Investigation: undersea cable dogged by donation allegations

Investigation: undersea cable dogged by donation allegations


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Huawei is a commercial company but has remained under a cloud because of its possible links to the Chinese government.

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The undersea cable project was supposed to bring reliable internet to the Solomon Islands, the small Pacific nation where Australian military and police forces have been helping keep political stability since 2004.

The project, which was to connect the Solomons to Sydney via a 4500-kilometre fibre optic cable, had the backing of the Asian Development Bank and a favoured contractor in a British-American company. It even had the nod from the Australian government to land the cable in Sydney.

But then last year, abruptly and allegedly without proper processes, the Solomons government switched to a subsidiary of the Chinese firm Huawei, which was banned from involvement in Australia's national broadband network on security grounds on the advice of ASIO.

Since then, allegations have surfaced of a $6.5 million political donation paid by Huawei to the ruling party in Honiara. Solomons Prime Minister Manasseh Sogavare visited Canberra this week and discussed the matter with his Australian counterpart Malcolm Turnbull.

Mr Sogavare said afterwards that "the security issue was expressed to us" but added "we continue to have discussions with the Australian government to see how we can solve that" and expressed confidence there was a way through the issue.

In a separate statement, Mr Sogavare said he was "considering all available options" - which could point either to ditching Huawei as a contractor or connecting to another hub such as Fiji or Papua New Guinea.

Officially, Australia will assess any landing permit for the cable under the new arrangement with Huawei Marine - a joint venture between Huawei and British firm Global Marine Systems.

But multiple sources have indicated to Fairfax Media that Huawei plugging into Australia's telecommunications infrastructure backbone presents a fundamental security issue. And experts have said beyond the fear that Beijing is trying to find a new way into Australia's infrastructure is the broader concern around growing Chinese influence in the Pacific region, including through telecommunications projects that don't follow recognised rules of transparency.

Nick Warner, the head of the intelligence agency ASIS, warned Mr Sogavare of Australia's concern during a visit to capital Honiara in June.

Huawei is a commercial company but has remained under a cloud because of its possible links to the Chinese government. The US Congress found five years ago that Huawei "cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems".

Huawei Australia's director of corporate affairs Jeremy Mitchell said in response to detailed questions sent by Fairfax Media that "Huawei won an open tender with the best product and the best team to deliver the project".

He added that the firm was a leading telecom provider in the world and "has and will always comply with local laws and regulations".

But a spokeswoman for the Asian Development Bank said it was forced to withdraw approval for a $23 million loan - nearly a third of the total cost of the project - because "the Huawei contract was developed outside of ADB procurements processes". She said the bank received no information about who the other bidders were and "on that basis, ADB could no longer be involved and therefore cancelled the project in May 2016".

The Solomons Parliament's public accounts committee meanwhile has produced a report - provided to Fairfax Media - noting allegations that "Huawei Technologies ... had promised the Prime Minister a political donation of $40 million [$A6.5 million] for the award of the contract".

"If true, this is a corrupt and criminal offence and the committee calls on the [Royal Solomon Islands Police] to conduct an urgent investigation into this," the report said.

"The committee is of the view that this is the main reason for the government to bypass procurement requirements in favour of the company Huawei."

The head of that cross-party committee, Rick Houenipwela, is a respected MP and opposition finance spokesman who has previously been the country's central bank governor and a senior official at the World Bank.

"It's a very frustrating situation," he said. "We've raised those concerns and we still have those concerns ... Why did the government take the stand to just select Huawei and not do a normal tender?"

Allegations of the political donation have been circulating for some months in Honiara and have appeared in local news reports. Mr Sogavare has made the counter-claim that the political donation was actually paid to Sir Thomas Chan, the ethnic Chinese businessman who is chairman of Mr Sogavare's United Democratic Party.

Mr Chan has described those claims as "an absolute lie". He did not return repeated phone calls last week.

Fairfax Media sent written questions to Mr Sogavare's office more than a week ago but as of Saturday had not received answers.

Fairfax Media asked the Royal Solomon Islands Police Force a week ago whether they were investigating the claims. On Friday a spokesman replied to Fairfax Media asking for a copy of Mr Houenipwela's committee's report.

A spokesman for the Attorney-General's Department said the Solomon Islands Submarine Cable Company had not applied for a submarine cable installation permit.

Any application would be "considered on its merits" and the department would consider "matters of international law, native title and national security", he said.

Experts said Australia was right to have security concerns around critical infrastructure

Huawei is involved in Australian communications in various ways, but involvement in backbone infrastructure is regarded as a more significant security risk.

Peter Jennings, executive director of the Australian Strategic Policy Institute, said plugging it would be a "high priority" for China, allowing bulk collection of data on the cable itself but also potentially allowing "one more vector" for sabotage in a security crisis.

"They'd be looking at a way of getting any backdoor into Australia's infrastructure and systems," he said.

He added that China was more broadly aiming to weaken Australian and American relationships in the Pacific region and increase its own influence there including through infrastructure development.

Chinese telco firms have substantial involvement elsewhere in the region. Huawei Marine is also laying a 5500-kilometre undersea cable network to service Papua New Guinea and connect it internationally via Indonesia.

TheAustralian Financial Review reported in 2012 that the federal government was investigating Huawei Marine over its involvement in a planned undersea cable between Perth and Singapore. That project did not go ahead.

Rory Medcalf, head of the Australian National University's National Security College, said China's growing activity in the Pacific should concern Australia though Canberra should maintain a balanced view of it.

He said China's willingness to offer help but "with strings attached" could create political dependence on Beijing that could "dilute our ability to exert constructive influence on South Pacific countries".

Jonathan Pryke from the Lowy Institute said it was "absolutely right" to raise concerns about the project, especially given the way Huawei had won the contract.

"It's completely legitimate for us to be raising concerns with the leadership of the Solomon Islands especially given the strong partnership and the strong commitment we have to see them develop," he said.

The story Investigation: undersea cable dogged by donation allegations first appeared on The Sydney Morning Herald.

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