Huawei has already been accused, with good reason, of violating US and UN sanctions over doing business with Iran. Now, the Washington Post reports, citing clandestine internal documents, that Huawei secretly helped build a North Korean wireless network.
The revelation is the latest threat to undercut trade talks between Washington and Beijing, which have already reportedly stalled.
The telecoms giant partnered with a Chinese state-owned firm called Panda International Information Technology Co. on a variety of projects in North Korea over the span of eight years, according to past work orders, contracts and detailed spreadsheets taken from a database that charts the company’s telecom operations worldwide.
The way the partnership was structured made it difficult to detect Huawei's involvement. The spreadsheets and other documents were provided to The Post by former Huawei employees who believed the information is in the public interest. Other sets of documents were provided to WaPo by others who hoped to see them made public. All three sources spoke with WaPo on the condition of anonymity, fearing reprisals.
Taken together, the revelations raise questions about whether Huawei, which uses American technology and components in its products, violated US export controls regarding business dealings with North Korea.
The Commerce Department has been investigating potential links between Huawei in North Korea since 2016, but it hasn't publicly connected them. Meanwhile, Huawei said it has "no business presence" in North Korea. Spokesman Joe Kelly didn't comment, and he didn't dispute the authenticity of the documents, either.
"Huawei is fully committed to comply with all applicable laws and regulations in the countries and regions where we operate, including all export control and sanction laws and regulations" of the United Nations, United States and European Union, the statement read. A spokesman for Panda Group, Huawei's alleged partner, also declined to comment.
A State Department official explained the administration's frustration with Huawei over the situation.
"All of this fits into a general concern we have about corporate responsibility and a company like Huawei that is not trustworthy because of its company culture and numerous incidents indicating a willingness to evade or outright violate laws," the official said. "Working with regimes like North Korea, who deprive individuals on a regular basis of their basic human rights, raises concern."
When Koryolink, the first major North Korean wireless network, emerged in 2008, it solved a serious problem: North Korea's inability to find foreign multinationals willing to work with it. But the company only came about after a 2006 visit by Kim’s father, Kim Jong Il, to Huawei’s headquarters in Shenzhen, China.
"This was the time that confirmed not only the top leadership’s interest in dealing with Huawei but pretty much revealed a choice of Huawei as the primary supplier of technology," said Alexandre Mansourov, an adjunct professor at Georgetown University’s School of Foreign Service, who in 2011 wrote about North Korea’s digital transformation. "They decided to work with Huawei from that time on."
Koryolink was built through a 2008 joint venture of Egypt's Orascom Telecom Holding and North Korea's state-owned Korea Post and Telecommunications Corp. The venture was called CHEO Technology. Panda, and Huawei, via its relationship with Panda, was also heavily involved with building Koryolink's network.
Panda has a long history of doing the Communist Party's bidding.
A key player was Panda International, part of the storied electronics conglomerate Panda Group that has sometimes served China’s foreign policy. In 2001, for instance, during a visit to Havana, China’s president at the time, Jiang Zemin, gave Cuba 1 million Panda-made TV sets and introduced a company representative to Cuban leader Fidel Castro, who "excitedly shook hands and embraced" him, the firm recounts on its website.
And Huawei was more than willing to supply the equipment needed to build the network.
Huawei worked closely with Panda, using it as the conduit to provide North Korea with base stations, antennas and other equipment needed to launch Koryolink, internal documents show. For years, Huawei and Panda employees worked out of an inexpensive hotel near Kim Il Sung Square in Pyongyang, according to a person familiar with the arrangement.
Huawei was involved in "network integration" and "software" services as well as at least one "expansion" project for Koryolink, the documents show. It also provided "managed service" and "network assurance" services. One current Huawei employee reached by The Post, Yin Chao, said he worked in 2012 and 2013 on Koryolink’s automated callback system, one of several improvements the company offered the North Koreans.
Huawei has other shady links to companies accused of violating sanctions related to their dealings with Pyongyang.
Internal documents show that Huawei has done business with a separate Chinese company, Dandong Kehua, which in November 2017 was sanctioned by the US Treasury Department for exporting and importing goods to and from North Korea - trade seen by U.S. officials as financing Pyongyang’s nuclear and ballistic missile programs.
Documents obtained by The Post also illustrate the North Koreans’ concern with foreign spying on regime officials and their family members who would be using Koryolink. In spring 2008, Orascom and Korea Post tasked Huawei with developing an encryption protocol for the network, noting that the government would create its own encryption algorithm, according to the documents.
"Both sides had common agreement that the ordinary people will use the international standard mobile phones and special users will use different mobile phones which will contain locally developed encrypted algorithm," state the minutes of a 2008 meeting, a document signed by Korea Post’s chief engineer and an Orascom board member.
Soon, the North Korean government was building a rival wireless network, and used equipment from another Chinese telecoms giant, ZTE. It's likely that both of these networks contain American-made components.
The original joint venture agreement gave Orascom exclusive license to operate the mobile network through 2015, according to media reports, but the North Korean government launched a rival network, Kang Song, in 2013 using another Chinese telecom equipment supplier, ZTE. Kang Song quickly supplanted Koryolink as the dominant wireless provider in North Korea.
In 2014, the Commerce Department banned the export of U.S.-origin components to Panda, alleging it had furnished such parts to the Chinese military “and/or” to countries under U.S. sanctions. Since then, any company to provide Panda with telecom items intended for North Korea and containing at least 10 percent U.S.-origin content without a license would be in violation of the export ban.
Several experts, including the supply-chain analysis firm Interos, consider it to be likely that Huawei’s 3G equipment contained American components, though it is difficult to know whether it surpassed the 10-percent threshold outlined in export regulations.
So, will the Trump Administration change its plans to ease up on Huawei and blow up the trade talks over this? It's unlikely, but that doesn't mean a trade deal is any more likely.