Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the recent Investigative Report by the United States House Permanent Select Committee on Intelligence on the US national security issues posed by Chinese telcos, including Huawei. This report was released three weeks ago by Chairman of the House Intelligence Committee, Mike Rogers, a Republican, and Ranking Member, CA Dutch Ruppersberger, a Democrat.

Let me state for the record that Australia welcomes Chinese investment and it welcomes Huawei to Australia. However I am concerned at Huawei's attempts to gloss over this report as well as the reasons for Huawei's exclusion from Australia's NBN, which were based entirely on national security. Huawei's local spokesman, Jeremy Mitchell, tweeted:

… it's all politics. Why is it UK agencies happy for their PM to meet Huawei CEO and huawei deliver their NBN for last 7 years?

Indeed Huawei has made much of its involvement with Britain's National Broadband Network. The truth is that Britain has tried to address security issues by limiting Huawei's access to its infrastructure and evaluating its equipment and software before it enters the infrastructure.

The US House Intelligence Committee report states that, as part of an overall mitigation strategy the British government entered an agreement with Huawei to establish an independently managed Cyber Security Evaluation Centre. The report says:

The goal of the British government is to attempt to lessen the threat that Huawei products deployed in critical UK telecommunications infrastructure pose to the availability or integrity of UK networks.

Huawei has proposed similar schemes for products entering the United States market and only last week Huawei's Australian chairman, Rear Admiral John Lord, in a speech to the National Press Club, proposed the creation of a cyber-security evaluation centre for Australia.

According to the US House intelligence committee report:

For a variety of technical and economic reasons, evaluation programs as proposed by Huawei ... are less useful than one might expect. In fact, the programs may create a false sense of security that an incomplete, flawed, or misapplied evaluation would provide …

Unfortunately, given the complexity of the telecommunications grid, the limitations of current security evaluation techniques, and the economics of vendor-financed analyses provide a sense of security but not actual security.

For detailed reasons outlined in the US intelligence committee report, I believe Australia should reject Huawei's proposal for a national cybersecurity evaluation centre for Australia. Indeed, Britain's Parliamentary Intelligence and Security Committee has confirmed it is reviewing the presence of Huawei in regards to critical national infrastructure and whether this should give rise to concern.

Australians should be cognisant of the findings of the US Intelligence Committee. After extensive interviews with company and government officials, submitting questions, requesting documents and an open hearing, the committee found that:

Huawei did not fully cooperate with the investigation and was unwilling to explain its relationship with the Chinese government or Chinese Communist Party, while credible evidence exists that it fails to comply with US. laws.

According to the committee, Huawei's repeated failure to answer key questions or support their answers with credible internal evidence—in short, their obstructionist behaviour—makes addressing these national security concerns a national imperative for the US.

Huawei admitted that the Communist Party of China maintains a party committee inside the company, but it failed to explain its function or membership, simply stating that all Chinese companies are required to have such committees. This was a key area of concern to the US intelligence committee because of the opportunity for the Chinese state to influence Huawei's expansion into critical US infrastructure.

During the US intelligence committee's hearing, Mr Ding from Huawei suggested he did not understand and had no knowledge of the term 'national champion', used to describe favoured Chinese companies which act to expand China's influence and prestige. The committee found that Mr Ding's response was not credible. Huawei even blamed the use of the term 'national champion' in a slide presentation at Capitol Hill in November 2011 on a third party it said created the slide.

But this was not Huawei's evidence to last month's Parliamentary Joint Committee on Intelligence and Security where Rear Admiral Lord said:

As far as being the national champion, it is recognition. There is no title and no certificate; we have never been given a trophy. It is something the company is proud of in that it has gone from US$3,000 in 1987 to a US$40 billion revenue company now, and it is innovative.

The US intelligence committee found that Huawei failed to answer key questions or provide supporting documentation for its claims to be financially independent of the Chinese government, although it admits its customers receive billions in support from Chinese state owned banks and that it had received favourable loans from Chinese banks for years.

Huawei denied doing business with the Iranian government but refused to provide any internal documents relating to its decision to scale back operations in Iran. Huawei stated that it did not allow employees to engage in population monitoring but refused to answer detailed questions about its operations in Iran or other sanctioned countries or provide evidence to support its claims that it complies with all international sanctions.

The committee found that Huawei's corporate history indicated ties to the Chinese military and that Huawei failed to provide detailed answers about those connections. Huawei refused to provide details on its R&D programs, while other documents undermined its claim that Huawei provides no R&D for the Chinese military or intelligence services. The House committee received internal Huawei documentation from former Huawei employees which appeared to show that Huawei provides special network services to an entity the employee believes is an elite cyberwarfare unit within the PLA.

The committee received multiple, credible reports from former and current Huawei employees which provided evidence of a pattern and practice of potentially illegal behaviour by Huawei officials in the US. Those allegations include immigration violations, fraud and bribery when seeking contracts, discriminatory behaviour against non-Chinese employees and a pattern and practice of Huawei using pirated software in its United States facilities. These and other alleged violations are being referred to the Department of Homeland Security and the Department of Justice.

Further, I understand that a second phase of inquiry is expected because 'dozens and dozens' of new complaints have emerged about Huawei following the intelligence committee's 11-month investigation. Going to a key concern of the House committee's findings in the unclassified section of its report, I quote:

Inserting malicious hardware or software implants into Chinese-manufactured telecommunications components and systems headed for US customers could allow Beijing to shut down or degrade critical national security systems in a time of crisis or war. Malicious implants in the components of critical infrastructure, such as power grids or financial networks, would also be a tremendous weapon in China's arsenal.

Malicious Chinese hardware or software implants would also be a potent espionage tool for penetrating sensitive U.S. national security systems, as well as providing access to the closed American corporate networks that contain the sensitive trade secrets, advanced research and development data, and negotiating or litigation positions that China would find useful in obtaining an unfair diplomatic or commercial advantage over the United States.

For all the above reasons, the US House intelligence committee recommended that US government systems, particularly sensitive systems, should not include Huawei equipment, including in component parts, and, similarly, that government contractors, particularly those working on contracts for sensitive US programs, should exclude Huawei equipment from their systems. It strongly encouraged private sector entities in the US to consider the long-term security risks associated with doing business with Huawei for equipment or services. It also strongly encouraged US network providers and systems developers to seek other vendors for their projects. The House intelligence committee stated that, based on available classified and unclassified information, Huawei could not be trusted to be free of foreign state influence and thus posed a security threat to the United States and its systems.

In recent years Huawei has attempted to gain a profile and acceptance in Australia by appointing an Australian board, sponsoring the Canberra Raiders and appearing at the National Press Club. Huawei's presence in Australia is to be welcomed. However, at the same time, the Australian government and industry should be aware of the potential issues that this raises.