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Documents Implicate China’s Huawei in Concealing Sanctioned Trade

By
David Z. Morris
David Z. Morris
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By
David Z. Morris
David Z. Morris
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March 20, 2016, 11:39 AM ET

The New York Times has spotted a document suggesting that Chinese telecom giant Huawei has engaged in systematic deceptive trade practices. The document was part of a set of internal documents from China’s ZTE Corporation, released by U.S. regulators when they placed restrictions on U.S. companies’ dealings with ZTE earlier this month.

The document describes a company referred to by the pseudonym “F7,” cited as an example of the use of front companies to do business in countries under U.S. sanctions, such as Iran, Syria, and North Korea. The Times cites evidence that “F7” is really Huawei.

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The ZTE documents include details about F7’s failed bid to buy an American company called 3Leaf. Huawei attempted to buy 3Leaf in 2010, but American officials opposed the purchase and Huawei withdrew the offer in 2011. Similarly, the documents describe a joint venture between F7 and Symantec which closely parallels one with Huawei.

The documents describe the use of so-called “cut-off companies” acting as F7’s agents to work with countries under trade embargo. Huawei has worked with sanctioned countries publicly, recently signing a deal with the U.S.-embargoed government of Syria to build telecom infrastructure.

For more on China abroad, read ZTE Under Investigation in Nigerian CCTV Scandal

But Huawei might have been motivated to conceal similar transactions in the past because, as the ZTE documents mention, they strained its dealings with U.S. trade authorities. The root cause of U.S. concern about Huawei’s practices is the widely held suspicion that it effectively acts as an arm of Chinese intelligence, monitoring information that travels over the networks it builds. Huawei, which is now one of the world’s largest telecom providers, has denied those charges, saying it is simply a convenient target for anxieties about China’s growing global influence.

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By David Z. Morris
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