3Com-Huawei deal 'in trouble' over China connection

3Com-Huawei deal 'in trouble' over China connection

Summary: 3Com sells network intrusion-prevention equipment used by the Pentagon and U.S. government agencies and U.S. intelligence officials are concerned the technology China would gain from 3Com will boost the Chinese military's computer warfare capabilities.

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3Com deal in trouble A proposed $3 billion cash deal between 3Com, Bain Capital and China's Huawei has been deemed a legitimate threat to U.S. national security, according to a report by Bill Gertz in the Washington Times.

"The deal is in trouble," the paper an unnamed official as saying, confirming earlier fears that Huawei's involvement could derail the merger.

Gertz writes:

U.S. intelligence agencies informed a Treasury Department-led review committee recently that a merger between 3Com and a Chinese company would threaten U.S. national security.

Bush administration intelligence officials said the Office of the Director of National Intelligence (DNI) recently submitted a required threat assessment to the Committee on Foreign Investment in the United States, known as CFIUS, which is conducting a 30-day investigation of the proposed deal between 3Com and China's Huawei Technologies.

The assessment, which is classified, described the deal as posing a "threat" to U.S. national security, according to officials familiar with the document.

3Com sells network intrusion-prevention equipment used by the Pentagon and U.S. government agencies and U.S. intelligence officials are concerned the technology China would gain from 3Com will boost the Chinese military's computer warfare capabilities.   The company also runs a side business that buys advance access to zero-day vulnerabilities.

[SEE: 3Com (and TippingPoint) head to China in $2B cash deal ]

Gertz has reported extensively on Huawei's alleged links to illegal high-tech exports to Saddam Hussein's regime and the supply of telecommunications equipment to Taliban-ruled Afghanistan.

The newspaper also ran an editorial urging the U.S. Committee on Foreign Investment in the United States (CFIUS) to  "take a careful look at this merger, because what is already known about the deal is deeply troubling."

The CFIUS is the same committee that torpedoed Check Point’s acquisition of Sourcefire over national security concerns.

ALSO SEE:

3Com: China connection no risk to national security

Topics: Telcos, Banking, Networking, Security, China

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3 comments
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  • Another test to show US's resistence to monkey

    The question is which matters, the greed of shareholders or the national security?
    pa2004
  • Why can't this be a threat to China's security?

    Any time there's a deal between a US company and a China company, we always hear loud noises about how it's a threat to US national security. Why not turn the tables and make these a threat to China's security instead? It can surely work both ways.

    This only means either (a) US national security can be compromised by a 6-year old child with a computer or (b) China's national security is far far better than the US or (c) both, or (d) the US govt is advocating protectionist measures, the very same stuff they condemn Japan for doing.
    kraterz
  • Good catch

    Sounds like Huawei has a shady history and really should be checked out. With there already having been several instances of Chinese contractors sneaking viruses onto US computer hardware components it's a good idea IMO to be cautious about mergers like this, especially when the merger is one that deals with sensitive networking equipment that is used not just by the general populous but by the government as well. We definitely do not want Chinese contractors sneaking viruses onto these devices!

    - John Musbach
    John Musbach