China Angles to Buy 3Com

The pending sale of a U.S. defense contractor to a company directly linked to the Chinese army would normally be canceled at once.

However, the links between a dark Chinese company and many of the most powerful politicians in America appears to have put the buyout of 3Com on the fast-track toward approval.

Bain Capital and Goldman Sachs — two leading financial firms — are currently seeking the buyout of 3Com, a computer communications firm with U.S. defense contracts. 3Com makes equipment used by the Pentagon to block computer hackers.

Bain is financing the buyout of 3Com with the Chinese telecommunications giant Huawei. Huawei is associated with the Chinese, Iraqi, and Taliban militaries.

Bain Capital is a major financial firm with a great deal of success in the past. Bain Capital was founded in 1984 by Republican presidential candidate Mitt Romney. According to Gov. Mitt Romney's campaign Web site, Bain is "one of the nation's most successful venture capital and investment companies."

However, it is Huawei that will benefit from the buyout. Huawei installed air defense networks for Saddam Hussein and the Taliban. The CIA, U.S. Defense Department, the Rand Corporation and even Indian intelligence agencies have openly documented Huawei's links to Saddam and the Taliban.

According to the CIA, Huawei was responsible for the installation of an advanced fiber-optic air defense network in Iraq during Saddam's brutal rule. The Huawei network, NATO code-named "Tiger Song," was used to shoot down allied aircraft flying patrol over the Iraqi skies.

The network was installed in violation of an U.N. embargo. Worse still, the air defense network was paid for by the corrupt oil-for-food program which send cash to Huawei that was intended to feed starving Iraqi children.

Despite its history of killing American soldiers — it is Huawei's teaming with Bain and Goldman Sachs that has enabled the Chinese company to arrange the buyout of 3Com. The Bain/Goldman/Huawei team has influence inside the highest political circles.

For example, current Republican candidate Mitt Romney has links to Bain. Gov. Romney enjoyed a successful career at Bain, helping to amass over a quarter of a billion dollars in his own personal fortune. Romney may have left the company in 2001, but he and his family still own a significant stake in the firm through his blind trust, which according to the Washington Post earned him $7 million to $15 million during the last year.

Bain associates, employees and friends have also been very generous to Gov. Romney's campaign for the White House. Bain employees have donated over $190,000 to Romney, making the firm one of his largest sources of political cash. This amount does not include the efforts of former and current Bain partners and executives of companies Romney bought who are also raising hundreds of thousands of dollars.

All these financial ties to Bain bring into question the possible conflict of interest that Romney faces. So far, Gov. Romney has refused to comment on the Bain deal. Repeated calls to the Romney campaign were not returned.

Another link in the chain for Huawei is Goldman Sachs — a financial company that is also sponsoring the 3Com buyout. Goldman is the former employer of Treasury Secretary Henry Paulson. The Treasury Department is charged with reviewing the take-over of 3Com by Huawei. Paulson had to recuse himself from the process because of the possible conflict of interest.

The Bush administration is having trouble dealing with the take-over bid. Secretary of Defense Robert Gates revealed that he was completely in the dark about the deal. The admission by the Gates echoed similar admissions by the Pentagon top brass that they also were unaware of the buyout.

The Defense Department and the U.S. intelligence agencies were surprised by the proposed deal and had to scramble in order to get it reviewed for national security reasons.

The failure at the Defense Department is attributed to the Defense Technology Security Agency or DTSA. The Pentagon has not appointed a director to run DTSA and the length of time the position has been vacant suggests little sense of urgency to do so. Leaderless, DTSA was caught unaware of the deal and was unable to provide warning to senior Defense Department officials.

During the Clinton years, DTSA was a strong advocate of checking all export deals with China. In fact, aggressive DTSA efforts were documented by the Loral Corporation for holding up the sale of advanced radars to the Chinese military. Today, DTSA is a headless giant unable to do its job.

Newsmax has a reputation around here for inaccuracy, so I googled:

“Huawei, the Chinese telecommunications equipment maker, could acquire up to 21.5 per cent of 3Com and hold three of the 11 board seats as part of a deal to take over the US technology group with Bain Capital, but it will have “no ability to make decisions” for the company, a regulatory filing disclosed.

The recently announced $2.2bn proposed bid for 3Com by Bain, a US private equity group, and Huawei, which will initially take a 16.5 per cent minority stake, has come under scrutiny in Washington, where lawmakers have expressed alarm at Huawei’s allegedly close ties to the Chinese government.

3Com’s products include “intrusion prevention” technology that helps clients, including the US defence department, defend themselves against hackers.”

http://www.msnbc.msn.com/id/21258026/

“In a filing Thursday, 3Com said Huawei, its largest customer, would not have any access to sensitive US-origin technology or US government sales.

3Com also said it did not operate classified contracts, and had “effective internal IP control and export compliance program mes to prevent unauthorised transfers of control technology”.

Experts in Washington say the deal faces political hurdles on Capitol Hill and that officials at the defence department, an influential agency within Cfius, are sceptical about the deal. The Pentagon is believed to have recently come under cyber-attack by the Chinese.

The first question the US government is likely to pursue in its review of the deal is the extent of control Huawei may have over 3Com.

As part of a so-called control test, Cfius is likely to examine whether Bain has agreed to give Huawei minority investor protections, technology-sharing agreements, input on the appointment of executives and membership on board committees.

In a filing, 3Com said Huawei would be able to increase its equity stake by up to 5 per cent based on certain criteria but could not gain additional seats on the board or gain “any measure of additional operating control”.

