U.S. Charges Huawei With Fraud, Stealing Trade Secrets, Obstruction

The U.S. Justice Dept. yesterday filed a pair of sweeping indictments against China’s Huawei Technologies, charging it with violating U.S. sanctions on Iran as well as fraud, obstruction of justice and stealing trade secrets. 

A 13-count indictment unsealed in federal court in Brooklyn, N.Y.,  charges Huawei, two of its affiliates and CFO Meng Wanzhou with bank fraud, conspiracy to commit wire fraud, and violating the International Emergency Economic Powers Act. Huawei USA and its parent company are also charged with conspiracy to obstruct justice. 



“Top U.S. law enforcement officials, including acting attorney general Matthew G. Whitaker and FBI Director Christopher A. Wray, held a news conference in Washington to announce the charges,” Ellen Nakashima and Devlin Barrett write for the Washington Post.

“The criminal activity in this indictment goes back 10 years and goes all the way to the top of the company,” Whitaker said, they report. 

“Wray said firms like Huawei ‘pose a dual threat to both our economic and national security, and the magnitude of these charges makes clear just how seriously the FBI takes this threat.’”

(At the end of the press conference, sweating under the lights, Whitaker said he thought the Mueller investigation was “close to being completed,” touching off a twitter-stream of ridicule and opprobrium from critics for commenting on an active case.)

Last night, the CBC reports, the U.S. formally requested Huawei CFO Meng’s extradition from Vancouver, Canada, where she was arrested in early December and is currently free on bail. China, in turn, called on Washington to “stop the unreasonable crackdown.”

Meanwhile, a 10-count indictment  unsealed in U.S. District Court in Seattle “alleges Huawei stole trade secrets from T-Mobile beginning in 2012. Huawei also allegedly offered bonuses to employees who stole confidential information from other companies, notably U.S. carrier T-Mobile,” reports CNET’s Abrar Al-Heeti. 

Huawei “began stealing information about a phone-testing robot from T-Mobile called Tappy. Huawei engineers allegedly violated confidentiality and nondisclosure agreements by taking pictures of Tappy, taking measurements of parts of the robot and stealing a piece of it. When T-Mobile found out and threatened to sue, Huawei falsely said the theft was done by rogue actors within the company, according to the indictment,” Al-Heeti continues. 

“Despite Huawei's insistence that the action was a one-off affair, the Justice Department says emails obtained during the investigation found that the theft of secrets from T-Mobile was a company-wide effort,’” he adds.

In 2017, T-Mobile won a $4.8 million lawsuit against Huawei in the Tappy case.

Yesterday’s criminal charges “are the latest to accuse the Chinese government or Chinese companies of stealing intellectual property from U.S. firms through a combination of cyberattacks, traditional espionage and other means. U.S. officials have warned that China’s corporate raiding of secrets, which some government estimates value into the hundreds of billions of dollars in damages annually, represents a pre-eminent national- and economic-security threat,” Kate O’Keeffe, Aruna Viswanatha and Dustin Volz write for the Wall Street Journal.

“The indictments also come as U.S. trade negotiators prepare to sit down with Chinese counterparts in Washington this week to seek a solution to a prolonged trade dispute that has the two sides exchanging tit-for-tat tariffs on goods flowing between the two economic superpowers,” they add.

“The Trump administration is reportedly considering an order that would ban wireless carriers from purchasing Huawei or ZTE equipment, and another report said the U.S. was pushing allies to also drop Huawei hardware. In a Senate appearance this week, American intelligence chiefs will likely cite Chinese companies’ 5G work as a key threat to U.S. interests,” Colin Lecher writes for The Verge.

“A crackdown on any major company inevitably has unintended consequences, and companies in the U.S. and abroad are already surveying the fallout. Colleges have reportedly been stepping away from using the company’s equipment, and lawmakers have started to fret over whether vulnerabilities could lurk in the company’s solar products,” Lecher continues.

In a statement released in China today, Huawei “denies that it or its subsidiary or affiliate have committed any of the asserted violations,” adding that it “is not aware of any wrongdoing of Ms. Meng and believes the U.S. courts will ultimately reach the same conclusion,” Thomas Maresca reports for USA Today.

“China's Ministry of Industry and Information Technology spokesman Wen Ku called the legal action against Huawei ‘unfair,' according to state-run newspaper Global Times, saying that it was an attempt to smear the company without concrete evidence,” he adds.

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