LONDON -- In the summer of 2008, Iranian security agents arrived at the family home of Saleh Hamid, who was visiting his parents in Iran during a break from his university studies. 

The plainclothes agents, he says, shackled him and drove him blindfolded to a local intelligence detention center. There, he says, they beat him with an iron bar, breaking bones and damaging his left ear and right eye.

Hamid says the authorities accused him of spreading propaganda against the regime and contacting opposition groups outside Iran. The evidence? His own phone calls.

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"They said, ‘On this and this day you spoke to such and such person,'" says Hamid, now 30 and a human rights activist in Sweden. "They had both recorded it and later they also showed me the transcript."

Hamid was not the only one. The Iran Human Rights Documentation Center and other human rights groups say they have documented a number of cases in which the Iranian regime has used the country's communications networks to crack down on dissidents by monitoring their telephone calls or Internet activities.

Now a Reuters investigation has uncovered new evidence of how willing some foreign companies were to assist Iran's state security network, and the regime's keenness to access as much information as possible.

Documents seen by Reuters show that a partner of China's Huawei Technologies Co. Ltd. offered to sell a Huawei-developed "Lawful Interception Solution" to MobinNet, Iran's first nationwide wireless broadband provider, as MobinNet was preparing to launch in 2010.

The system's capabilities included "supporting the special requirements from security agencies to monitor in real time the communication traffic between subscribers," according to a proposal by Huawei's Chinese partner seen by Reuters.

Huawei also gave MobinNet a marketing presentation on a system that features "deep packet inspection" -- a powerful and potentially intrusive technology that can read and analyze "packets" of data that travel across the Internet. Internet service providers use DPI to guard against cyberattacks and improve network efficiency, but it also can be used to block websites, track Internet users and reconstruct email messages.

Huawei says it has never sold either system to MobinNet and doesn't sell DPI equipment in Iran. But a person familiar with the matter says MobinNet obtained a Huawei DPI system before it began operating in 2010. The person does not know how MobinNet acquired it or if it is being used.

Asked to comment, Vic Guyang, a Huawei spokesman, said in a statement, "We think it's not for us to confirm or deny what systems other companies have." He later said, "It is our understanding that MobinNet does not have such equipment." An official with MobinNet declined to answer any questions, saying only, "So you know the answers. Why do you need confirmation?"

The relative ease with which Iran has been able to obtain technology that enables surveillance illustrates the cat-and-mouse nature of the American-European campaign to contain Iran's nuclear ambitions through crippling economic sanctions. It wasn't until this year that Europe and Washington -- which primarily have focused on Iran's banks and oil industry -- targeted the sale of monitoring gear to Iran. But even now, the ban is not global, and does not extend to Chinese companies.

Reuters reported in March that China's ZTE Corp had recently sold Iran's largest telecom firm, Telecommunication Co. of Iran, a DPI-based surveillance system that was capable of monitoring landline, mobile and internet communications.

ZTE later said it intends to reduce its business in Iran. Huawei made a similar announcement a year ago.

Fixing ‘the problem of youth’
The documents seen by Reuters challenge statements made by Shenzhen-based Huawei that it doesn't sell any Internet monitoring or filtering equipment.  

But the documents' descriptions of the Huawei systems pitched to MobinNet emphasize their filtering capabilities and ability to enable monitoring by security agencies.

For example, a proposal made to MobinNet dated April 2009 offers what it calls a Huawei "lawful interception" solution. The proposal was prepared by China's CMEC International Trading Co., which states in the document that it had selected Huawei as its bid partner.

"As we know, lawful interception is mandatory and sensitive for the operators in Iran," the proposal states.

An accompanying diagram illustrates how the system can duplicate data streams and transmit the copies to multiple "monitoring" centers. It also states that more than 0.5 percent of all subscribers could be targeted and that individuals would not be aware their communications were "being intercepted."

CMEC is a part of an engineering conglomerate that includes a unit that for years has been under U.S. sanctions for allegedly helping Iran and Iraq obtain weapons of mass destruction. CMEC didn't respond to a request for comment. Huawei says it no longer partners with CMEC.

U.S. and other international sanctions are designed to deter Iran from developing nuclear weapons; Iran says its nuclear program is aimed purely at producing domestic energy.

Although Huawei maintains it doesn't sell any filtering technologies, its presentation given to MobinNet, marked confidential, repeatedly says its "DPI Solution" features "URL filtering," which can be used to block specific websites. The presentation also cites a number of customer "success" case studies -- including in Britain, Russia, Colombia, and China -- where it says telecommunication operators were using its system to filter websites.

