ZTE to 'restrict' Iran biz, after alleged spy equipment sale

update China telecommunications equipment maker tells ZDNet Asia it will back off from Iran business in future, amid reports that it sold Iran surveillance system, and country also using China as a "backdoor" around U.S. sanctions.
Written by Ellyne Phneah, Contributor

Chinese telecommunications equipment maker ZTE to back off from business development in Iran, amid reports that it reportedly sold the Telecommunication Company of Iran (TCI) a surveillance system to monitor landline, mobile and Internet communications.

When contacted by ZDNet Asia, a China-based ZTE spokesperson said that her company only sold "standard" equipment to Iran.

"Our main focus for business in Iran is to provide standard communications and network solutions for commercial use to help operators upgrade their network," she told ZDNet Asia in an e-mail. "We are a small scale telecommunication equipment supplier in the Iran market [and] sell standard equipment [to them] as we do globally. In the future, we will restrict our business development in Iran."

When queried further for clarification, the ZTE spokesperson responded: "The specifics of this process are currently under review and the details are still being finalized."

Reported sale of spy equipment
According to a report on Thursday by newswire Reuters, interviews and contract documents indicated that the system was part of a 98.6 million euro (US$130.6 million) contract between China's ZTE and Iran's TCI.  The deal signed in Dec. 2010, showed how despite tightened global sanctions, Iran managed to obtain "sophisticated technology", including monitoring systems to crack down on dissidents.

TCI has a "near monopoly" on Iran landline telephone service, and the majority of the country's Internet traffic has to flow through its network.

The ZTE-TCI documents further revealed that Iran was obtaining U.S. technology through a backdoor method by purchasing them through China, despite America's ban on non-humanitarian sales to Iran. ZTE's "Packing List", dated Jul. 24 2011, had included hardware and software products from some of America's top companies such as Microsoft, HP, Oracle, Cisco, Dell, Juniper and Symantec.

It was also mentioned that ZTE had partnerships with some of the U.S. firms. However, in interviews, all of these companies had said they had no knowledge of the TCI deal. Several companies including HP, Dell, Cisco and Juniper had said in statements that they were launching internal investigations after learning about the contract from Reuters.

Last month, a separate report noted that U.S. lawmakers had called for the investigation of Chinese telecoms giant Huawei, for allegedly supplying sensitive technology to Iran and violating a 2010 sanction law. Huawei however, dismissed the U.S. call for a probe stating that it had been based on "inaccurate media reports".

In November, the U.S. House of Permanent Select Committee on Intelligence also launched an investigation to assess potential threats to national security posed by China's networking vendors presence and expansion in the country.

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