'Huawei spies for China' - ex CIA boss

23:39, Jul 31 2013

The former head of the US Central Intelligence Agency and National Security Agency, Michael Hayden, believes Chinese telecommunications manufacturer Huawei Technologies is a significant security threat to Australia and the US, has spied for the Chinese government, and intelligence agencies have hard evidence of its activities.

The retired four-star general told The Australian Financial Review it was his "professional judgment" that Huawei supplied sensitive intelligence to Chinese officials, an assessment that backs up the federal government's decision in 2011 to ban it from helping build the national broadband network.

Critics said the move was an overreaction that hurt relations with China.

Huawei, China's second-largest company, has been dogged by controversy in its efforts to sell telecommunications infrastructure to the Australian, Indian, American, European, UK, Canadian and New Zealand markets.

General Hayden said Western intelligence agencies had information about Huawei's clandestine activities and it had, at a minimum, "shared with the Chinese state intimate and extensive knowledge of the foreign telecommunications systems it is involved with," he said. "I think that goes without saying - it's one reality," he said.

General Hayden's comments are the first time a leading Western official has categorically stated in public that there is evidence to back claims that Huawei, the world's largest telecoms infrastructure supplier, has spied for the Chinese state.

The comments are likely to be damaging to the company, which has embarked on an extensive lobbying campaign in Australia and elsewhere to promote itself as a low-cost and reliable equipment maker independent of the Chinese government. Huawei's global cyber security officer, John Suffolk, described Hayden's comments as tired, unsubstantiated and defamatory, and said the company's critics should present any evidence publicly.

"It's time to put up or shut up," said Mr Suffolk, a former chief information officer of the UK government.

Huawei has funded more trips to China by federal politicians - mostly Coalition MPs - than any other Chinese company, according to the parliamentary pecuniary interests register.

The Coalition's communications spokesman, Malcolm Turnbull, and deputy leader, Julie Bishop, have said they would revisit the NBN decision if the Coalition won government.

General Hayden, in his most extensive interview since he left the CIA, said the security risks of hiring Huawei were too great for governments.

"It's simply not acceptable for Huawei to be creating the backbone of the domestic telecommunications network, period," he said.

"Frankly, this is where I think the state has a role to play - to ensure we don't make decisions that compromise the foundations of our national security."

General Hayden is the only person to have led America's two highest-profile intelligence services. He ran the NSA, which collects information from electronic sources, between 1999 and 2005 and the CIA from 2006 to 2009. He noted he could not comment on specific classified matters.

General Hayden is a visiting professor at George Mason University, a principal at the Chertoff Group, a security consultancy, and a director of Motorola Solutions, which provides radios, smart tags, barcode scanners and safety products for law enforcement agencies, and does not regard Huawei as a direct competitor. A Huawei Australia spokesman said it does compete against Motorola Solutions, albeit with different products.

Since it was reported in March 2012 that Huawei was banned from helping build the NBN on the advice of security agencies, the company has worked hard to improve its image in Australia.

The director-general of the Australian Security Intelligence Organisation, David Irvine, has personally briefed Turnbull and Bishop on the company. Turnbull said ASIO didn't disclose the top-secret advice it gave to the government.

Huawei Australia's chairman, John Lord, recently told the Financial Review that "Malcolm Turnbull is making positive statements about us and that is a good position for us to be in compared to 18 months ago".

"I think the board and management has been quite successful opening up and showing people there is nothing in Huawei other than a very, very smart company that can bring benefits to Australia," Lord said.

Former Coalition foreign minister Alexander Downer is a member of Huawei Australia's board. He wrote last year that "Huawei is a tribute to capitalism's creativity".

James Lewis, a director of the Centre for Strategic and International Studies in Washington and former State Department official specialising in commercial technology risk, said General Hayden's remarks reflected the view of the US government.

"Officials within several agencies have privately told me that Huawei is a national security threat," he said.

"While you hear rumours of the evidence, it has never come out in public before."

General Hayden said that given the "over-arching national security risks a foreign company building your national telecoms networks creates, the burden of proof is on Huawei."

Huawei has fallen "well short" of meeting the test, he said.

"These guys are not even transparent to themselves," he said. "There's no transparency around who appoints the board or who controls the ownership of the business.

"And there's no independent Chinese government oversight committee that could give us confidence that Huawei would not do what they promised not to do."

The CIA says that Huawei's chairman, Sun Yafang, previously worked for the Ministry of State Security, China's foreign intelligence service.

The company's founder, Ren Zhengfei, was a deputy director in the People's Liberation Army's Information Engineering Academy, which is responsible for telecommunications research. He was elected to the 12th National Congress of the Communist Party of China in 1982.

General Hayden said he was approached to join Huawei's American board. "Two or three years ago Huawei was trying to establish a pretty significant footprint here," he said. "And they were trying to get people like me to endorse their presence in the US.

"I reviewed Huawei's briefing paper. But God did not make enough slides on Huawei to convince me that having them involved in our critical communications infrastructure was going to be OK. This was my considered view, based on a four-decade career as an intelligence officer."

America's Congressional Intelligence Committee and Britain's Parliamentary Intelligence and Security Committee recently published reports concluding Huawei is a security risk to domestic phone networks, although they say it spied for China.

"I understand that this can be tough on business in Australia and the US because we're taking the lowest bidder out of the competition," General Hayden said. "But this isn't very hard for us to do in the security domain: it's almost reflexive, given what we believe."

In a public hearing of the Australian Parliament's intelligence committee last September, Lord, Huawei Australia's chairman, confirmed the company had been designated a "national champion" of strategic significance by the Chinese state.