For example, the presentation states that a Chinese telecoms firm was using the Huawei system "to settle the problem of youth getting secure and healthy access to websites, and the traffic should be controllable." The presentation also states that the system was used during the 2008 Beijing Olympic games to block "illegal" Internet phone services, filter websites and to conduct "user behavior analysis."

In a series of emailed statements, Guyang, the Huawei spokesman, did not address Huawei's claim that it doesn't "provide any services related to monitoring of filtering." But he says website filtering is used by many telecoms, including in the U.S., "as part of efforts to counter cyberterrorism, child pornography, smuggling of narcotics and other crimes, as well as illegal websites and data."

He said Huawei "did not sell products containing this function in Iran." He also said the Huawei system described in the proposal -- the Quidway SIG9800 -- can't access "content" in the telecommunications network.

But a former Huawei employee who has worked in Iran said the SIG9800 can be used to reconstruct email messages provided they are not encrypted. "This product has some special usage which Huawei customers do not like to share ... especially in Iran," said the former employee, who spoke on condition of anonymity.

Storing every text message
The proposal to MobinNet for the Huawei lawful-intercept system states that it includes technology from a German company called Utimaco Safeware AG. Utimaco says Huawei is one of its worldwide resellers but that neither MobinNet directly -- nor Huawei on behalf of MobinNet -- purchased or licensed its products.

The proposal also states that Huawei equipment at another Iranian telecom had "already successfully integrated with" an Utimaco product "and accumulated rich integration experience, which will be shared."

The other Iranian telecom isn't named but Malte Pollmann, Utimaco's chief executive officer, confirmed that in 2006, Nokia's German unit had purchased Utimaco software for MTN Irancell, Iran's second-largest mobile phone operator which has a major contract with Huawei. He said the product hadn't been maintained for several years and that Utimaco believes it no longer is being used.

MTN Irancell is 49 percent owned by South Africa's MTN Group, Africa's largest telecom carrier. It declined to comment about the Utimaco product.

Interviews and internal MTN documents reviewed by Reuters show that prior to MTN Irancell's launch, Iranian intelligence authorities took a keen interest in the capabilities of its lawful-intercept system, and pushed to make it more intrusive.

Like most countries, including the United States, Iran requires telephone operators to provide law enforcement authorities with access to communications. But people who have worked at Iranian telecoms say authorities sometimes abused their access, targeting certain individuals without a warrant or with little or no explanation.

In response, a spokesman for Iran's mission to the United Nations in New York emailed a section of Iran's constitution which states that recording telephone calls, eavesdropping and censorship "are forbidden, except as provided by law." 

The terms of MTN Irancell's license agreement stipulated that Iran's security agency could record and monitor subscribers' communications, including voice, data, fax, text messaging and voicemail, the internal MTN documents show. "At least 1 percent of all subscribers" could be targeted, and authorities wanted access to their location -- "within 10 to 20 meters" -- as well as billing information, according to the documents.

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According to a person familiar with the matter, prior to its launch, Iranian authorities pushed MTN Irancell to provide them with even more surveillance capabilities. The requests included copying and storing all text messages on the network for 30 days and providing 36 different monitoring centers with access to communications. 

The authorities also wanted to be able to intercept every call handled by an individual mobile-phone tower. "They were not talking of a single tower, they were talking of a large number of towers," the person said. "That is not the norm."

MTN, which oversaw the telecom's launch, didn't express to the authorities any concern about potential abuse, according to this person. Rather, the company argued during a series of meetings that the new requirements weren't part of the scope of the licensing agreement. MTN offered to add other surveillance capabilities over time, this person said.

MTN declined to comment. In April, its chief executive, Sifiso Dabengwa, said that any allegations that MTN was complicit in human rights abuses in Iran "are both false and offensive."

The Iranian intelligence authorities eventually agreed to hold off on their surveillance wish list - and allowed the telecom's launch. But they made clear they expected MTN Irancell would eventually install more capabilities, according to the person familiar with the situation.

The extent to which MTN Irancell later added new surveillance capabilities to its network remains unclear. The network did add enhanced location-based services in 2011.

A British company, Creativity Software, announced in August 2009 that it had won a contract to supply the technology, which it said would allow MTN Irancell to offer its customers special rates at home.

An official with Creativity Software did not respond to requests for comment. In a statement last year, the company said its sale was legal and "any connection implied between the provision of commercial location-based services deployed by MTN Irancell in Iran and any possible human rights abuses is ... erroneous."

Hamid, the human rights activist who says Iranian security agents told him in 2008 they had listened to his telephone conversations, says he had been using a cellphone he had purchased through MTN Irancell.

Then a student at a Syrian university, he said that he had returned to Iran to visit his family in Ahwaz, Khuzestan. The region is home to many Iranian Arabs who allege they have been subject to discrimination and economic deprivation by the Iranian government.

