ZTE denies spying for China military

Controversial Chinese telecommunications company ZTE, on the short-list to build Telstra's 5G mobile phone network in Australia, has been accused in a US court of being a front for Chinese military intelligence and linked to corruption in 18 countries.

ZTE, also vying to provide a new communications system for Perth's rail network and in recent weeks in the middle of a political storm involving US President Donald Trump, allegedly handed over "brown paper bags" of cash to win contracts in Africa, according to a Fairfax Media report.

The claims are part of a lawsuit filed in Texas accusing ZTE of bribing Liberian officials to unseat a US company which had won the right to upgrade the west African country's telecommunications networks.

The lawsuit alleges ZTE was formed partly with the aim of spying for Beijing.

"China's Ministry of Aerospace founded ZTE as a front to send officers abroad under non-diplomatic covers such as scientists, businessmen and executives for the purpose of collecting intelligence," a court filing states in the lawsuit underway in the 191st District Court of Dallas.

ZTE told Fairfax it denied the spying and corruption allegations and said as a global company it "maintains a high standard of ethics and integrity in its business activities throughout the world".

The Texas court proceedings involve allegations ZTE breached the terms of its non-disclosure agreement with US firm, Universal Telephone Exchange Inc.

The Trump administration in April banned US firms from doing business with ZTE, but the president recently outraged members of Congress when he indicated he might lift the ban in return for Chinese trade concessions.