* Ministers should have been told earlier - UK parlt cttee
* Failure to tell ministers was "unacceptable" lapse
* Huawei CEO says will continue to talk to UK govt
* Huawei aims to increase investment in UK
By Paul Sandle and Brenda Goh
LONDON, June 7 China's Huawei Technologies Co
Ltd should not have been allowed to become embedded in
Britain's critical communications network infrastructure without
the knowledge and scrutiny of ministers, lawmakers said on
The Chinese company, the world's No.2 telecoms gear maker,
has a multi-billion pound deal to supply equipment to BT Group
Plc, Britain's largest telecoms operator, stretching back
to 2005. It also supplies O2 (part of Spain's Telefonica SA
), EE (owned by France Telecom SA and Deutsche
Telekom AG ) and TalkTalk.
BT told government officials of Huawei's interest in the
contract two years before it was awarded, but the officials did
not inform ministers until 2006, a decision that "shocked"
lawmakers, a report from the parliamentary intelligence and
security committee said.
"Such a sensitive decision, with potentially damaging
ramifications, should have been put in the hands of ministers,"
the committee said. "The failure ... to consult ministers seems
to indicate a complacency which was extraordinary given the
seriousness of the issue," it added, describing the lapse as
It said a lack of clarity around procedures, responsibility
and powers relating to the awarding of contracts meant national
security issues risked being overlooked.
The report comes amid mounting concerns on both sides of the
Atlantic over the potential security threat stemming from
Huawei's access to communication infrastructure. Huawei, founded
in 1987 by Ren Zhengfei, a former People's Liberation Army
officer, has raised security concerns from countries including
the United States and Australia about alleged links between the
company and the Chinese state.
"China is suspected of being one of the main perpetrators of
state-sponsored attacks ... focused on espionage and the
acquisition of information," the report said. "In this context,
the alleged links between Huawei and the Chinese state are
concerning, as they generate suspicion as to whether Huawei's
intentions are strictly commercial or are more political."
The company has denied it has links with the Chinese
government or military and has said it receives no financial
support from the Chinese government, the report noted.
"We will continue to communicate on this issue with the UK
government and related parties and we will thank them for the
support they have given us for the past 12 years," Huawei CEO
Guo Ping told Reuters on Friday on the sidelines of a business
conference in Chengdu in southwestern China.
"We will, to the best of our ability, continue to expand our
investment in the UK," he added.
The Joint Intelligence Committee - the UK's senior
intelligence watchdog - also warned that in the event of a cyber
attack, it "would be very difficult to detect or prevent and
could enable the Chinese to intercept covertly or disrupt
traffic passing through Huawei-supplied networks".
In a response to the report, ministers expressed strong
support for inward investment from China, calling Huawei a
"long-term valued investor in the UK."
"It is a personal priority of mine to increase trade links
between the UK and China, and I cannot emphasise enough that the
UK is open to Chinese investment," said Finance Minister George
In an earlier statement, Huawei that prior to BT's selection
of the company in 2005, it was subject to a comprehensive 2-year
audit. "Since then, BT has continued to conduct a thorough
annual evaluation of Huawei," a spokesman for Huawei said.
"We believe the report will prompt governments and the
communications industry to require ever-higher standards on this
important global topic to further reduce the security risks and
enable better and safer networks for consumers," he added.
A BT spokesman said the report recognised BT had taken
measures to ensure its infrastructure was secure. "Security is
at the heart of BT and it will continue to be so in the future,"