Brian Hioeby Brian Hioe
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ONE OF TAIWAN’S largest banks, Cathay United, has come under fire over core technologies in its new credit card system being developed by a company alleged to have China ties.
The company in question, AnyTech, frames itself as a Singaporean company that had set up a subsidiary in Taiwan. However, the company is accused of having close ties with Huawei and being backed by Chinese capital, including China’s Ministry of Finance.
Reports last month stated that AnyTech was, in fact, a subsidiary of Riveretech, a Beijing-based Chinese technology company. Apart from Cathay United, AnyTech had apparently been lobbying other major domestic credit card companies and banks such as CITIC, the Shanghai Commercial and Savings Bank, and Fubon to use its core credit card technology system. Warnings were, however, that this could mean that the credit card system included Chinese backdoors.
Cathay United denied that there was any backing of AnyTech by Chinese capital, though the Financial Supervisory Commission later determined that the controlling stake of AnyTech was Chinese capital. A Shenzhen-based state holding company holds 10.18% of AnyTech’s staje, while the National Small and Medium-Sized Enterprise holds 25%, leading to suspicions that the equity structure of AnyTech is set up for control by China’s Ministry of Finance. Cathay United stated that its security checks determined no backdoors in AnyTech’s software. A third-party company, CHT Security, also found no backdoors. At the same time, Cathay has been criticized for not carrying out due diligence. In February, Cathay prematurely terminated its contract with AnyTech.
Photo credit: Solomon203/WikiCommons/CC BY-SA 4.0
This is not the first time that a Singaporean tech company has been accused of acting as a front for Chinese capital. In 2023, Bondee, a social network app allowing users to create virtual avatars and chat rooms in which they can host up to fifty of their friends entered the Taiwanese market. Though Bondee framed itself as an app co-developed by the US and South Korea, with Metadream, the company that produced the app registered in Singapore, it did not escape notice that the user terms agreement referred to Taiwan as part of China.
This led to suspicions that Bondee could be a Chinese company seeking to enter Taiwan by pretending to be from another country. The app’s design highly resembles the Chinese app Jelly, which debuted in the Chinese market in January 2022, becoming even more downloaded than WeChat. At one point, Phoenix Media, which has state investment, also invested in Jelly. Yet Jelly was removed from the Chinese app ecosystem after user errors were reported in February 2022, with concerns including privacy concerns, security issues, and other problems. Some users reported their private information had been leaked, resulting in spam calls, after using the app.
There have been a number of scandals in past years regarding Chinese infrastructure in telecommunications and surveillance, such as regarding the widespread use of Chinese-made cameras in schools and public facilities, or even in military vehicles. In 2022, it was found that 1,089 Hikvision cameras were in use at 309 schools or agencies. Likewise, a report by the Executive Yuan in May 2021 found that 19,256 devices made in China were used in 2,596 schools, local governments, and other institutions. 1,848 cameras or drones made by Da-Jiang Innovations Technology were used by 717 universities, and 1,632 computer networking systems were used by TP-Link Technologies.
But this is not the first time that a Taiwanese company has been accused of contracting core technologies to Chinese companies either. In the same year, Chinese parts and software were found to be used in the luggage self-check-in system at Taoyuan International Airport. The machinery parts and software were made by the subsidiary of a Chinese arms manufacturer, China North Industries Corporation (Norinco), built in China, but then disassembled and shipped to Taiwan. The logic controller for the system was programmed by a Japanese company, but using programming originally designed by Norinco, which led to concerns that there could be backdoors in this software.
Cathay has stressed that the core credit card system had not already begun to be implemented by the time it terminated its contract with AnyTech. At the same time, it proves concerning that there is another instance of a Taiwanese company that may not have done due diligence on Chinese firms or firms with Chinese backing–particularly a major banking institution in Taiwan.