National security could be at risk as a result of Chinese firms involved in Britain’s telecommunications systems, MPs have warned.
The intelligence and security committee (ISC) claims that ministers have failed to find a balance between encouraging Chinese investment and implementing domestic security.
The influential Commons group highlighted the case of the telecoms giant Huawei, which signed a major contract in 2005 to supply equipment to BT. It has since signed deals with other companies including O2, TalkTalk and EverythingEverywhere.
Huawei is effectively barred from the United States over spying concerns and has previously been accused of stealing technology from Motorola and Cisco.
The ISC said, in a highly critical report, that the firm should not have been allowed to become embedded in Britain’s critical network infrastructure without the knowledge and scrutiny of ministers.
BT told government officials of Huawei’s interest in the contract two years before it was awarded, but the officials did not inform ministers until 2006, a decision that “shocked” MPs.
“Such a sensitive decision, with potentially damaging ramifications, should have been put in the hands of ministers,” said committee chairman Sir Malcolm Rifkind, a former Tory defence secretary.
“The failure… to consult ministers seems to indicate a complacency which was extraordinary given the seriousness of the issue,” the committee said.
The ISC said staff from the Government Communications Headquarters (GCHQ) – the UK’s signals intelligence agency – should take over the running of Huawei’s cyber-security centre, known as the Cell, in Banbury, Oxfordshire.
“The government’s duty to protect the safety and security of its citizens should not be compromised by fears of financial consequences, or lack of appropriate protocols,” the report said.
The ISC expressed concern that the Cell was funded and staffed by Huawei – even though personnel were security-cleared in the UK – and called for the national security adviser to carry out a review “as a matter of urgency”.
As an “absolute minimum”, the ISC said GCHQ should have greater oversight of the Cell and that the government must be involved in the selection of its staff.
Despite strenuous denials by Huawei, the ISC described reported links between the firm and the Chinese state as “concerning”.
A Huawei spokesman said prior to the BT selection decision in 2005, the company was subject to a comprehensive audit which took two years to complete.
“Since then, BT has continued to conduct a thorough annual evaluation of Huawei,” he said.