ZTE Sold Surveillance Equipment To State-Owned Iranian Telco

Chinese mobile manufacturer ZTE provided Iran’s largest telecoms company with internet, mobile and landline monitoring equipment, according to Reuters.

The Telecommunication Co of Iran (TCI), a state-controlled company which dominates the nation’s phone lines, mobiles and internet, reportedly signed a contract worth €98.6 million (£82.3m) with ZTE in December 2010.

Dodgy dealings

The surveillance products in question are part of ZTE’s Special Equipment Co. (ZTEsec) product line, designed largely for governmental and law enforcement usage. The contract suggests that TCI purchased a “ZXMT” system used for monitoring and interception of phones and internet messages.

Two former employees who had previously installed and worked with the system said that ZXMT used “deep packet inspection” to track and recover large amounts of data, thereby allowing authorities observe an individual’s every call, text and online action.

A ZTE “Packing List” from last July, detailing all of the products provided to Iran through the agreement, revealed a way for the country to gain access to otherwise unobtainable foreign goods. ZTE has partnerships with various technology companies, including Microsoft, Dell, HP and Oracle, that cannot trade with Iran directly due to sanctions. The Chinese company therefore acts as a go-between.

However, many partner companies placed the condition on ZTE that no products of theirs would end up on the Iranian market. Some of these companies have opened investigations to look into the ZTE-TCI claims, including Hewlett Packard.

“HP’s distribution contract terms prohibit the sale of HP products into Iran,” an HP spokesperson told Reuters. “As a matter of company policy, HP investigates any credible allegations of breaches of these contractual obligations by our partners or resellers and we are actively examining this situation.”

ZTE did not deny allegations that it provided either surveillance equipment or disallowed products to Iran, but claimed instead that its trade was small scale within the country.

“Our main focus for business in Iran is to provide standard communications and network solutions for commercial use to help operators upgrade their network,” wrote Li Erjian, a spokesperson, in an email to Reuters. “We are a small scale telecommunication equipment supplier in the Iran market. We sell standard equipment in Iran as we do globally,”

ZTE was embroiled in a spying claim last year when the US government began investigating the threat posed by Chinese phone makers, citing “serious national security concerns” about Huawei and ZTE.

This Iran contract, however, could have greater implications for the business and the partners it has access to. The Middle Eastern country is currently subject to various international trade embargoes and any breaches will breed controversy.

Such a problem befell British company Creativity Software last November when it was revealed that it provided mobile tracking software to another Iranian telco in 2009. This was around the time of the country’s elections when the government censored many public voices online.

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