Now 30, Hamid said he eventually was released on bail and fled the country. But he said he was arrested in Iraq, jailed for three years and finally received refugee status in Sweden.

He said he was surprised that Iranian authorities had intercepted his phone calls. "I was completely taken aback," he said. "When I bought the Irancell mobile, I didn't even buy it in my name."

MTN declined to comment. The spokesman for Iran's U.N. mission said Hamid's allegations "are unfounded" and that Iran's constitution protects the rights of Iranian Arabs and other ethnic groups.

"Iran's constitution also bans any kind of torture and espionage," the spokesman added.

Additional reporting by Yeganeh Torbati in Dubai.

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WASHINGTON -- As many as 66 countries would be eligible to buy U.S. drones under new Defense Department guidelines but Congress and the State Department, which have a final say, have not yet opened the spigots for exports, a senior Pentagon official said on Wednesday.

The 66 countries were listed in a Defense Department policy worked out last year to clear the way for wider overseas sales of unmanned aerial systems, as the Pentagon calls such drones, said Richard Genaille, deputy director of the Pentagon's Defense Security Cooperation Agency. He did not name them.

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"We don't really have a comprehensive U.S. government policy" on such exports, he told an industry conference called ComDef 2012. "It hasn't moved quite as fast as we would like, but we're not giving up."

NYT: US arms sales make up most of global market

Northrop Grumman Corp chief executive Wes Bush on Wednesday praised the Obama administration for what he described as significant moves to boost arms exports, but voiced frustration at delays in codifying them in a new export policy.

"I wish we were further along in getting that done. It's slow, it's painful, but we're doing the right things to move in that direction," Bush told Reuters.

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U.S. arms makers are looking abroad to help offset Pentagon spending cuts spurred by U.S. deficit-reduction requirements.

Northrop Grumman's ability to boost its overseas arms sales, which now account for less than 10 percent of its overall revenues, hinges largely on streamlined export controls, Bush said.

Complex web of regulations
U.S. defense and high-technology exporters have long complained about the complex web of regulations governing exports of weapons and "dual-use" goods that have both civilian and military applications. They believe the rules disadvantage them versus foreign competitors.

Of particular concern to Northrop Grumman are restrictions on exports such as the company's high-altitude Global Hawk surveillance planes.

The administration last year began informally consulting Congress on plans to sell Global Hawk to South Korea before withdrawing the proposed sale for reasons that have not been publicly disclosed.

Japan, Singapore and Australia also have shown interest in acquiring the aircraft, a Northrop Grumman spokeswoman told Reuters last year.

Bush said that failure to allow such exports could spark a repeat of the 1990s, when strict curbs on U.S. commercial satellite sales prompted other countries to develop rival hardware and software. Those efforts eventually eroded the market share of U.S. satellite producers from more than 70 percent to just around 25 percent.

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"The consequences of the decisions that were made in the early '90s were devastating for the US industrial base, and ultimately did nothing to enhance security, and in fact, were detrimental to our security," he said.

Overhaul of munitions list
The Obama administration, over the objections of some Republicans in Congress, is aiming to create a single list of items subject to export controls overseen by a single licensing agency, instead of the two separate lists now administered by the State Department and the Commerce Department.

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Jim Hursch, director of the Defense Department's Defense Technology Security Administration, speaking at the ComDef event, said the administration was well into the overhaul but still had significant work to do.

Government agencies, as interim steps toward creating the single unified list, have worked their way through the 21 categories of the U.S. Munitions List administered by the State Department to see what items can be moved to the Commerce Department's Commercial List, Hursch said.

"We'll see what happens in November and what the victors of that election want to do to move forward on that," Hursch said.

Beth McCormick, deputy assistant secretary for defense trade and regional security, said she hoped the reforms would continue whether President Barack Obama is reelected on November 6 or Republican challenger Mitt Romney.

"Regardless of what happens in November, we should continue this work and bring it closure," McCormick said.

The Obama administration has already put proposed revisions to nine categories of the munitions lists out for public comment and faces some hard decisions moving ahead.

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"There are some categories that by their basic nature are very, very difficult," including one that encompasses both night-vision technology and fire control, she said.

In deciding what items to move to the commercial list, "we obviously have to think about the type of technology that we use on the battlefield, where obviously the control of the night has been something that's been very, very important to us," McCormick said.

Kevin Wolf, assistant secretary of Commerce for export administration, said moving an item from the munitions list to the commercial list did not mean it was "decontrolled."

It does give the U.S. government more flexibility in allowing exports to close allies, while maintaining a strict arms embargo on other countries such as China, he said.

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