President Obama may need to decide on whether to approve Chinese vendor Huawei’s acquisition of US server company 3Leaf Systems as a government panel seems set to recommend that the transaction be rejected, according to media reports.
According to a…
President Obama may need to decide on whether to approve Chinese vendor Huawei’s acquisition of US server company 3Leaf Systems as a government panel seems set to recommend that the transaction be rejected, according to media reports.
According to a report in the Wall Street Journal, Huawei said yesterday that the Committee on Foreign Investment in the US (CFIUS) had told it that if it did not divest 3Leaf Systems, the committee would recommend to the president that the transaction should be blocked.
Huawei has reportedly decided to let the decision go forward to the president.
The US$2m acquisition was completed in May 2010, but CFIUS was reportedly not notified, and decided in January this year to start a retrospective investigation.
The decision comes after several other Huawei strategic moves have been blocked in the US due to national security concerns. Huawei maintains that it is an entirely privately-held company, but there have been fears of its alleged links to the Chinese state and military.
WSJ reported that Bill Plummer, the vice president for government affairs for Huawei USA, said that the company had great respect for the process and was willing to negotiate a national security agreement that would deal with any concerns.
Plummer also reportedly said that to divest the asset now would tarnish the company’s brand and reputation.
Separately, the Financial Times reported today that cables released by Wikileaks revealed that US diplomats had attempted to stop Huawei acquiring potentially sensitive information by applying pressure to suppliers in Europe, including UK company Spirent Communications and Philips in the Netherlands.
According to the report, the US State department asked its London embassy to run a background check on Spirent regarding its plans to export data on the global positioning system (GPS).
Another cable from 2004 reportedly showed a US official telling his Dutch counterparts that Philips should be cautious of providing telecoms equipment to Huawei because of the fear that it could eventually go to the Chinese military.
However, the report also mentioned another cable from 2007, in which a Chinese source allegedly said that Huawei was involved in foreign arms sales.
Huawei denied this claim.
Huawei were unavailable to comment before the press deadline. CFIUS refused to comment.
