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Huawei invites US gov to investigate links to Chinese military claims

Turning over a new 3Leaf

Chinese comms kit giant Huawei Technologies, which controversially withdrew from its bid to buy 3Leaf Systems earlier this week, is calling on the US government to investigate claims that it has links to the People's Liberation Army.

The company's deputy chairman Ken Hu attacked what he described as "a number of misperceptions that some hold about Huawei" in the US, where the manufacturer has been trying to build its business over the past 10 years.

Earlier this week, Huawei walked away from 3Leaf Systems, which it sought to acquire in May 2010 for $2m, after overseas ownership concerns prompted an investigation of the deal by the Committee of Foreign Investment (CFIUS) in the US. All of which hampered completion of the planned takeover.

Hu complained in an open letter published on the firm's website today that allegations that Huawei has close connections with the Chinese military were "unfounded and unproven claims" made against his company.

"These falsehoods have had a significant and negative impact on our business activity and, as such, they must be addressed as part of our effort to correct the record," he said.

Hu said Huawei did not pose a threat to the national security of the US and added that the allegations focused on "a mistaken belief that our company can use our technology to steal confidential information in the United States or launch network attacks on entities in the US at a specific time."

He said: "There is no evidence that Huawei has violated any security rules. Not only that, in the United States we hire independent third-party security companies, such as EWA, to audit our products in order to certify the safety and reliability of the products at the source code level."

He called on the US government to carry out a formal probe into Huawei to reach what he described as a "clear and accurate conclusion."

"We have faith in the fairness and justness of the United States and we believe the results of any thorough government investigation will prove that Huawei is a normal commercial institution and nothing more."

However, this isn't the first time Huawei has been forced to kill a planned acquisition of a US-based company.

In March 2008, the Chinese networking giant – alongside private equity outfit Bain Capital Partners – pulled out of a joint $2.2bn bid to acquire 3Com.

At the time, Bain said that despite its best efforts to restructure the deal, it was notified that the CFIUS would block the buyout.

In the UK, Huawei – which is an important supplier to BT – is set to install a mobile phone network on the London Underground to coincide with the start of the 2012 Olympics.

Despite that, the UK government has similarly expressed concerns about the Chinese company's alleged ties to the People's Liberation Army.

Earlier this week Beijing officials at China's Ministry of Commerce (MOC) said they "regretted" Huawei's decision to abandon the proposed takeover of California-based cloud computing firm 3Leaf.

"In recent years, some relevant parties in the United States have used various reasons, such as national security, to hamper Chinese firms' trade and investment activities in the United States," said the MOC, according to state-owned news agency Xinhua.

"Such obstructions have already had an impact on the Sino-US economic and trade cooperation.

"We believe an open, just and transparent trade and investment environment is good for economic growth for both China and the United States and can help facilitate the world economic recovery." ®

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