January 30, 2019
The Justice Department charged Huawei and its chief financial officer Meng Wanzhou with the theft of trade secrets, obstructing a criminal investigation and evading economic sanctions on Iran. The charges are part of an aggressive move by the U.S. to block the Chinese telecom firm suspected of undermining national interests. The charges are based on Huawei’s internal emails describing a plan to steal T-Mobile testing equipment. Internal memos also link Meng to bank fraud to evade sanctions against Iran.
The New York Times reports that, “the charges underscore Washington’s determination to prove that Huawei poses a national security threat and to convince other nations that it cannot be trusted to build their next generation of wireless networks, known as 5G.”
Acting U.S. attorney general Matthew Whitaker stated that the U.S. would seek Meng’s extradition from Canada, “where she was detained last year at the request of the United States.” Meng is the daughter of Huawei’s founder and “her arrest has outraged the Chinese government, which has since arrested two Canadians, in apparent retaliation.”
This week, top Chinese officials will arrive in Washington “for two days of talks aimed at resolving a months-long trade war between the world’s two largest economies.” Although the timing is bad given China’s reaction to Meng’s situation, “Trump administration officials have insisted that [her] detention will not affect the trade talks.”
NYT reports that, “the indictment unsealed against Meng is similar to the charges leveled against the Huawei executive in filings made by federal prosecutors in connection with the bail hearing in Canada,” claiming that “Huawei defrauded four large banks into clearing transactions with Iran in violation of international sanctions through a subsidiary called Skycom.” Prosecutors identified one of those banks as HSBC.
The “most serious new allegation in the indictment” levied by federal prosecutors is that Huawei destroyed or concealed evidence (by moving employees out of the U.S. so they could not be called as witnesses) to block the investigation into its attempt to evade economic sanctions against Iran. The charge that Huawei conspired to steal trade secrets from T-Mobile relates to a 2014 civil suit in which “T-Mobile accused Huawei of stealing proprietary robotics technology that the telecom company used to diagnose quality-control issues in cellphones.”
Huawei, which was found guilty in May 2017, “appeared to set up a bonus system for employees who could illicitly obtain the T-Mobile testing system.” The U.S. has also been drafting an executive order to “ban American companies from using Chinese-origin equipment in critical telecommunications networks.”