0 Huawei and ZTE a risk to national security, says U.S. Congressional report

Chinese electronics firms Huawei and ZTErepresent a potential threat to U.S. national security, according to a draft congressional report.The report from theU.S. House of Representatives' Intelligence Committee follows an 11-month investigation into the firms.A draft seen by Reuters suggests that the companies may be subject to the influence of the Chinese government, thus representing a possible espionage threat.

Much of the panel's conclusions are drawn from Huawei and ZTE's failure to deliver documents relating to their interactions with the Chinese government. The panel said it also received evidence from "industry experts and current and former Huawei employees" suggesting corruption, bribery and copyright infringement at Huawei in particular.

The document states that Huawei and ZTE "cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems," and that"U.S. network providers and system developers are strongly encouraged to seek other vendors for their projects."

Speaking on CBS's "60 Minutes," committee chairman Mike Rogers said U.S. companies should"find another vendor if you care about your intellectual property; if you care about your consumers' privacy and you care about the national security of the United States of America."

In addition to Android smartphones, both ZTE and Huaweiproduce networking equipment such as routers. Though the U.S. represents a small quantity of their overall business, the companies are looking to rapidly expand within the U.S., particularly where smartphones are conc erned. The Reuters report does not specifically mention whether networking equipment alone is suspected, or whether smartphones, too, could make up part of the alleged espionage threat.

In statements given to Reuters today,Huawei and ZTEdeny the committee's allegations. Huawei dismissed the accusations as "baseless" and a "dangerous political distraction," while ZTEsays it "profoundly disagrees" with the panel's conclusions.

The full report is due to be released later this morning.

Source: Reuters