Huawei would also be barred from access to TippingPoint, a 3Com subsidiary that sells network security systems.

In a letter to Treasury secretary Hank Paulson, Duncan Hunter, the most senior Republican on the House armed services committee, said Congress would consider “Chinese ownership” of 3Com in future spending authorisations.”

http://www.newsmax.com/smith/chinese_companies/2007/10/10/39642.html

Chinese Cos. Tied to Military Buying U.S. Companies

On paper, Huawei seems like a nice little Chinese telecom. It has the backing of U.S. Bain Capital Partners to go ahead with a plan to buy out the American communications firm 3Com.

With such high power backing one could rest assured that all is well with Huawei.

However, Huawei is close to the Chinese military and 3Com makes equipment used by the Pentagon to block computer hackers, including those from the Chinese military.

According to a Rand Corporation report, the Huawei Shenzhen Technology Company was founded in 1988 by Ren Zhengfei, a former director of the PLA General Staff Department’s Information Engineering Academy. Zhengfei is an ex-staff officer of the People’s Liberation Army.

The department that Zhengfei left is responsible for telecom research for the Chinese military.

“Huawei maintains deep ties with the Chinese military, which serves a multi-faceted role as an important customer, as well as Huawei’s political patron and research and development partner. Both the government and the military tout Huawei as a national champion,” notes the Rand report.

Yet, there is more to Huawei than mere “deep ties” to the Chinese military. According to a May 2004 U.S. Defense Department report to the inspector general, obtained under the Freedom of Information Act, Huawei is “a Chinese company that operated in Iraq under Saddam Hussein.”

Huawei’s operations inside Saddam’s Iraq included smuggling in communications gear forbidden by the U.N. and taking payments in the form of cash from the Iraqi oil-for-food program. In fact, Huawei’s antics inside Iraq were detailed by the CIA in its Iraq Survey Group final report.

“One Chinese company, illicitly provided transmission equipment and switches to Iraq from 1999 to 2002 for projects that were not approved under the UN OFF Program. Reporting indicates that throughout 2000, Huawei, along with two other Chinese companies, participated in extensive work in and around Baghdad that included the provision and installation of telecommunication switches, more than 100,000 lines, and the installation of fiber-optic cable,” noted the CIA report.

The fiber-optic systems installed by Huawei, in violation of the U.N. sanctions, had a much more sinister function than providing Saddam with access to the Internet. That function was spelled out in 2001 Senate testimony from Gary Milhollin, professor emeritus, University of Wisconsin Law School and director, Wisconsin Project on Nuclear Arms Control.

Huawei, according to Milhollin, was “caught helping Iraq improve its air defenses by outfitting them with fiber optic equipment. The assistance to Iraq was not approved by the United Nations, and thus violated the international embargo.”

Ironically, much of the Iraqi air defense network installed by Huawei was made of equipment exported to China by U.S. manufacturers. Huawei’s air defense network even acquired the NATO code-name “Tiger Song” because allied aircraft had to dodge missiles and bomb the system on a regular basis.

“These exports no doubt make money for American companies, but they also threaten the lives of American pilots,” stated Milhollin in 2001.

However, America is not the only nation to get a clear picture of Huawei. The Times of India reported in 2005 that several Indian government agencies, including the RAW — the Research and Analysis Wing (India’s CIA) — concluded that Huawei “poses a specific threat.”

The Indian intelligence agency stated that Huawei “has been responsible for sweeping and debugging operations in the Chinese embassy. In view of China’s focus on cyber warfare, there is a risk of exposing our strategic telecom network to the Chinese.”

Moreover, India’s Ministry of External Affairs cited concerns over Huawei’s “links with the Chinese military and intelligence establishment, their clandestine operations in Iraq and Taliban-ruled Afghanistan, and their close ties with the Pakistan army.”

These ties to the Taliban were discovered by American forces when another Huawei military command network was found in Afghanistan.

U.S. intelligence officials stated that Huawei installed a telephone system in Kabul in 2001. The system was described as a switching network to handle up to 130,000 users.

The U.S. intelligence reports contradicted Beijing’s claims that no Chinese firms worked for the Taliban. Of course, no one told the official Taliban news outlets not to announce the deal with Beijing.

In September 2000, according to the official Kabul Radio Voice of Shari’ah in Dari/Pashto, the Tablian met with representatives of China’s export trade and electronics industry and a number of Chinese engineers.

The Chinese “briefed the minister of communications, Mowlawi Yar Mohammad Rahimi” and “promised that during their stay they would implement practical measures to lay the fiber-optic cable and prepare sites for the installation of newly-purchased units. The Chinese delegation came to Kabul recently to carry out the preparatory work for installing the 12,000-line telephone exchange.”

The history of Huawei is very clear, documented by Saddam Hussein and the Taliban, two customers who kept their receipts. Huawei violated a U.N. ban on Iraq and took money destine to feed starving Iraqi children to put an air defense network in the desert. They sold a similar network to the Taliban, aimed again at U.S. soldiers. Huawei worked to kill Americans.

The question of Huawei should not be whether to allow them to buy 3Com but why are these monsters doing business here in the first place?

Alas, the lives of U.S. soldiers are not discussed at the corporate board level or, apparently, inside the U.S. State Department. The investors and stockholders of Bain should be sickened by this attempt to grab cash over the lives of dead Americans.

The widows and orphans of U.S. service personnel killed in action due to the efforts of Huawei should haunt the Bain executives and stockholders. Those who invest money into companies that kill Americans need to find a new haven for their cash.

Huawei and companies like Huawei need to be kicked out of America and banned from doing business here.

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