January 28, 2011 / 6:43 PM / 7 years ago

U.S. review of Huawei/3Leaf under way

WASHINGTON (Reuters) - Chinese telecom equipment maker Huawei Technologies Co’s $2 million deal for 3Leaf Systems is being reviewed by an inter-agency committee, the company said on Friday.

The Committee on Foreign Investment in the United States (CFIUS) is scrutinizing Huawei’s deal for server technology firm 3Leaf, which the Chinese telecom gear maker completed in May, for U.S. national security implications.

“Huawei voluntarily invited CFIUS review of this transaction,” said William Plummer, Huawei’s vice president of external affairs. “Huawei cannot speculate about the possible outcome, but be assured Huawei is comfortable having any transaction in the United States reviewed by the U.S. government so we can demonstrate our commitment to transparency.”

Plummer said the CFIUS filing took place on November 24.

The U.S. government has been concerned about Huawei for years because of uncertainty over its relationship with the Chinese government, said James Lewis, a cyber expert with the Center for Strategic and International Studies think tank.

Huawei was founded by a People’s Liberation Army soldier, and opponents say it retains links with China’s security services. Huawei has denied the links.

This suspicion has hampered the efforts of Huawei, the world’s No. 3 seller of telecom network equipment, to expand into the U.S. market.

Huawei had sought to buy 3Com in 2008 but abandoned its bid because of U.S. security concerns. Hewlett-Packard bought the company the next year.

In 2010, a group of U.S. Republican lawmakers raised national security concerns about Huawei’s bid to supply mobile telecommunications equipment to Sprint Nextel Corp because of the company’s deals with Iran and China’s military.

CFIUS is an inter-agency U.S. government panel that reviews deals with national security implications. Its members are drawn from the Defense, State, Homeland Security, Justice, Commerce and other departments.

A spokeswoman for the Treasury Department, speaking for CFIUS, declined comment.

Reporting by Diane Bartz in Washington, Sakthi Prasad in Bangalore and Melanie Lee in Shanghai; Editing by Jon Loades-Carter and Matthew Lewis

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