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Cisco Ends Business Relationship With China's ZTE Corp

Cisco Systems has severed ties with ZTE Corp, after a Reuters investigation turned up evidence that the company’s technology was likely being sold to Iran. An internal investigation, which Cisco will not comment on, has caused enough concern that it was determined a clean break was needed.

News of Cisco’s break with ZTE Corp comes after a report by the House Intelligence Committee said that the company “cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems.”

The report cautioned private firms in the U.S. to consider the long-term security risks associated with doing business with ZTE Corp.

The fallout seen this week is systematic of political and corporate concerns that have existed for years. In the case of Cisco’s break with ZTE Corp, the story starts in June, when a Reuters investigation turned up evidence that Cisco’s equipment – as well as equipment from HP and Oracle, was being sold to Iran, one of the blacklisted nations under a U.S. trade embargo.

“ZTE is highly concerned with the matter and is communicating with Cisco. At the same time, ZTE is actively cooperating with the U.S. government about the probe to Iran. We believe it will be properly addressed,” David Dai Shu, a ZTE spokesman, told Reuters.

In statements to SecurityWeek and Reuters, Cisco confirmed the parting of ways, and added that the internal investigations ongoing.

“Cisco has no current relationship with ZTE,” a spokesperson said.

Further, in a statement to Reuters, John Chambers, Cisco's chief executive, said that his company doesn’t "tolerate any direct or indirect" sales to blocked nations.

Reuters’ story on Cisco is here.

Details on the congressional report advising U.S. organizations avoid business dealings with China’s two largest telecommunications companies, as well as their reactions, can be seen in the related links below. 

Related: China Warns of 'Prejudice' in US Telecom Report

Related: Report Concludes China Telecom Giants "Cannot Be Trusted"

Related: Huawei Calls US Congress Report 'China-bashing'

RelatedConvenient Scapegoat - Why All Cyber Attacks Originate in China

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Steve Ragan is a security reporter and contributor for SecurityWeek. Prior to joining the journalism world in 2005, he spent 15 years as a freelance IT contractor focused on endpoint security and security training.