UPDATE 3-U.S. concern over Huawei telecoms deal with South Korea

Wed Dec 4, 2013 4:02am EST

WASHINGTON Dec 3 (Reuters) - The heads of two U.S. Senate committees overseeing national security have expressed concern to the Obama administration over a recent network supply deal between China's Huawei Technologies Co Ltd and Washington ally South Korea.

South Korea, which hosts some 28,000 U.S. soldiers to deter potential provocation from North Korea, said Huawei's deal to supply mobile network equipment does raise security concerns, but it had no immediate plan to look into the issue. U.S. Vice President Joe Biden is due to visit Seoul later this week as part of a broader Asia trip.

LG Uplus Corp, South Korea's third-largest mobile carrier, added Huawei to its fourth-generation mobile network vendor list in October to boost competition. It was already working with Samsung Electronics Co, Ericsson and Nokia's telecoms gear unit.

"There is a security concern when you purchase telecoms equipment from foreign suppliers. It's not just limited to one specific company," said Lee Dong-ho, an official in charge of telecoms network regulation at the Ministry of Science, ICT and Future Planning.

"But they are providing equipment in accordance with local regulations, and we also have authorities and proper systems in place aimed at monitoring any security breaches. We don't have any plan to look into Huawei's deal at this point," the official said.

His minister, Choi Mun-kee, told lawmakers in late October "There's not much the government can do about private companies doing business with Huawei, but there is security concern (involving such deals)."

LG Uplus has said Huawei, the world's second-largest telecoms equipment maker, would supply equipment, but LG would directly manage and operate the system.

"Unlike some other foreign countries, we directly manage and control our network," LG Uplus said in a recent statement on the Huawei deal.

"Japan's Softbank Corp also has been using Huawei equipment for more than two years, but their government hasn't raised any issues as they operate the system like we do."

Huawei, whose overseas expansion has stumbled in recent years largely due to security concerns raised by U.S. politicians, said those concerns were groundless.

"Our gear is world-proven and trusted, connecting almost one-third of the world's population. The motivations of those that might groundlessly purport otherwise are puzzling," Huawei said in a statement to Reuters.

"Huawei has a proven track record of providing secure products and solutions to our customers. There has never been one incident where Huawei's commitment to security has ever been called into question."

Chinese Foreign Ministry spokesman Hong Lei said Chinese companies like Huawei, operating overseas, respect all laws and regulations and contribute to economic development.

"We hope that relevant countries can look upon the commercial activities that Huawei and other Chinese enterprises engage in abroad fairly and impartially, and refrain from politicizing this issue at every turn," he told reporters.

SECURITY CONCERNS

Democratic Senators Robert Menendez, chairman of the Senate Foreign Relations Committee, and Dianne Feinstein, chairwoman of the Senate Intelligence Committee, said media reports on Huawei's supply deal with LG raised concerns in light of the close security alliance between the United States and South Korea.

"Maintaining the integrity of telecommunications infrastructure is critical to the operational effectiveness of this important security alliance," they said in a letter to Secretary of Defense Chuck Hagel, Secretary of State John Kerry and James Clapper, President Barack Obama's Director of National Intelligence.

The letter, dated Nov. 27 and obtained by Reuters on Tuesday, underscores how intertwined the communications industry has become with concerns about security.

Last year, the U.S. House Intelligence Committee urged U.S. telecoms companies not to do business with Huawei and its local rival ZTE Corp because it said potential Chinese state influence on the companies posed a security threat.

Both firms have denied they have links to the Chinese government.

Menendez and Feinstein said they were "very interested" to receive the administration officials' assessment of "potential threats and security concerns" about Huawei's involvement, as well as any discussions the U.S. government has had with the South Korean government about the importance of network integrity related to the decision.

A senior administration official declined to discuss details of diplomatic discussions involving Seoul, but added, "We do have concerns about Huawei."

The official noted Huawei was excluded in October 2011 from taking part in the building of a U.S. wireless emergency response network due to national security concerns.

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