Huawei frustration boils over as CIA allegedly shows the goods

In China Huawei cybersecurity bosses vented their frustrations, while in the US, the CIA has reportedly produced evidence of Chinese Government investment in the telco vendor.

According to The Times, the CIA has produced strong, but not concrete, evidence of the Chinese Government investing in Huawei. The investment is allegedly from the People’s Liberation Army, China’s National Security Commission and a third branch of the Government’s investment network, perhaps demonstrating the collusion the US has so repeatedly claimed. This could prove to be the most damning report of the telco vendor to date.

The CIA reportedly shared the evidence with members of the Five Eyes intelligence community, potentially undermining Huawei’s primary argument against collusion with the government. To date, Huawei has consistently defended itself, pointing to evidence it is a private company, owned by its employees with founder Ren Zhengfei being the largest shareholder with 1.14%. This position would certainly put it on stronger grounds considering many other Chinese economic champions are at least partly state-funded.

The ‘evidence’ has only been seen by a handful of senior intelligence officials to date, though it is not claimed to be concrete proof of collusion with the Chinese Government. That said, ‘strong’ proof might be all many nations need, evidence for this is the 5G blocks made by the US, Australia and New Zealand, three of the Five Eyes members.

For the two remaining members, this could be a very worrying development for Huawei. The UK and Canada, two important markets for Huawei, are undergoing investigations as to whether Huawei should be allowed to continue selling to their domestic telcos. Whether this is deemed weighty evidence remains to be seen.

What is worth noting is this is all hearsay for the moment. The Times has not stated it has seen the evidence, nor has it declared its sources. For all we know, the sources could well be the CIA, and the strength of the evidence could be greatly exaggerated. This would not be stretching the realms of possibility for some, though the up-coming supply chain review in the UK will shed light on the situation.

The news is certainly breaking at an interesting time for Huawei. Last week cybersecurity executives, including Huawei’s Global Head of Cybersecurity John Suffolk vented their frustrations to a room full of journalists. “Being a Chinese company means the spotlight will always be on you in some places, that is not our fault but something we will deal with,” said Suffolk.

The press conference was certainly an impactful one, with Suffolk clearly frustrated with the current state-of-affairs. While suggested the US was ‘belittling’ other nations capabilities to make their own decision and accusing the US of undermining its supposed pursuit of ‘open competition’, Suffolk called for a more impartial and obvious assessment of security.

According to Suffolk, Huawei has passed every security investigation and testing procedure put in front of it and would be open for more. Suffolk said the team would never openly publish its code, that would not be a commercial sensible decision, but anyone who would like to audit the codes is fully welcome to.

As it stands, the US is yet to produce evidence to back-up its claims of collusion with the Chinese Government. This document might well have ‘strong’ evidence, though as there is yet to be any confirmation from the security agencies outside the US, we’ll keep hold of a healthy level of scepticism. The US has already demonstrated its ability to exaggerate and over-react, so we will wait for measured opinions to make their case.

Should the evidence prove to be adequate, this would be a significant dent to Huawei’s ambitions and claims. Firstly, it contradicts the claim that Huawei is a private company.

At the Huawei Analyst Summit last week, a few executives pointed to this fact as evidence of innocence, promising the company was only owned by employees. This may well put it in a better position than its rivals, which have entered into Joint-ventures with state-owned organizations, but should the evidence counter this claim Huawei’s credibility will be suitably dented.

Secondly, if a direct link between the Chinese Government and Huawei does prove to exist, this would scare a lot of Western governments, many of whom are already suspicious of Chinese espionage. Huawei equipment in telecommunications networks might prove to be one step too far.

The next couple of days will answer a lot of questions. While the UK Government, regulators and The National Cyber Security Centre are remaining quiet for the moment, there will be a statement before too long. This will give us a much better idea of the strength of the evidence.