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October 19, 2012

China's Huawei Under Investigation By The White House

By Stan Abrams 

The latest development with Huawei’s U.S. troubles is that in addition to the House Intelligence committee investigation, apparently the White House ordered a separate 18-month investigation of the Chinese telecom company. It’s not clear to me why they did that, but the results have raised the same issues that we were all talking about last week.

Because this investigation found no evidence of espionage/cybersecurity problems, the “no smoking gun” crowd is again saying that Huawei has been treated unfairly. To these folks, if there is no evidence of past wrongdoing, Huawei should be given a clean bill of health and allowed to do business in the U.S. just like any other telecom company.

Based on the House report, I disagree, and the White House-ordered investigation doesn’t change anything. As I wrote a few days ago, this was not about past misdeeds, but future risk.

It’s nice to know I’m not the only one with this opinion. Reporting on the White House investigation, Reuters notes the following:
Pressed about why the White House review and unclassified version of the House Intelligence Committee report had not turned up a “smoking gun,” two officials familiar with intelligence assessments said U.S. agencies were most concerned about the capability for future spying or sabotage.
Similarly, Chris Johnson, a former CIA analyst on China, said he had been told that the White House review had come up empty on past malicious acts. Nonetheless, officials emerged from the review with “a general sense of foreboding” about what would happen if China asked Huawei for assistance in gathering intelligence from U.S. customers, he said.
“If the Chinese government approached them, why would they say no, given their system?” Johnson said.
This is in total agreement with the approach and analysis of the House report.

There is, however, one part of this new development that bothers me. Just what prompted this investigation? We know that the House investigation began after Huawei sent a letter to Congress; it wanted an opportunity to tell its side of the story after running into problems with several deals. I was not aware of any White House involvement, though, at least until today.

Additionally, the Reuters article contains this odd quote:
“We knew certain parts of government really wanted” evidence of active spying, said one of the people, who requested anonymity.
This person is simply described as someone familiar with the probe. So not only did the White House launch this investigation for mysterious reasons, but it may have been looking for a particular result. That raises a lot of questions, if it’s true. With only one anonymous source who may/may not have actually been part of the investigation, we can’t exactly rely on that comment.

For all the Huawei boosters out there, this news about the White House will no doubt solidify opinions. If you think that the standard here should be evidence of wrongdoing, well, now you’ve got two separate investigations that have in effect cleared Huawei’s name.

For those of us on the other side of this, the White House investigation may also solidify our opinions. If the people involved in this second investigation also felt that there was an unacceptable future risk, then the conclusions of the two investigations are in agreement.

This raises lots of questions.

About The Author - Stan Abrams is a Beijing-based IP/IT lawyer and law professor with an M.A. from Johns Hopkins in International Relations, a J.D. from Boston College Law School, a B.A. from Pomona College, and writes at China Hearsay.  (EconMatters author archive here)

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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