WASHINGTON — US legislators concerned over the possibility of Chinese espionage today issued a report warning the US government not to buy equipment from telecommunications makers Huawei and ZTE.

While the report itself does not compel US businesses nor the government from engaging with the Chinese OEMs, it casts a large shadow over those companies, implying that pose security risks and are pawns of the Chinese government.

A group of US agencies led by Treasury Secretary Tim Geithner will ultimately decide whether the companies will be permitted to sell their equipment inside the US. However, the fallout was immediate: Cisco has already canceled an agreement with ZTE over the committee's allegation that the Chinese firm sold telecom equipment to Iran.

Huawei immediately disputed the report, calling it politically based. "[We have] not seen the committee report so has no familiarity with such allegations…The security and integrity of our products are world proven. Those are the facts, political agendas aside."

US government official sand security analysts are concerned that the Chinese companies could plant bugs or otherwise compromise the security and functionality of the network equipment. Huawei was founded by a former Chinese military officer and both companies reportedly have deep ties to leaders of the Chinese Communist Party.

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