New Group Looking to Ban Huawei Needs a Better Argument

Sep 25, 2019
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Is Huawei really a Trojan horse destined to siphon out telecommunications secrets to its masters in Beijing? Or is it a legitimate contender, and fierce competitor, in the global telecommunications race to 5G?

Wccftech was recently invited to a teleconference on the topic of Huawei and 5G security hosted by Global Cyber Policy Watch, an offshoot of Cambridge Global Advisors, a consulting firm, that featured a panel discussion with former Department of Homeland Security Secretary Tom Ridge as well as Nate Snyder, a senior DHS official during the Obama administration, and Chris Cummiskey, former DHS undersecretary for management.

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During the call, the three formal officials advocated for more money from the federal government and private industry to develop 5G via a standardized, open source-based approach in conjunction with other Western countries and firms while warning of the dangers of Huawei.

But what was not brought up during the call was the damning smoking gun that convicts Huawei of being the high-tech engine of China's New World Order.

Innuendo and Not Evidence

There are a number of arguments against allowing Huawei equipment into Western telecom networks, but they usually have a few common themes: Huawei is nearly wholly owned by the Communist Party of China; Huawei is heavily subsidized by Beijing; or Huawei is obliged to assist Beijing with its bidding due to provisions contained within the National Intelligence Law of the People's Republic of China.

The problem is these -- and they were all brought up during the call -- are a mixed bag of factuality.

One of the strongest arguments against Huawei is that its ownership structure is murky. Huawei claims that it's an employee-owned firm, where employees are given profit-sharing rights in the company via their union. But research by Christopher Balding and Donald Clarke, of Fulbright University Vietnam and George Washington University, say otherwise:

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The Huawei operating company is 100% owned by a holding company, which is in turn approximately 1% owned by Huawei founder Ren Zhengfei and 99% owned by an entity called a “trade union committee” for the holding company.We know nothing about the internal governance procedures of the trade union committee. We do not know who the committee members or other trade union leaders are, or how they are selected. Given the public nature of trade unions in China, if the ownership stake of the trade union committee is genuine, and if the trade union and its committee function as trade unions generally function in China, then Huawei may be deemed effectively state-owned.

For this, Huawei doesn't have a good answer, pointing to the union's independence on paper and its primary activity of promoting employee welfare through things like sports clubs. If there was more evidence showing CCP influence over the union, and directives downward from above, this would be the smoking gun, but right now we can only classify this with legitimate suspicion.

Another argument brought up during the call is that Beijing substantially subsidizes Huawei to the extent that its products can undercut its competitors on the market. While it is true that Beijing does provide Huawei with subsidies -- to the tune of $222 million -- all companies of that size are subsidized to some degree by respective governments. According to SubsidyTracker, Ericsson has received $70 million in subsidies by different branches of the US government (it should be noted that Ericsson is a foreign company operating in the US) while Cisco has received approximately $44 million. Boeing, though of a different scale than these companies, has received tens of billions in government cash.

Lastly is the question of Huawei's obligation to assist Beijing as per the National Intelligence Law of the PRC. In May 2018 two high profile lawyers from China, Jihong Chen of Zhong Lun Law Firm, and Jianwei Fang of the same firm, testified before the FCC to elaborate on whether Huawei would be compelled to give Beijing a backdoor at its request per this intelligence law. Chen and Fang argued that the law wouldn't be applicable to Huawei because it applies to telecommunications service providers -- not hardware vendors -- and is limited to domestic counterespionage. Chen and Fang also pointed out that the law has a safeguard built into it which allows firms to decline to assist intelligence agencies should it "contradict [the company's] legitimate rights and interests" or "violate the laws of another country". Furthermore, Huawei employees that are abroad would not be under the jurisdiction of any laws of China.

In some ways, this National Intelligence Law isn't all that different from the US' PATRIOT Act, which also has provisions to compel telecoms to assist with national security investigations in secrecy. Though the scope and extent of the PATRIOT Act has been challenged -- and occasionally struck down -- in court but it's unlikely that China's judiciary would take such an adversarial role.

Checking for Bugs or Backdoors -- Line by Line

While the United States debates whether Huawei should be allowed in its 5G network, the United Kingdom has a solution: have its electronic spy service, GCHQ, thoroughly inspect all of Huawei's gears for backdoors before it can be deployed.

Could the NSA do the same? For Global Cyber Policy Watch, that's not something on the table. When asked about it, the panelists seemed to reject the idea.

"I wouldn't necessarily feel comfortable at this point with the fact that it would give you the seal of approval to say that there weren't back towards or other avenues that Huawei could continue to exploit," said Chris Cummiskey. "[Huawei could] upload a patch once vulnerabilities were discovered."

"I think it doesn't really go to the issue of when you look at application development and software which is going to be driving much of this," he continued. 

More Questions Than Answers

One of the glaring issues with the Global Cyber Policy Watch and the Cambridge Global Advisors are the litany of conflicts of interests that present themselves through its advocacy. The group and its members aren't registered as a lobby group (Gov. Ridge is involved in various partisan PACs but not related to this issue) or a think tank, rather they appear to be drumming up future consulting business.

But the most glaring conflict of interest comes from the biggest name attached to the group -- former DHS Secretary Tom Ridge. Ridge, while advocating for banning Huawei from US networks under suspicion that its a Trojan horse for China's electronic eavesdroppers, is also an advisor to the NSO Group -- an Israeli technology firm that sells offensive hacking tools to governments worldwide. NSO Group is best known for zero-day exploits that allowed its clients to intercept WhatsApp calls and even hoover up the data on the target's iPhone.

To be sure Huawei is no saint: its CFO has been alleged to have engaged in bank fraud to allow the company to bypass sanctions to sell its products to Iran.

But the problem is the narrative of it being an arm of Chinese intelligence isn't as clear cut as some would have us believe. It's especially concerning when its loudest opponents are consultants posing as lobbyists and tied to companies that are literally involved in what Huawei is accused of doing.

 

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