Chinese telecoms equipment supplier Huawei was able to monitor all the phone conversations made through the Netherlands's largest mobile network, reported Dutch News citing Dutch newspaper Volkskrant.
Huwaei was able to listen in to conversations made by government ministers and also had access to a database of phones which were being tapped, according to a Capgemini report dating from 2010.
Former state company KPN dominated the mobile phone market in 2009, with 6.5 million subscribers and Huawei was an integral part of its technological base.
Lawmakers from across the political spectrum have called for a government statement about the role of Chinese telecoms company Huawei in the KPN mobile phone network.
Looking to cut costs further, the company asked Capgemini to draw up a risk analysis as part of preparations to transfer the management of Chinese parts of the system into Huawei's hands.
The findings were considered so explosive at the time that the report's authors said that the continuity of KPN could be in danger because the company may lose its licence and the confidence of both the Dutch state and industry.
The researchers could not, however, establish if and how often Huawei listened in to conversations.
Its findings put "the continued existence of KPN Mobile in serious danger" since users "may lose confidence ... if it becomes known the Chinese government can monitor KPN mobile numbers," the report concluded.
KPN continued to award several contracts for parts of its core 3G and 4G networks to Huawei after receiving the Capgemini report, which it never made public.
Last year, however, KPN became one of the first European operators to exclude the Chinese company from its core 5G network, opting for Sweden's Ericsson instead.
Michel van Eeten, a professor at Delft University and a member of the Cyber Security Council told the paper that the telecommunications market was extremely competitive at that time. 'That is how cheap Huawei got in," he said.
"At that time, security was not as important. That way of working would be considered unacceptable now." There is also more awareness of the geopolitical implications of bringing in outsiders, he said.
Last year, the US designated Huawei and ZTE Corp as national security threats, saying they have close ties with the Chinese Communist Party and China's military apparatus.
( With inputs from ANI )
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