January 30, 2019 / 9:29 AM / 6 months ago

China's Huawei excluded from Czech tax tender after security warning

PRAGUE (Reuters) - China’s Huawei has been excluded from a Czech tender to build a tax portal after the country’s cyber watchdog warned of possible security threats posed by the telecoms supplier, documents showed on Wednesday.

FILE PHOTO: A woman walks past a Huawei shop in Beijing, China, January 29, 2019. REUTERS/Thomas Peter

Huawei faces international scrutiny over its ties with the Chinese government and allegations that Beijing could use Huawei’s technology for spying, which the company denies.

The U.S. Justice Department has also charged Huawei with conspiring to violate U.S. sanctions on Iran and with stealing robotic technology from T-Mobile US Inc.

The Czech Finance Ministry amended a tender for a new tax portal for filing returns, documentation on online registries showed.

The ministry said the tender could “not allow producers that are subject to a current warning by the NUKIB,” referring to the Czech cyber security agency.

The agency in December warned network operators and other key institutions against using software or hardware made by Huawei or China’s ZTE, saying they may pose a security threat.

A NUKIB warning does not constitute an outright ban but requires 160 public and private operators of critical infrastructure to conduct an analysis of risks and act accordingly.

“A warning from (NUKIB) is by law binding for the Financial Administration and we are obligated to carry it out,” a spokesman for the Finance Ministry’s General Financial Directorate said.

Huawei objected to the decision.

“We believe firmly that it is a discriminatory act based on a groundless and misleading warning issued by NUKIB,” a spokeswoman for Huawei in the Czech Republic, Magda Teresa Partyka, said in an emailed statement.

“We will request the Ministry of Finance to retract this tender and re-issue in accordance with applicable Czech law. If no resolution is found, Huawei will consider all its options.”

The tender is valued at 500 million crowns ($22 million) according to the Mlada Fronta Dnes daily newspaper which first reported Huawei’s exclusion.

Huawei had been seen as a favorite in the tax portal tender.

Huawei’s products have so far not been banned or excluded from planned upgrades of Czech mobile networks to next-generation 5G technology.

The company said it had done some 5G tests with Vodafone in the Czech Republic, as well as testing MIMO (multiple-input and multiple-output) technology with T-Mobile. However, Vodafone said on Friday it was pausing the use of Huawei’s equipment in its core networks in Europe until the technology is cleared by authorities.

Last November, Huawei signed a memorandum of understanding on testing 5G solutions with investment group PPF.

FILE PHOTO: A woman walks past a Huawei shop in Beijing, China, January 29, 2019. REUTERS/Thomas Peter/File Photo

PPF controls Czech and Slovak operator O2 Czech Republic, Czech network provider CETIN and last year bought Telenor’s mobile operations in Bulgaria, Hungary, Montenegro and Serbia.

Huawei has been publicly backed by Czech President Milos Zeman, who has long promoted close cooperation with China, while Prime Minister Andrej Babis has called for a debate on cyber security at the European Union level.

($1 = 22.5380 Czech crowns)

Reporting by Jason Hovet and Robert Muller; Editing by Alexander Smith, Jason Neely and Mark Potter

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