Congress Targets Chinese Telecom Threat

Legislation would block intel officials from working for Chinese-linked businesses

June 5, 2014

Current House intelligence and defense legislation now before Congress is seeking to block U.S. intelligence officials from working for Chinese-linked companies, and also is aimed at preventing a major Chinese telecommunications firm from conducting cyber attacks against defense and intelligence networks.

Two amendments now part of the fiscal 2015 intelligence and defense authorization bills target China’s Huawei Technologies, a company linked by the U.S. government to electronic spying, although the company is not named specifically in the legislation, members of Congress and aides said.

The intelligence bill amendment would prevent former U.S. intelligence officials from joining companies like Huawei, which the U.S. government has linked to China’s military and illicit spying through its network equipment.

The defense bill amendment would require the director of national intelligence and secretary of defense to report to Congress on all bids by foreign telecommunications companies seeking U.S. contracts.

Both measures are being dubbed the Rogers’ amendments after their Republican sponsors: Rep. Mike Rogers of Michigan, chairman of the House Permanent Select Committee on Intelligence; and Rep. Mike Rogers of Alabama, chairman of the House Armed Services subcommittee on strategic forces.

"I am greatly concerned Chinese-government-controlled telecommunications companies could pose a direct threat to our national security," said Rogers of Alabama who sponsored the defense amendment.

"We need to make sure we're protecting all levels of our infrastructure," he said. "This is an issue that affects big cities, small towns, and military bases in every corner of the U.S. and those overseas as well."

Both amendments passed the House last month and now face House-Senate conferences.

Huawei spokesman Bill Plummer declined to comment on the legislation.

Rep. Frank Wolf, (R., Va.) said he supports both measures, and specifically the intelligence employees restriction. Wolf was the first to reveal last year that Huawei had hired Theodore Moran, who worked on two government intelligence advisory panels at the same time he was paid consultant for the Chinese company.

"I think it’s good amendment and it’s a problem I think neither [Republican or Democratic] administration has addressed," Wolf said in an interview. "When you get a guy connected to some of these groups who comes in and advises an administration on public policy, it’s not a good idea."

Susan Phalen, a spokeswoman for the House intelligence committee, said the amendment is needed to protect secrets. Senior intelligence officials gain access to the nation’s most sensitive secrets during their careers, she said in an email.

"This provision would help avoid conflicts of interest or the appearance of impropriety in post-government employment funded by governments that pose a high counterintelligence threat to the United States," Phalen said. "These limits are analogous to the restrictions on executive and legislative branch employees who seek to lobby the federal government after they leave public service."

The global Chinese telecommunications equipment maker is widely viewed within the U.S. intelligence and military communities as an arm of the Chinese government that is engaged in clandestine intelligence collection through its equipment.

The Pentagon’s annual report on the Chinese military has linked Huawei to Beijing’s People’s Liberation Army (PLA). "Information technology companies in particular, including Huawei, Datang and Zhongxing, maintain close ties to the PLA," a report several years ago said.

The first Rogers amendment is a response to the case of a senior adviser to the Director of National Intelligence (DNI), Theodore Moran, who worked for DNI as an adviser at the same time he was a paid consultant to Huawei.

The provision prevents all U.S. intelligence officials with access to sensitive compartmented information, the most secret classified information category, from working with suspect foreign companies for a period of one year after leaving government. For two years following retirement, covered intelligence officials cannot work for an outside foreign company on any matter relating to their work for spy agencies during the last year of employment.

It also would require former intelligence officials to report to their former agencies any payments received from suspect foreign employers.

Both requirements would be imposed for five years.

The measure also requires the designation of certain governments that that are classified as "a significant counterintelligence threat," such as China and Russia.

The Obama administration, according to observers, has been lax in pursuing foreign intelligence agents. Since the 2010 arrests of 10 Russian undercover agents, the administration has not apprehended a single significant foreign spy.

The second Rogers amendment calls on the defense secretary and DNI to notify Congress if every foreign-influenced company or its affiliate "is competing for, or has been awarded a contract" that could impact military or intelligence systems.

The legislation specifies the networks as "information technology or telecommunications networks of the Department of Defense or the intelligence community; and information technology or telecommunications networks of network operators supporting systems in proximity to Department of Defense or intelligence community facilities."

A U.S. official said the provision is aimed at preventing companies like Huawei from infiltrating rural U.S. and other networks through sales of equipment to local telecommunications firms, as has occurred in the past, in an effort to avoid federal security scrutiny.

"We’ve seen Huawei go under the radar in seeking to infiltrate rural providers," the official said. "We have to be careful that we don’t wake up in five years and find that 20 percent of the country is using Huawei equipment."

The amendment also was written broadly enough to capture the recent deal between Huawei and South Korea’s LG that has raised concerns about the security of U.S. military communications in a potential war zone.

U.S. intelligence and military officials have said allowing Huawei to build a South Korean network could compromise U.S. military communications in a future conflict on the Korean Peninsula.

Chris Bush, a spokesman for the U.S. Forces Korea, told the Free Beacon last month that the command is concerned about the contract between Huawei and the South Korean company LG as a potential security problem.

"Telecommunications equipment is inherently vulnerable to a multitude of threats, from interception and monitoring to malicious software and applications, regardless of service provider," Bush said in response to questions about the Huawei-LG deal.

Rogers of Michigan said earlier this year that he opposes permitting Huawei to set up a telecommunications network in South Korea.

"Allowing Huawei equipment into South Korea’s advanced wireless network could create dangerous operational security vulnerabilities for the U.S. and South Korean military and government personnel who will inevitably use this network," Rogers said.

The defense amendment would require the DNI to report to Congress annually on whether suspect foreign companies are competing for or were awarded contracts related to information technology or telecommunications components.

The U.S. government has blocked Huawei three times since the early 2000s from buying or merging with U.S. telecommunications firms over spying concerns.

Australia has also blocked Huawei from doing business there and Britain’s government has set up a special security panel to review Huawei equipment used in Britain’s networks.

A House Permanent Select Committee on Intelligence report in 2012 identified Huawei and another Chinese telecom firm, ZTE, as security threats that could facilitate electronic spying by the Chinese government. The report concluded that U.S. companies should not use any Chinese gear in networks.

The House report also warned that other infrastructures, including electric power grids; banking and finance systems; natural gas, oil, and water systems; and rail and shipping channels all could be compromised by penetrating computerized control systems.

An open-source U.S. intelligence report from 2011 said Huawei was linked to the Ministry of State Security, the civilian political police and intelligence service, through one of its executives.

The CIA-based Open Source Center report said Huawei’s chairwoman, Sun Yafang, worked for the Ministry of State Security (MSS) Communications Department before joining the company. The report said Sun used her connections at MSS to help Huawei through "financial difficulties" when the company was founded in 1987.

China’s government has paid Huawei more than $220 million for research and development in the past decade.

The OSC report, dated Oct. 5, said Huawei’s senior leaders have "connections" to the PLA. Huawei founder Ren Zhengfei worked for China’s military from 1974 to 1983 in the engineering corps.

Huawei’s headquarters is located in Shenzen, China, the companies has plans for facilities in 10 U.S. cities.