DOJ Charges Huawei With Iran Sanction Violations, Stealing Trade Secrets

Cathy He
By Cathy He
January 28, 2019Chinashare
DOJ Charges Huawei With Iran Sanction Violations, Stealing Trade Secrets
A woman stands at the booth of Huawei featuring 5G technology at the PT Expo in Beijing, China on Sept. 28, 2018. (Reuters)

The U.S. Department of Justice (DOJ) unsealed two indictments against China’s Huawei Technologies Co., its chief financial officer (CFO) Meng Wanzhou, and several of the company’s subsidiaries, in a pair of legal cases accusing the company of violating sanctions against Iran, and stealing trade secrets from U.S. mobile carrier T-Mobile.

In a 13-count indictment, the DOJ said Chinese telecoms giant Huawei misled a global bank and U.S. authorities about its relationship with a Hong Kong firm named Skycom Tech—which was in fact an unofficial subsidiary of Huawei that conducted business in Iran. Meng, who is currently released on bail in Canada and faces extradition to the United States, is listed as a defendant, alongside parent company Huawei and two of its subsidiaries, Huawei USA and Skycom Tech.

In a separate 10-count indictment, the prosecutors accused Huawei of stealing trade secrets, committing wire fraud, and obstructing justice for allegedly stealing robotic technology from T-Mobile to test smartphones’ durability.

“Both sets of charges expose Huawei’s brazen and persistent actions to exploit American companies and financial institutions and threaten the free and fair global marketplace,” said FBI Director, Christopher Wray, at a press conference in Washington D.C. on Jan. 28.

“Huawei and its senior executives repeatedly refused to respect U.S. law and standard international business practices,” Wray added.

The charges add heat to the scrutiny Huawei already faces in the West over allegations that its products could be exploited by Beijing for spying—an allegation the company has repeatedly denied.

Violation of Iran Sanctions

In the first indictment, the DOJ unveiled the charges that triggered Meng’s arrest in Canada back in early December.

Prosecutors accuse Huawei of a long-running scheme, which started in 2007, to deceive numerous global banks and the U.S. government regarding the company’s business activities in Iran, a DOJ press release stated.

“[Huawei] willfully conducted millions of dollars in transactions that were in direct violation of the [sanctions],” said Homeland Security Secretary Kirstjen Nielsen in the press release.

Meng, Huawei, and its subsidiaries are charged with bank fraud, wire fraud, violating trade sanctions, and conspiracy to commit money laundering.

Meng—also daughter of Huawei founder and CEO Ren Zhengfei—is specifically accused of making a presentation in August 2013 to a bank executive in which she repeatedly lied about Huawei’s relationship with Skycom, according to the press release.

The CFO was released on bail on Dec. 11 and is due to return to court in Vancouver on Jan. 29. The Acting Attorney General Matthew G. Whitaker confirmed that the DOJ would file an extradition request by the deadline of Jan. 30.

U.S. Commerce Secretary Wilbur Ross said the Trump administration was cracking down on those who violate trade sanctions.

“For years, Chinese firms have broken our export laws and undermined sanctions, often using U.S. financial systems to facilitate their illegal activities,” Ross said. “This will end.”

Trade Theft

Prosecutors also accuse Huawei of engaging in a concerted effort from 2012 to steal information about a T-Mobile phone-testing robot nicknamed “Tappy.” The robot, which mimics human fingers, was developed by the phone carrier to test smartphones.

T-Mobile previously sued Huawei for stealing technology related to Tappy. Huawei has said the two companies settled their disputes in 2017.

The indictment provides details into how the company sought to get their hands on the technology, including getting Huawei engineers to secretly take photos and measurements of the robot in violation of confidentiality agreements with T-Mobile. In one case, Huawei tried to steal part of Tappy’s robotic arm to allow engineers in China to replicate the device.

The prosecutors’ evidence includes numerous emails exchanged between the parent company and Huawei USA over months showing attempts to obtain T-Mobile’s technology, said First Assistant U.S. Attorney Annette L. Hayes of the Western District of Washington. In one instance, Huawei USA allegedly sent an email to its employees acknowledging that its actions would be illegal in United States.

“The conspiracy to steal secrets from T-Mobile was a company-wide effort involving many engineers and employees within the two charged companies,” said Hayes.

The company, Hayes said, also allegedly had a bonus program to reward worldwide employees who would steal confidential information from competitors.

Huawei is also accused of obstructing justice by providing a false report claiming the attempts at stealing T-Mobile tech were the work of rogue employees rather than the company as a whole.

“The indictment … reveals just how determined Huawei was to steal T-Mobile’s trade secrets, how clearly Huawei knew that what it was doing was wrong, and just how far Huawei was willing to go get the the technology it wanted,” Hayes said.

The charges come just days before U.S. and Chinese delegates are due to resume trade talks in Washington D.C., although Whitaker said the investigations were independent to the negotiations.

From The Epoch Times

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