Re: Managing Chinese Threat
Posted: 01 Sep 2012 23:34
Dragon in your dongle
By Anupam Dasgupta
Story Dated: Saturday, September 1, 2012 9:27 hrs IST
Fears over Chinese telecom hardware escalate after ZTE bags plum BSNL contract
For some time the Research and Analysis Wing, the Intelligence Bureau and the Enforcement Directorate have been fretting over imported telecom hardware made by Chinese giants Huawei Technologies and ZTE Corporation. The anxiety increased when Huawei was recently asked by the Chinese counter-espionage division to sweep and debug many Chinese diplomatic missions, including the one in Delhi.
Almost immediately, the Ministry of Communications and Information Technology asked Bharat Sanchar Nigam Ltd to test all equipment supplied by Huawei for trapdoors, black boxes and malware. BSNL was also asked to “check if it [the equipment] is susceptible to remote hacking”, before using the devices.
THE WEEK has documents of confidential assessments made by four top national security and financial intelligence agencies on this issue. All of them agree that the Chinese threat is real and credible. One report said Chinese vendors were “supplanting and not supplementing" indigenous players in India's telecom equipment manufacturing sector. Another report was cautious about the vendors' reluctance to share technical information and system keys of their products with Indian operators.
An R&AW note of April 2012 has cautioned the Department of Telecommunications about Huawei's links with the Chinese ministry of state security and the People's Liberation Army. BSNL had cancelled a contract with Huawei in 2010, over security issues. And, during 2009-2010, both Huawei and ZTE registered a growth slowdown after Indian security agencies voiced their fears.
The Telecom Equipment Manufacturers Association wrote to Prime Minister Manmohan Singh on March 27, highlighting the need to keep the “know-how and control of telecom equipment” in Indian hands. TEMA said that the flawed preferential market access policy had resulted in the influx of Chinese vendors in core sectors.
Telecom equipment worth over 070,000 crore are added to the Indian network every year, and only around 3 per cent of this is made here. The National Telecom Policy 2012 wants the “domestic production of telecom equipment to meet Indian telecom sector demands to the extent of 60-80 per cent” by 2020; experts and critics call the policy over-ambitious.
Another MCIT letter dated May 31, 2011, called for network forensics, network hardening and network penetration tests by telecom service providers. It warned service providers of “non-addressable vulnerabilities” and asked them to get their “network audited from the security point of view once a year”. It placed the onus of network security solely on the service provider and mooted the creation of a Telecom Security Council of India.
The Cabinet Committee on Security, chaired by the Prime Minister, too, is wary, say sources. And, the fear is not restricted to India. The US House of Representatives' Permanent Select Committee on Intelligence had recently cleared a probe into national security threats arising out of foreign telecom equipment. Australia has banned Huawei from entering the nation's broadband network.
Sources said that, variously, Union Home Secretary R.K. Singh, Union Commerce Secretary S.R. Rao, Union Telecommunications Secretary R. Chandrashekhar, former Union home minister P. Chidambaram and National Security Adviser Shivshankar Menon were briefed on the potential threat.
Attempts by THE WEEK to reach Chandrashekhar on phone were unsuccessful. And, attempts to reach Ram Narain, deputy director general (security), department of telecommunication, resulted in his office curtly asking this correspondent to “stop disturbing a senior government official”.
Security sources say the potential threat from Chinese vendors is twofold—espionage and disruption. Under espionage comes tapping and remote accessing of networks and devices, while disruption could mean Beijing throwing the kill switch and silencing all infected devices.
Sources within Indian intelligence agencies said that they had come across Chinese sleeper agents in India who seemed to have no designated function. Like all sleepers, they, perhaps, are in place to set in motion a pre-prepared espionage blueprint.
The PLA's technical department is responsible for gathering SIGINT (signals intel) and COMINT (communications intel), and the department is believed to have the capability to conduct sophisticated operations throughout southeast Asia. Huawei founder Ren Zhengfei is a retired PLA officer and former director of the PLA's Information Engineering Academy.
