Report: Pentagon Officials Want Review of Huawei Deal

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Chinese network supplier Huawei, whose business deals in the U.S. have faced security concerns, is once again drawing scrutiny from the U.S government, this time over the past acquisition of a California-based technology firm, according to a report by The Wall Street Journal.

In May, Huawei paid US$2 million to acquire intellectual property and hire away staff from a start-up called 3Leaf Systems, which specializes in pooling together servers to run as more powerful mainframe computers. But the acquisition occurred without the review by the Committee on Foreign Investment in the United States (CFIUS). Now Pentagon officials have asked Huawei to "retroactively" clear the deal with CFIUS, the Journal reported on Friday. "Retroactive reviews have only happened in a handful of cases," the report adds.

The scrutiny comes as some U.S. lawmakers have expressed concern that Huawei may have possible links with the Chinese government and military. The company's business deals in the U.S. have suffered as a result.

Earlier this month, the Journal reported that Sprint Nextelturned down a bid from Huawei to modernize its network due to concerns from the U.S. government. In 2008, Huawei also had to abandon participating in a $2.2 billion deal to buy network equipment vendor 3Com.

Huawei was contacted on Friday, but only confirmed that the company had bought intellectual property from 3Leaf Systems in May. "Huawei believes the deal would further enhance the company's capabilities in delivering innovative products and solutions to its customers," the company said in an e-mail statement.

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