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Last Updated: Monday, 27 March 2006, 13:48 GMT 14:48 UK
US group wants China 'spy' probe
Lenovo employee shows off its new notebook computer
Lenovo is to supply 15,000 PCs to the state department
A US agency is calling for an official probe into Chinese computer firm Lenovo's contract to supply 15,000 computers to the US State Department.

The US-China Economic and Security Review Commission (USCC) said it feared the PCs could be fitted with bugging devices to spy on the US government.

Lenovo, which last year bought IBM's PC arm, said it had nothing to hide and would welcome the investigation.

Concern has been rising in the US over foreign companies buying US firms.

Political opposition

Earlier this month United Arab Emirates-based docks company Dubai Ports World was forced to announce that it would sell all US ports it had inherited after it bought UK firm P&O.

The move by Dubai Ports World followed extensive opposition from US politicians.

Last year, Chinese oil producer CNOOC withdrew from the race for US oil firm Unocal last year, again in the face of strong US political opposition.

However, Jeff Carlisle, vice president of government relations for Lenovo, said his firm had "nothing to hide".

Mr Carlisle added that no investigation was warranted and voiced concerns that Lenovo could be put at an unfair disadvantage regarding future US government contracts due to the controversy.

The State Department is spending about $13m (7m) on the Lenovo computers, which are assembled at factories in North Carolina and Mexico.

Mr Carlisle added that the circuit boards are originally made in US ally Taiwan, and not mainland China.

Foreign intelligence

Yet USCC member Michael Wessel said the opportunity for intelligence gathering through the computers was "enormous".

Larry Wortzel, head of the USCC - whose membership is appointed by the US Congress - said he expected US lawmakers to begin a probe.

"If you're a foreign intelligence service and you know that a [US] federal agency is buying 15,000 computers from [a Chinese] company, wouldn't you look into the possibility that you could do something about that?" he said.

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