The former MI6 agent behind the Trump dossier has contributed to a 70-page intelligence report that accuses Huawei and the Chinese regime of running a sophisticated operation to manipulate peers and MPs.
The claims were angrily dismissed on Monday night by Huawei which said it "refuted these unfounded allegations" which had "no basis in fact". Sources said they believed the company was the victim of a US propaganda campaign to keep it out of the 5G network being built in Britain.
The report was paid for by a US film producer Andrew Duncan who hired Christopher Steele and his company Orbis Business Intelligence to assist with the report. Mr Steele, a former senior MI6 officer who ran its Russia desk, was author of the dossier on Donald Trump that alleged links - denied by the president - to Russia and claimed the existence of a compromising sex tape in Moscow’s possession.
A number of high-profile individuals named in the report are understood to have denied being targeted or influenced in any way.
They included former Conservative MP Sarah Wollaston, who previously chaired the powerful Commons liaison committee, who told The Telegraph she had no knowledge of any covert PR campaign.
Ms Wollaston said the only contact with Huawei she could recall was an offer made via an intermediary to sponsor an event to mark the 40th anniversary of the select committees system. On learning of Huawei's offer, she rejected it, she said.
"If they tried to influence me, they didn't get very far," she added.
Separately, Lord Clement-Jones, a Liberal Democrat peer, said there would have been no need to target him as he sits on Huawei's international advisory board.
Sir Kenneth Olisa, the Lord Lieutenant of London, Sir Mike Rake, the former chairman of BT and John Suffolk, the former Government chief information officer turned Huawei’s head of global security, were also allegedly named in the report, according to the Daily Mail. They all strenuously denied the claims.
“My connection to the company is well known. They don’t have to have fake radio shows to reach me as far as I’m concerned. It’s all very baffling. It’s all a fantasy. We are not putty in the hand of manipulators,” he told the Guardian.
The new report into Huawei and China comes at a time when the British Government is under intense pressure from the US to jettison Huawei from any involvement in future 5G network.
On Monday night, the Chinese ambassador, Liu Xiaoming warned there will be “consequences” if the UK pulls the plug on Huawei as ministers consider bringing forward the deadline to remove all traces of the company from the 5G network.
With Boris Johnson expected to announce that telecoms companies will be banned from buying new Huawei equipment from 2022, Mr Xiamong claimed doing so would dent investor confidence in Britain. The Telegraph understands that the Government is also looking at bringing forward the proposed cut-off date for removing existing Huawei equipment from 2029 to as early as 2025.
Huawei believes it is itself the victim of a propaganda operation run out of the US with assistance from US embassy staff in London. The Telegraph understands that Mr Steele and Orbis have contributed less than ‘ten percent’ to the intelligence report with sources close to Mr Steele insisting "it isn’t our report or our work" but that Chinese experts had worked on it.
The Telegraph understands that the allegations include a claim that Huawei ran a "covert" campaign to influence opinion in its favour that targeted senior figures. The report is understood to allege that fake radio stations, based abroad, were set up and senior figures invited on to panel discussions and interviews with the aim of encouraging them to support Huawei and even join its board. It also claims there were attempts to manipulate social media and use email campaigns to change opinion.
The report also raises concerns that China had attempted to hack into a centre set up by GCHQ in Banbury to keep a check on Huawei’s contribution to the 5G network.
In a statement, a Huawei spokesman said: “We categorically refute these unfounded allegations, which do not bear scrutiny and are regrettably the latest in the long-running US campaign against Huawei. They are designed to deliver maximum reputational damage to our business and have no basis in fact.”
Whitehall insiders said that work was now underway to try and find a “sensible middle ground” which would also satisfy Tory backbenchers, who want all Huawei equipment ejected by the end of this Parliament.
Urging Mr Johnson not to row back on the commitment to allow the company a limited role in the network, Mr Xiaming told reporters: “They [Chinese businesses] are all watching. There’s also an element of trust, how could people trust you?
“I do hope the British government will make the decision in the best interests, not only in China’s interests, not only in the interests of UK-China co-operation, but also in the interests of the UK itself.”
“We want to be your friend, we want to be your partner, but if you want to make China a hostile country you have to bear the consequences.”
It comes just days after it emerged that the National Cyber Security Centre (NCSC) no longer believes Huawei’s products are secure after the US banned the Chinese company from using American components.
In light of the US sanctions, Boris Johnson is expected to bar telecoms companies from buying new Huawei equipment by the end of the year, with 2029 now floated as the deadline for removing its technology entirely.
Asked about the NCSC’s findings, Culture Secretary Oliver Dowden admitted the new sanctions on Huawei were likely to have a “significant impact” on the firm’s ability to participate in the 5G networks.
He added that the decision taken earlier this year to permit the Chinese company limited access to the network was “not fixed in stone,” suggesting that a major U-turn could be announced shortly.
Mr Dowden confirmed that MPs would be given an update on any change in policy before Parliament rises for the summer recess on July 22.
However, a number of senior Conservatives are also calling for existing Huawei equipment to be removed before the end of this Parliament, warning that 2029 is too late.
Faced with a major rebellion, Government insiders indicated that Mr Dowden was now likely to recommend a number of alternative cut-off dates, including “before and after 2026”, to the National Security Council, which will decide on a final deadline.
One source added that 2029 was now expected to be dropped as an option altogether.
It has previously been suggested that removing all Huawei equipment before 2026 could cause significant disruption to telecommunications systems, including broadband.