Attorney general to FCC head: 'Huawei and ZTE cannot be trusted'

The Justice Department is backing a Federal Communications Commission plan to block Huawei and ZTE from receiving federal money to help build U.S. broadband infrastructure.

“At this critical moment, while the world decides where to place its trust, we should not signal that Huawei and ZTE are anything other than a threat to our collective security,” Attorney General William Barr wrote in a letter to FCC Chairman Ajit Pai on Wednesday.

The move comes ahead of a Nov. 22 FCC vote on the proposal to name the two Chinese telecom giants companies that “pose a threat to national security,” which would block them from receiving anything from the U.S. government’s $8.5 billion Universal Service Fund. The fund subsidizes building infrastructure to increase internet access across the United States, where 65% of residents in rural areas and 60% on tribal lands have access to high-speed service, compared with 97% in urban areas.

The DOJ also backed the FCC’s proposal to replace any broadband equipment already in place that uses the two Chinese companies.

“Their own track record, as well as the practices of the Chinese government, demonstrate that Huawei and ZTE cannot be trusted,” Barr said.

Barr pointed to criminal proceedings against Huawei, including one where Huawei allegedly violated the U.S. embargo on Iran and committed bank fraud and obstruction of justice and another where the DOJ says Huawei carried out trade secret theft, fraud, and obstruction of justice while exploiting T-Mobile and stealing its intellectual property. Barr pointed out that ZTE pleaded guilty in 2017 to violating the U.S. embargo on Iran with $32 million in U.S. goods then lied to investigators about it.

In late October, the FCC released a 96-page report focused on challenges facing the U.S. as it seeks to improve internet access nationwide and as it prepares for wider use of the fifth generation of wireless networks, known as “5G.” Huawei was mentioned 295 times and ZTE was mentioned 132 times in the report, repeatedly pointing to the security challenges posed by both.

“The concern is that hostile foreign actors could use hidden ‘backdoors’ to our networks to spy on us, steal from us, harm us with malware and viruses, or otherwise exploit our networks,” Pai said in October. “And there are mounting reasons to believe that the Chinese firms Huawei and ZTE pose an unacceptable risk to U.S. national security.”

The DOJ and U.S. intelligence agencies believe that Huawei and ZTE working hand-in-hand with the Chinese government, possibly giving China’s surveillance state access to hardware and networks around the world.

DOJ has increased its scrutiny of China’s activities in recent years, charging an increased number of people in China-related espionage cases, cracking down on China-based hacking schemes, prosecuting Chinese efforts to steal trade secrets, and more. The DOJ has additionally turned its sights on Huawei’s alleged criminality.

Secretary of State Mike Pompeo has repeatedly warned European allies against using Huawei’s 5G technology.

“We will only share America’s information with those networks that we are confident aren’t under the control of China or China’s government,” Pompeo said.

And despite Barr’s trip to the United Kingdom in late July, disagreements over the use of Huawei technology remain between the U.S. and its closest intelligence allies.

China’s 2017 National Intelligence Law “requires Chinese companies, such as Huawei and ZTE, to support, provide assistance, and cooperate in China’s national intelligence work, wherever they operate,” according to a May DOJ report.

The U.S. government is also seeking the extradition from Canada of Huawei’s chief financial officer Wanzhou Meng, who faces federal charges for an alleged scheme to circumvent U.S. sanctions on Iran. James Cole, former deputy attorney general under the Obama administration, represents Huawei in that criminal case, despite efforts from the DOJ to have him removed.

And Samir Jain, former senior director for cybersecurity policy for the National Security Council under the Obama administration, registered as Huawei’s lobbyist this year.