Report: Huawei in Deal for HP Gear to Iran

For a company trying to rehabilitate its reputation as a responsible member of the global technology industry, Huawei Technologies Ltd. isn’t doing itself many favors.

For the second time in three months, journalists have found evidence of Huawei officials working with major partners to sell IT and telecommunications equipment to Iran in transactions that would violate international trade embargoes. This time, the deal was for $1.7 million worth of Hewlett-Packard Co. server storage and networking gear, according to a report published by Thomson Reuters Corp.

According to the report, Huawei and one of its larger partners, Skycom Tech Co. of Hong Kong, joined forces on a 13-page proposal to sell the HP hardware to Iran’s largest mobile carrier, Mobile Telecommunications Co. The equipment was to be used to update the carrier’s subscriber billing system, but the deal never went through, the report said.

Huawei issued a statement on Sunday saying it was voluntarily reining in its efforts in Iran, but remained committed to supporting modern communications capabilities for Iran’s civilian population “in line with our vision to enrich life through communication.”

“Due to the increasingly complex situation in Iran, Huawei will voluntarily restrict its business development there by no longer seeking new customers and limiting its business activities with existing customers,” the statement read. “For communications networks that have been delivered or are under delivery to customers, Huawei will continue to provide necessary services to ensure communications for Iran’s citizens.”

The report involving HP gear is similar to a story published by Reuters in October that claimed another Iranian partner of Huawei tried to sell embargoed antennas made by Huawei partner CommScope Inc. of Hickory, N.C., to Iran’s second largest mobile operator, MTN Irancell.

The latest revelation is another black eye for Huawei, which has been trying to gain traction in the United States, but has been thwarted by accusations from competitors and lawmakers that the Shenzhen, China-based vendor engages in intellectual property theft and poses a threat to U.S. national security.

In a CBS News “60 Minutes” report in October, U.S. Rep. Mike Rogers (R-Mich.) offered a damning assessment of Huawei, deeming them bad partners for American businesses and calling out U.S. companies that work with the IT equipment manufacturer.

“If I were an American company today, and I’ll tell you this as the chairman of the House Permanent Select Committee on Intelligence, and you are looking at Huawei, I would find another vendor if you care about your intellectual property, if you care about your consumers’ privacy, and you care about the national security of the United States of America,” said Rogers.

Following the “60 Minutes” expose, a Channelnomics survey found that more than two-thirds of solution providers say their customers will be less likely to buy hardware or software from vendors suspected of compromising U.S. national security or economic interest. Nearly eight out of 10 solution providers say they would not work with such vendors.

Huawei officials continue to stress they had violated no international sanctions with the disclosed proposals, which were never consummated for a variety of reasons: “Huawei provides telecommunications equipment for commercial and civilian use around the world and has established an industry-standard trade compliance system and internal control policies for exports to ensure legal application of our products and technologies. Huawei’s business in Iran has been in full compliance with all applicable laws and regulations including those of the United Nations, the United States and the European Union.”

For their part, officials at HP in Palo Alto, Calif., issued a statement saying the Huawei/Skycom deal for servers, disk arrays, network switches and associated software violates existing HP distribution contract language that prohibits “the sale of HP products into Iran and requires compliance with U.S. and other applicable export laws.”

“HP has an extensive control system in place to ensure our partners and resellers comply with all legal and regulatory requirements involving system security, global trade and customer privacy and the company’s relationship with Huawei is no different,” the HP statement read.

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