Spy fears as Chinese firm eyes NBN deal

The United States’ National Security Agency intervened to block Huawei Technologies’ bids to supply equipment to AT&T last year, threatening to withdraw government business if Huawei was chosen, The Washington Post reported.

The company also has faced opposition from Indian and British intelligence agencies and Australian security experts are voicing similar concerns as Huawei seeks a slice of the $43 billion broadband roll-out.

As the rate of cyber attacks on Australian interests intensifies, an intelligence expert at the Australian National University’s Strategic and Defence Studies Centre, Desmond Ball, said he didn’t want to sound alarmist ”but this is the highest order risk that I would see with regard to network vulnerability”.

Bids by Huawei ”would have to be subject to the closest scrutiny but in the end it would be the government’s responsibility to reject such an involvement”.

He said the cyber security debate focused on malicious software but more attention should be paid to hardware, which could carry digital trapdoors. Professor Ball said even the most secure cable systems were vulnerable.

Over the next decade, he said, the US-China relationship would become the most likely source of major international conflict and Australia was a key ally of the US.

Retired air commodore Gary Waters, a former senior official in the Defence Department who now works for consultancy firm Jacobs Australia, said the government appeared not to be taking cyber security seriously enough. ”The threat is increasing and I think this is one of those threats,” he said, adding that an independent private-sector audit would be required of any foreign company ”where alarm bells could sound on cyber security”.

Alan Dupont, director of the Centre for International Security Studies at the University of Sydney, called for a robust discussion of the NBN’s security risks, saying: ”This is the critical piece of infrastructure that is going to go down over the next 30 or 40 years … there needs to be a broader discussion of the national security implications.”

The executive director of national security policy at Verizon in Washington, DC, Marcus Sachs, said malicious software was easy to hide in hardware and any risk assessment should focus on how much a company could be trusted.

Huawei lost a bid to supply the NBN’s ethernet aggregation equipment and the gigabit passive optical network in June. The contract went to Alcatel-Lucent, a French company.

Huawei, the world’s second-largest telecommunications network provider, is believed to be preparing bids to supply almost all the equipment the NBN needs. Former Victorian minister Theo Theophanous is lobbying Canberra on Huawei’s behalf.

Huawei emphasises that it is privately owned and has released details that show its employees own its shares. But links with the military are persistently reported. According to The New York Times, Huawei’s founder and chief executive, Ren Zhengfei, was an officer in the People’s Liberation Army. China analysts say loan credits from China Construction Bank, which were granted to small companies that wanted to buy Huawei equipment, were not necessarily repaid.

Jeremy Mitchell, public affairs director for Huawei Australia, denied the company was linked to the Chinese government.

He said Huawei guaranteed that its equipment was safe. Despite intelligence resistance, Huawei has supplied equipment to British Telecom. He said Optus and Telstra already used Huawei’s equipment and about 50 per cent of Australians relied on it. A spokeswoman for Communications Minister Senator Stephen Conroy said the government would ensure that ”national security and resilience issues are addressed in the design and operation of the NBN”.