Huawei Controversy And Telecom Security In India

In 2013 Huawei Telecommunications (India) Pvt Ltd applied for government permission to set a manufacturing plant in India. On papers Huawei India is a nondescript Company incorporated in India with Directors from China. Its parent Company Huawei Technologies Company Limited was founded by Ren Zhengfei in China. Huawei literally means Chinese achievement.

It produces Telephone Switches of C & C08 type and other ancillary hardware useful to Telecom Operators having license to operate telecom services in India. Such switches were launched in 1998 in China.

Telephone Switches are electric apparatus which works like an operator in old school exchanges. In traditional telephone exchanges different lines of phones were manually connected by operators. Manual operators connected domestic lines directly by connection on switch board of local phones. For a long distance call they would call the operator who would connect another telephone exchange which would connect to the subscriber in local area.

Huawei Controversy

When Huawei first applied for Indian government permission in 2013, concerns were raised by various segments in India as it was alleged that Telephone Switches manufactured by Huawei could be tempered or rather manipulated so that data could be passed over in peace-time to China or switches could be shut down during hostile situations. Indian mindset towards China after Sino-Indian War in 1962 and repeated pin-pricking by China at border areas was also a factor in taking such concerns seriously.

Earlier there were allegations of favouring Huawei by BSNL officials regarding a tender floated in 2008 and awarded in 2009 for building 25 million mobile lines for entire South India. The tender was later dropped down after opinion of a Government Committee under Sam Pitroda.

Security concerns over Huawei controversy were based on an Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE. ZTE also has presence in Indian telecom sector. The report on Chinese Companies was released on 8.10.2012. It recommended that sensitive U.S. government systems should not include Huawei or ZTE equipment or component parts. It also recommended that contractors working on sensitive US Programs should not include equipment manufactured by ZTE or Huawei in their systems.

It was observed in the report that

‘Opportunities to tamper with telecommunications components and systems are present throughout product development, and vertically integrated industry giants like Huawei and ZTE provide a wealth of opportunities for Chinese intelligence agencies to insert malicious hardware or software implants into critical telecommunications components and systems’. It was also observed in the report that ‘under Chinese law, ZTE and Huawei would be obligated to cooperate with any request by the Chinese government to use their systems or access them for malicious purposes under the guise of state security’

It was believed that founder of Huawei, Ren Zhengfei, was a director of the People’s Liberation Army (PLA) Information Engineering Academy, which was associated with PLA’s signals intelligence division. Mr. Ren Zhengfei in his official biography also admits that in 1982 he was asked to be a member of 12th National Congress of the Communist Party of China.

Project 863

Apart from this report, it was also believed that Huawei was part of ambitious project in field of technology launched by the PLA – labeled as ‘Project 863’ as it was started in March month of year 1986. In 1986 four Chinese Scientists Wang Daheng, Wang Ganchang, Yang Jiachi, and Chen Fangyun submitted a proposal to Chinese Government to start a Project to give boost to technology in China. After approval by Chinese leader Den Xiaoping, Government accepted the Project and included it in next three five year plans. Officially the Project falls under Ministry of Science and Technology of China. It was kept a grant based project to include private sector also in its scope of work. Objective of the project was “to achieve leap-frog development in key high-tech fields in which China should take strategic positions in order to provide high-tech support to fulfill strategic objectives”, perhaps a Chinese technological version of Indian Mundakopnishad. Many countries looked suspiciously at a National programme with defined international objectives.

Office of the US National Counterintelligence Executive submitted a Report to Congress on Foreign Economic Collection and Industrial Espionage, 2007-2011 which has a mention about Project 863 as ‘an emblematic program in this drive is Project 863, which provides funding and guidance for efforts to clandestinely acquire US technology and sensitive economic information’.

After, the security concerns were raised about Chinese telecom companies, initially Indian government proposed to give permission subject to the Companies providing a financial guarantee or a third party assurance of their equipment not being bugged.

Finally in the din of Narendra Modi – Xi Jinping meetings this year the government of India gave permission to Huawei to set up a plant in India. Reportedly the permission was issued subject to Huawei appointing an Indian as its Chief Security officer and subject to permission being revoked in case Huawei was found to be engaged in activities detrimental to the national interest of India. Though India has passed the National Security Clearance Policy, it does not have a definite act like USA which has Economic Espionage Act, 1996.

The permission may have been given based on due verification by Indian security agencies but the issue of corporate veil, layered control and indirect funding remain a matter of concern for Companies functioning in sensitive areas.

In any case security clearance by ministry to Companies can be assailed by affected parties in Courts of law. In matter of Digital Radio (Mumbai) Broadcasting Ltd. government denied permission to Company citing security reasons. The denial of permission was challenged in Delhi High Court, and Court set aside the order of the Government vide Judgement dated 26.7.2015. The Order of refusal of radio license to FM Company was based on the reason that CBI investigations were ongoing against Kalanithi Maran and Dayanidhi Maran who were indirectly holding interest in the Company through a fourth layer company. Court noted that the petitioner companies themselves have not been alleged to be vehicles of any transgression of law.

Though High court decided case on its merits such a view of keeping the corporate veil in matters of Security would result in creating corporate tunnels for people who are either expressly barred or are under suspicion of working against the interest of India. In a Country where most people give instant consent to access personal data in mobile phones to download free foreign Android applications, telecom security concerns remain a distant priority for government.

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References

• INVESTIGATION OF THE SECURITY THREAT POSED BY CHINESE TELECOMMUNICATIONS COMPANIES HUAWEI AND ZTE – UNITED STATES HOUSE OF REPRESENTATIVES, PERMANENT SELECT COMMITTEE ON INTELLIGENCE (link)
• 863 Program (link)
• Relax, Huawei Technologies is no threat to India’s national security: COAI (link)

See also