“The sheer complexity of telecom networks comprising several hundred network elements is one of the reasons why it is so vulnerable from the outside,” said Ashok K. Aggarwal, honorary director-general, TEMA.
According to documents on security assessments available with THE WEEK, Huawei bribed telecom officials to bag its first contract in Chennai in 2006. The company is also accused of tax evasion by under-invoicing imported goods. What also spooked the Indian intelligence fraternity was that Huawei sought approval from the Foreign Investment Promotion Board for setting up manufacturing facilities in India.
In 2010, the R&AW wrote to the Department of Telecom asking it to stop Reliance Communications from seeking a loan worth $600 million from the Export-Import Bank of China. The note said that the loan was being facilitated by Huawei and ZTE with malicious objectives.
Investigations by the ED have found instances of ZTE staffers trying to bribe Indian officials. A senior official of ZTE had allegedly arranged visas and funds for some Chinese nationals who overstayed in India. These people never informed the Foreigners Regional Registration Offices about the extension of their stay. And, at least 140 ZTE officials have visited India on tourist visas.
An ED official confirmed to THE WEEK that they were probing Foreign Exchange Management Act violations by ZTE. “There is substantial evidence against the companies in certain BSNL projects they have recently bagged,” the official sad. “This needed to be examined threadbare and carefully.” The official also touched upon a probe on hawala money reaching certain Chinese nationals in India.
Despite security agencies and the department of telecommunications being wary of Chinese vendors, ZTE recently bagged BSNL's GSM deal worth 04,000 crore. The deal gives the Chinese company access to over 10.15 million GSM lines across telecom circles in India. The contract also gives ZTE sweeping access to indigenous technology and the existing network.
But senior officers in BSNL and Mahanagar Telecom Nigam Ltd feel that they are being singled out on account of national security apprehensions. “If there is a security challenge, then the government should contemplate banning the Chinese telecoms gear vendors. The MHA needs to take a clear call on the matter,” said Naresh Kumar Gupta, director (consumer fixed access), BSNL. “BSNL had okayed a contract to one of the Chinese vendors following government guidelines in 2010. And, insofar as national security challenges are concerned the home ministry has to take a call or offer a security template.” He declined to comment on the ZTE deal.
“When there are issues pertaining to granting security clearances to foreign business players, we will certainly take a tough call,” said Ajay Chadha, special secretary (internal security), Ministry of Home Affairs.
The IB and defence ministry had, in 2009, advised BSNL not to award business contracts to the two Chinese companies. The then IB director Rajiv Mathur said, “Given the current security situation in the country, even the southern region, because of its coastline, can be considered sensitive. Moreover, distinction in terms of zones is irrelevant in the communication sector.”
Leading telecom expert Rajshekhar Murthy said, “BSNL has a long history of lame security in regard to their critical web servers. This makes us internally vulnerable.” Murthy is also founder manager of National Security Database, a government-accredited programme aimed at the upkeep of critical national infrastructure.
Huawei had sometime back sought clarity on the security concerns raised by the Indian intelligence and national security agencies. The company's top brass had also met members of the National Security Council Secretariat and officials in the Prime Minister's Office to dispel fears.
Huawei India spokesperson Suresh Vaidyanathan said, “We strongly deny these baseless and malicious allegations which are basically rumours and falsehood and conjectures at best. Huawei has been in India for over a decade and has contributed to the growth and development of the Indian telecom sector immensely by investing in India and by also providing state-of-the-art technology to all top 10 telecom operators in India.”
Huawei has invested over $400 million in research and development in India over the past 10 years and is set to invest another $150 million in a new R&D facility in Bangalore by 2013. And, ZTE has developed an advance value-added service platform for Vodafone India and is part of a three-vendor consortium that was awarded the BSNL's network expansion contract, which is different from the GSM deal.
But network security hawks like Murthy are not convinced. “[Look at] Operation Orchard [September 6, 2007] when Israeli jets bombed a suspected nuclear installation in Syria,” he said. “Mysteriously, Syrian radars failed. It is suspected that microprocessors in the radars were 'back doored', temporarily blocking the radar.”
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