* 18-month review of telecoms supply chain ended in early
2012
* Found vulnerabilities in Huawei gear that pose security
risk
* Cyber experts differ on whether vulnerabilities were
deliberately inserted
(Adds Chinese foreign ministry comment)
SAN FRANCISCO, Oct 18 (Reuters) - A White House-ordered
review of security risks posed by suppliers to U.S.
telecommunications companies found no clear evidence that Huawei
Technologies Ltd had spied for China, two people
familiar with the probe told Reuters.
Instead, those leading the 18-month review concluded early
this year that relying on Huawei, the world's second-largest
maker of networking gear, was risky for other reasons, such as
the presence of vulnerabilities that hackers could exploit.
These previously unreported findings support parts of a
landmark U.S. congressional report last week that warned against
allowing Chinese companies Huawei and ZTE Corp
to supply critical telecom infrastructure.
But they may douse speculation that Huawei has been caught
spying for China.
Some questions remain unanswered. For example, it is unclear
if security vulnerabilities found in Huawei equipment were
placed there deliberately. It is also not clear whether any
critical new intelligence emerged after the inquiry ended.
"The White House has not conducted any classified inquiry
that resulted in clearing any telecom equipment supplier," White
House National Security Council spokeswoman Caitlin Hayden said.
She also noted that Huawei had been barred from participating in
an emergency network for first responders a year ago "due to
U.S. government national security concerns".
A spokesman for China's foreign ministry called for a "level
playing field" for Chinese companies in overseas business.
"As far as the report cited is concerned, it proves again
that allegations against Huawei are unfounded," said foreign
ministry spokesman Hong Lei, when asked to comment on an earlier
version of this story.
CLASSIFIED INQUIRY
At the White House's direction, according to people familiar
with the matter, intelligence agencies and other departments
conducted the largely classified inquiry, delving into reports
of suspicious activity and asking detailed questions of nearly
1,000 telecom equipment buyers.
"We knew certain parts of government really wanted" evidence
of active spying, said one of the people, who requested
anonymity. "We would have found it if it were there."
A spokesman for Huawei said the company was not familiar
with the review but it was not surprised that no evidence of
Huawei espionage was found.
Last week's report from the Republican and Democratic
leaders of the House Intelligence Committee noted the potential
for spying through Huawei gear installed to manage traffic on
wireless networks. The committee also criticized Huawei's
leadership for failing to provide details about its
relationships with Chinese government agencies.
Huawei, whose chief executive officer, Ren Zhengfei, founded
it 25 years ago after he was laid off by the Chinese army, has
rejected the House report as unfair and inaccurate. China's
Commerce Ministry has also called the accusations "groundless".
"Huawei is a $32 billion independent multinational that
would not jeopardize its success or the integrity of its
customers' networks for any government or third party. Ever,"
the company's U.S. spokesman, Bill Plummer, said on Wednesday.
ZTE said it had never encountered an instance of its
equipment causing security problems in the countries in which it
operates.
"We believe our equipment is safe," said spokesman David Dai
Shu. "ZTE recognizes and fully respects the obligation to
protect national security of all countries in which ZTE's
equipments are deployed."
The House Intelligence Committee's report did not present
concrete evidence that either Huawei or ZTE has stolen U.S.
data, although it said a classified annex provided
"significantly more information adding to the committee's
concerns" about the risk to the United States.
Speculation has swirled about the contents of the secret
annex, and both committee Chairman Mike Rogers and some
intelligence officials have hinted at evidence that Huawei has
participated in espionage.
Rogers, the report's lead author, stoked concerns by saying
some customers had seen routers sending off "very valuable data"
to China.
But in the one case a committee staff member pointed out to
Reuters, the victim - Leap Wireless International Inc -
said that while some of its computers were infected with viruses
earlier this year, an investigation found no evidence that the
infection was deliberate or that confidential data had been
stolen.
PREVENTIVE MEASURES
Pressed about why the White House review and unclassified
version of the House Intelligence Committee report had not
turned up a "smoking gun", two officials familiar with
intelligence assessments said U.S. agencies were most concerned
about the capability for future spying or sabotage.
Similarly, Chris Johnson, a former CIA analyst on China,
said he had been told that the White House review had come up
empty on past malicious acts. Nonetheless, officials emerged
from the review with "a general sense of foreboding" about what
would happen if China asked Huawei for assistance in gathering
intelligence from U.S. customers, he said.
"If the Chinese government approached them, why would they
say no, given their system?" Johnson said.
Preventing state spying through technology is a high
priority for U.S. President Barack Obama's administration, which
is lobbying for legislation to raise private-sector security
standards and readying a more limited executive order along
those lines.
Reuters interviews with more than a dozen current and former
U.S. government officials and contractors found nearly unanimous
agreement that Huawei's equipment poses risks: The company could
send software updates that siphon off vast amounts of
communications data or shut them down in times of conflict.
More than anything else, cyber experts complained about what
they said was poor programming that left Huawei equipment more
open than that of rivals to hacking by government agents or
third parties.
"We found it riddled with holes," said one of the people
familiar with the White House review.
At a conference in Kuala Lumpur last week, Felix Lindner, a
leading expert in network equipment security, said he had
discovered multiple vulnerabilities in Huawei's routers.
"I'd say it was five times easier to find one in a Huawei
router than in a Cisco one," Lindner said.
Lindner, who spent months investigating Huawei code, said
the vulnerabilities appeared to be the result of sloppy coding
and poor procedures, rather than any deliberate attempt at
espionage. Huawei is looking into his findings, he said.
Some in the U.S. government, however, have said the alleged
poor security practices at Huawei could be a deliberate cover
for future attacks.
One computer scientist, who helped conduct classified U.S.
government research on Huawei routers and switches four to six
years ago, told Reuters that he had found "back doors" that his
team believed were inserted with care.
He said these back doors could enable attackers to install
malicious software that would make critical government networks
inoperable, allow hackers to gain entry into highly classified
systems and enable them to spy on all traffic. He requested
anonymity because he was not authorized to discuss the research.
Huawei has denied the existence of these back doors. Plummer
also noted that any vendor's gear could be targeted by hackers,
and the company would address any vulnerabilities it finds.
The United States' closest allies have rendered a split
verdict on Huawei. Earlier this year, Australia barred Huawei
from becoming a contractor on the country's National Broadband
Network, and Canada said last week that Huawei could not bid to
help build a secure national network. In Britain, however, a
spokesman for the Cabinet Office said Huawei's products were
fully vetted and did not represent a security concern.
Dutch Ruppersberger, the ranking Democrat on the House
Intelligence Committee and co-author of the report, told Reuters
that the burden of proof had been on Huawei and ZTE, which cited
Chinese government restrictions in limiting their responses.
"China has the means, opportunity, and motive to use
telecommunications companies for malicious purposes,"
Ruppersberger said.
Republican Rogers' staff did not respond to questions about
the contents of the classified annex or the White House review.
(Reporting by Joseph Menn in San Franciso, Jim Finkle in
Boston, and Mark Hosenball in Washington; Additional reporting
by Paul Eckert and Jim Wolf in Washington and Jeremy Wagstaff in
Kuala Lumpur; Editing by Tiffany Wu, Lisa Von Ahn and Alex
Richardson)
