Chinese telecom company accused of aiding Taliban

— Huawei Technologies Inc., a Chinese telecommunications equipment maker, is mired in controversy following reports that India's intelligence agencies have placed the company's Indian operations on a watch list for alleged business dealings with the Taliban, Pakistan and Iraq.

The reports quoted Indian government sources as saying that Huawei India allegedly helped supply communication surveillance equipment to Taliban forces in Afghanistan. It is also alleged to have helped upgrade Iraq's military communication systems. Another allegation had Huawei selling telecommunication gear to Pakistan, India's military rival. No further details on the precise nature of the technology supplied was available.

Deportation considered

According to press reports here, India's Cabinet Committee on Security (CCS) is deciding whether to deport 178 Chinese engineers working in the company's research and development center here. India is believed to have been tipped off by U.S. intelligence services about Huawei's Indian operations. Huawei India had been on a watch list well before the Sept. 11 terror attacks, the reports said.

India's Ministry of External Affairs denied reports that the CCS plans to deport the Huawei engineers. "There's no decision to deport any Chinese software engineer working in India on a legitimate employment visa," an external affairs ministry spokesman said.

But the controversy may not end soon since the ministry said nothing about charges leveled against Huawei itself. Besides, a team from Software Technology Parks of India (STPI), an Indian government agency that promotes India's software industry, has been asked to investigate Huawei India's activities. STPI officials here declined to comment on whether such a probe is under way.

Local authorities in Bangalore are awaiting the return on Friday (Dec. 14) of Huawei India chief operating officer, Jack Lu, from an overseas visit. Lu is to be questioned on his return. Officials of the local information technology department have already visited Huawei's Bangalore office to question other senior executives on the company's business dealings.

A Huawei India spokesman dismissed reports that the company supplied equipment to the Taliban and Iraq. "The claims made by certain sections of the media are not true," he said. "Huawei's global business is in compliance with the United Nations' standards and regulations."

A Chinese foreign ministry spokeswoman said reports stating that Huawei Technologies was developing telecom surveillance equipment for the Taliban at its Indian development center were "misleading."

"We are surprised to see the misleading reports regarding Chinese electronic engineers developing surveillance system in India for the Taliban," she said. Furthermore, reports that an Indian security department may decide to deport the Chinese engineers are "not true," she said.

Huawei has close cooperation with leading Indian software companies such as Satyam Computers, Sasken and Tata Elxsi, and has completed about 20 projects with its partners. Huawei's India center develops wideband switching, mobile communications, wireless infrastructure, network management and voice-over-Internet Protocol application technologies.

The Bangalore center, Huawei's largest outside China, plays a strategic role in Huawei's ability to rapidly develop technologies and scale up its engineering processes. Launched in 1999, the center was formally opened in February of this year. It currently employs 513 workers, including 178 Chinese nationals. The remainder are Indians.

The Taliban controversy was also fueled by the fact that Huawei is known to be one of the best-paying firms for software professionals in Bangalore, a haven for software development. Unconfirmed reports indicate that Huawei pays its staff about 150 percent more than other companies here.

India and China have long been regional rivals. Hence, the Indian government has been reluctant to allow Indian software companies to hire Chinese software engineers to work in India. Still, Indian companies would like to set up software development centers in the hot Chinese market.

Tense relations

Sino-Indian relations have been tense ever since the nations waged war in 1962, with each nation suspicious of the other's military plans in the region. China has had close military ties with with Pakistan, a country with which India has been at war three times. Hence, India views the Pakistani-Chinese friendship with suspicion.

Huawei invested $8 million in its Bangalore center during 1999 and 2000, and another $30 million had been earmarked for expanding operations this year. Huawei also has research and development centers in Dallas, Silicon Valley, Stockholm and Moscow.

The controversy over Huawei's operations comes as India's software industry gears up for competition from China on its home turf, according to Nasscom, India's software industry association. The group said that while China has the potential to emerge as a serious competitor to India, it also presents a huge market for Indian software expertise. Nasscom plans to launch a study to identify market opportunities in China and seek collaborative ventures for Indian and Chinese software companies.

Huawei was founded in 1988 and is based in the Shenzhen Special Economic Zone. Its ownership is virtually unknown despite Huawei being the seventh largest telecom company in the world. It had revenues last year totaling $2.66 billion.