INTELLIGENCE chiefs have warned that China may have gained the capability to
shut down Britain by crippling its telecoms and utilities.
They have told ministers of their fears that equipment installed by Huawei,
the Chinese telecoms giant, in BT’s new communications network could be used
to halt critical services such as power, food and water supplies.
The warnings coincide with growing cyberwarfare attacks on Britain by foreign
governments, particularly Russia and China.
A confidential document circulating in Whitehall says that while BT has taken
steps to reduce the risk of attacks by hackers or organised crime, “we
believe that the mitigating measures are not effective against deliberate
attack by China”.
It is understood that Alex Allan, chairman of the Joint Intelligence Committee
(JIC), briefed members of the ministerial committee on national security
about the threat from China at a top-secret Whitehall meeting in January.
According to Whitehall sources, the meeting, led by Jacqui Smith, the home
secretary, heard that ministers had “not paid sufficient attention to the
threat in the past”, despite repeated warnings from the intelligence
services. These included warnings from the security arm of GCHQ, which
expressed concern because government departments, the intelligence services
and the military will all use the new BT network.
A Whitehall report is understood to warn that, although there is at present a
“low” risk of China exploiting its capability, “the impact would be very
high”.
Huawei was allegedly founded with significant funding from the Chinese state.
Its head is Ren Zhengfei, a former director of the telecoms research arm of
the 3m-strong People’s Liberation Army.
The company is providing key components for BT’s new £10 billion network,
which will update the UK’s telecoms with the use of internet technology. The
report says the potential threat from Huawei “has been demonstrated
elsewhere in the world”.
The multi-million-pound deal, signed in 2005, has led to a string of risk
warnings from the intelligence and security services, with officials
complaining of the failure of ministers to take them seriously.
It is unclear whether Patricia Hewitt, then trade and industry secretary, was
warned of the problems when the deal was agreed in April 2005. However, the
British company Marconi, which failed to win the contract in the face of a
far cheaper offer from Huawei, did ask her to intervene to protect British
jobs.
Hewitt, now a nonexecutive director of BT, declined to intervene, saying it
was “a competitive tender between two commercial companies”. The most recent
warnings about the cyberthreat to Britain’s security came in the JIC report
on UK cybersecurity circulated in January and a Cabinet Office briefing
paper that is understood to have emphasised Huawei’s links to the Chinese
military.
Despite Allan’s warnings, and repeated warnings in the past, ministers remain
reluctant to fund any move to remove the threat, officials say.
Yvette Cooper, chief secretary to the Treasury, is understood to have
cautioned that it would be difficult to find the necessary funds in the
current downturn. Ministers expressed concern that replacing the Chinese
components with British parts would clash with government policy on
competition.
According to the sources, the ministerial committee on national security was
told at theJanuary meeting that Huawei components that form key parts of
BT’s new network might already contain malicious elements waiting to be
activated by China.
Working through Huawei, China was already equipped to make “covert
modifications” or to “compromise equipment in ways that are very hard to
detect” and that might later “remotely disrupt or even permanently disable
the network”, the meeting was told.
This would be likely to have a “significant impact on critical services” such
as power and water supplies, food distribution, the financial system and
transport, which were dependent on computers to operate.
While technical modifications suggested to BT reduced the threat from hackers,
organised criminals and most “hostile adversaries”, they were “not effective
against deliberate attack from China”. The current friendly relations
between Britain and China meant there was no immediate threat of this
happening but there was still a very real threat that “covert functionality”
within the components was already being used to gather intelligence.
Intelligence chiefs are believed to have warned that it was impossible to say
if such information-gathering had already been introduced, since they had
“only limited understanding of our adversaries’ attack capability”.
Whitehall departments were reportedly targeted by the Chinese in 2007, and a
few months later Jonathan Evans, the MI5 director-general, wrote to 300
chief executives warning them that the Chinese were hacking into their
systems and stealing confidential information.
An attempt by Huawei to merge with the US company 3Com, which provides
computer security systems for thePentagon, was blocked last year after US
intelligence warned that it would not be in US national security interests.
In a new-year e-mail, Sun Yafang, Huawei’s chairwoman, told the company’s
85,000 employees that the global economic situation offered “both challenges
and opportunities”. Four weeks later she was inside Downing Street as Gordon
Brown welcomed Wen Jiabao, the Chinese premier.
Both Wen and Sun were keen to promote Huawei, which in little more than 20
years has grown into one of the world’s most powerful companies, with
projected sales this year of £21 billion. Last year its sales jumped 46%.
Its tentacles have reached most of the world’s telecoms companies.
Four days before Brown met Sun, intelligence chiefs had warned ministers of
fears that Huawei’s role in the new system might have given China the
ability to shut down Britain. Nor was it the first warning. Members of the
ministerial committee on national security were told that “ministers had not
paid sufficient attention to the threat from Huawei”.
John Tindle, professor in telecommunications engineering at Sunderland
University, said software or hardware could sit hidden in a network, waiting
to be activated. “If an unauthorised person were able to gain control of the
equipment, its mode of operation could be changed,” he said. “The ability to
move traffic across the network could be switched off. Traffic could be
re-routed to another node controlled by the attacker.”
Huawei was selected to provide key components for the BT network in April 2005
despite allegations that it was bank-rolled by the Chinese government. The
firm has previously shown itself to be opportunistic. The US company Cisco,
one of Huawei’s main rivals, sued the Chinese company for alleged theft of
its intellectual property rights in 2003. The case was settled out of court.
It is Huawei’s links to the Chinese military that cause most concern. Ren set
up the company in 1988 after an edict from Deng Xiaoping, then China’s
leader, that the country’s defence industry turn itself into profitable
companies able to acquire modern technology.
A Pentagon report last week cited Huawei as a key part of the cyberthreat from
China, noting that it retained “close ties” with the People’s Liberation
Army (PLA). Huawei denies any continuing links to the PLA. A spokeswoman at
the company’s UK headquarters dismissed the alleged links as “rumour and
speculation”.
Cyberspace targets
Chinese hackers have repeatedly targeted western networks
-Computers at the Foreign Office and other Whitehall departments were attacked
from China in 2007. In the same year, Jonathan Evans, the MI5 director-general,
warned 300 British businesses that they were under Chinese cyber-attack
-The People’s Liberation Army is reputed to hold an annual competition to
recruit the country’s best hackers
-Two years ago, Chinese Trojan horse spyware was found in the offices of
Angela Merkel, the German chancellor
