategorized — Mr. Craig @ 11:50 pm

FIRST:

Australia Bars Huawei From Broadband Project

By MAGGIE LU YUEYANG | REUTERS

CANBERRA — Australia has blocked Huawei Technologies of China from bidding on contracts in the $38 billion Australian National Broadband Network, citing security concerns, Huawei said Monday.

“We were informed by the government that there is no role for Huawei” in the network, said Jeremy Mitchell, a spokesman in Australia for Huawei, one of the world’s largest suppliers of telecommunications equipment.

The Australian plan is the largest infrastructure project in the country’s history. It is intended to connect 93 percent of homes and workplaces with fiber-optic cable, providing broadband service in urban and rural areas.

It was announced in 2009 by the Australian government with a committed investment of as much as $38 billion. The network is expected to be ready by 2020.

The Australian Financial Review newspaper said in a report Monday that Huawei had sought to secure a supply contract worth as much as 1 billion Australian dollars, or $1.05 billion, as part of the project, but had been blocked by the Australian attorney general on the basis of advice from the Australian Security Intelligence Organization.

The office of the attorney general said in a news release, “This is consistent with the government’s practice for ensuring the security and resilience of Australia’s critical infrastructure more broadly.”

The network is “a strategic and significant government investment,” the attorney general’s office told Bloomberg News. “We have a responsibility to do our utmost to protect its integrity and that of the information carried on it.”

The government declined to comment on its specific discussions with companies, which are confidential, the office said.

The security agency declined to comment on the report.

On the sidelines of a nuclear security summit meeting in South Korea, Prime Minister Julia Gillard of Australia said the government had made the correct decision.

“You would expect as a government that we make all of the prudent decisions to make sure that the infrastructure project does what we want it to do, and we’ve taken one of those decisions,” she said.

Huawei was founded by its chief executive, Ren Zhengfei, a former officer of the People’s Liberation Army in China. That has led to claims that it has too cozy a relationship with the Chinese government.

The company. based in Shenzhen, China, has been struggling to expand its business in the United States, which has blocked its equipment deals, citing national security concerns and allegations that Huawei had violated sanctions by supplying Iran with banned equipment.

“While we’re obviously disappointed by the decision,” the company said, referring to the Australian rejection, “Huawei will continue to be open and transparent and work to find ways of providing assurance around the security of our technology.”

Mr. Mitchell told the Australian Broadcasting Corp.: “We have never been told by the Chinese government to do a certain thing. If we would, that would be to our detriment, and we would lose the market share that we have.”

A former Australian foreign minister, Alexander Downer, who is an independent director on the board of Huawei’s Australian unit, rejected the government’s security concerns.

“This sort of whole concept of Huawei being involved in cyberwarfare, presumably that would just be based on the fact that the company comes from China,” he said on ABC Radio on Monday. “This is just completely absurd.”

Mr. Mitchell told Bloomberg that “the bar is set higher” for the company because of where it is from.

He said Huawei was working on eight broadband networks similar to the Australian plan in Benin, Britain, Brunei, Cameroon, Malaysia, New Zealand, Singapore and the United Arab Emirates.

THEN:

Symantec Dissolves a Chinese Alliance

By NICOLE PERLROTH and JOHN MARKOFF

SAN FRANCISCO — Less than four years after Huawei Technologies and Symantec teamed up to develop computer network security products, the joint venture is being dismantled because Symantec feared the alliance with the Chinese company would prevent it from obtaining United States government classified information about cyberthreats.

According to two people briefed on the deal, Symantec’s decision was a pre-emptive political maneuver timed to coincide with the United States government’s efforts to share more classified cyberthreat information with the private sector. People with knowledge of the venture, who would speak only on condition of anonymity because they were not authorized to speak, said Huawei had already laid off several workers in Huawei Symantec’s Silicon Valley offices this month and planned to move its entire operation out of the United States, largely because of increased American government oversight.

In the next two weeks, Symantec, the Mountain View, Calif., computer security software firm, is expected to sell its 49 percent stake in the venture to Huawei for $530 million. The companies first announced the sale last November. In a news release, Enrique Salem, Symantec’s chief executive, said the project had “achieved the objectives we set four years ago” and would “exit the joint venture with a good return on our investment.”

As online espionage proliferates, the United States government has grappled with how best to share its classified cyberthreat intelligence with the private sector. In January, the Pentagon transferred an information-sharing pilot program, called the Joint Cybersecurity Services Pilot, to theDepartment of Homeland Security. The program was originally intended to share classified National Security Agency intelligence with military contractors. Homeland Security is expected to extend the program beyond those companies to antivirus companies, like Symantec, and network providers.

Symantec worried that its ties to Huawei would be a disadvantage when it came to being the recipient of classified threat information, according to the two people briefed on the matter. Cris Paden, a Symantec spokesman, declined to comment.

William Plummer, a Huawei spokesman, said that from Huawei’s perspective “both companies had a positive experience with the joint venture.” He added, “We are going to streamline the organization market by market including in the U.S.”

National security concerns have long dogged Huawei. Ren Zhengfei, Huawei’s founder and chief executive, is a former officer in China’s People’s Liberation Army, and American government officials and regulators have repeatedly raised concerns about Huawei’s close ties to the Chinese government.

In 2008, Huawei was forced to abandon a bid for 3Com, which makes antihacking computer software for the United States military, among other products, after an American government panel raised questions about the national security risks. In 2010, Huawei lost a bid to supply mobile telecom equipment to Sprint Nextel after lawmakers expressed similar concerns.

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1 Comment »

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