Embattled Kwasi Kwarteng is facing questions over allowing a firm to continue supplying UK police radios despite a US security blacklisting for its Chinese owners.
Chancellor Mr Kwarteng – whose mini-Budget has sent markets spiralling – signed off on security pledges from UK firm Sepura and its parent Hytera Communications last year.
His move as Business Secretary was taken despite Hytera facing espionage charges in the US and being called “an unacceptable risk to national security”.
Hytera, part-financed by China, sold off Sepura this summer.
Labour Business Secretary Jonathan Reynolds said: “For years we’ve called on the Government to be clear-eyed about Chinese investment risks.
“They must urgently clarify the basis for signing off these undertakings.”
Hytera bought Cambridge-based Sepura in 2017. Its devices are used by thousands of police, including for protecting the Royal family, politicians and sensitive Government sites.
The takeover was approved by then Business Secretary Greg Clark after Hytera gave assurances that only Sepura staff with strict clearance could get access to classified material.
Sepura went on to share in police contracts worth more than £100m, including a £30m Scotland Yard deal.
US prosecutors filed espionage charges against Hytera in May 2021.
In December, Mr Kwarteng accepted “updated undertakings” from the firm, letting it continue ownership.
Lib Dem foreign affairs spokeswoman Layla Moran said: “Mr Kwarteng has very serious questions to answer.” Hytera declined to comment on Sepura but vowed to “mount a vigorous defence” in the US case.
Sepura said it was run by security-checked UK directors, adding: “They [Hytera] no longer have shares.”
The Government said all deals had to pass national security checks.
