Tuesday, 29 January 2019 10:00

US hits Huawei with criminal, fraud charges Featured

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Chinese telecommunications equipment provider Huawei Technologies has been hit with criminal charges, among others, by the US, with the indictments being unveiled on Monday, the first day of work after a government shutdown, and just a couple of days before the US and China resume talks on a trade dispute.

The company was accused of violating US sanctions on Iran and also of theft of trade secrets from an American business partner, according to a statement released by the US Department of Justice.

Huawei, its chief financial officer and other employees were alleged to have worked over years to hide from multiple global banks and the US Government its business in Iran. The indictment charged Huawei and two affiliates with bank fraud, violations of US sanctions and conspiring to obstruct justice related to a grand jury investigation.

Huawei CFO Meng Wanzhou was detained by Canada on 1 December, on a US request. Canada is yet to evaluate whether she will be extradited.

Defendants Huawei and Skycom were alleged to have committed bank fraud and conspiracy to commit bank fraud, wire fraud and conspiracy to commit wire fraud, violations of the International Emergency Economic Powers Act and conspiracy to violate IEEPA, and conspiracy to commit money laundering.

Huawei and its American operation, Huawei USA, were charged with conspiracy to obstruct justice related to the grand jury investigation in the Eastern District of New York. Meng was charged with bank fraud, wire fraud, and conspiracies to commit bank and wire fraud.

A second case alleges that Huawei tried to steal trade secrets from US provider T-Mobile and then try to obstruct the court process when T-Mobile threatened to sue.

These actions are alleged to have occurred between 2012 to 2014, and also claims that Huawei made an internal announcement that the company was offering bonuses to employees who succeeded in stealing confidential information from other companies.

The indictment claims Huawei began a concerted effort to steal information on a T-Mobile phone-testing robot dubbed "Tappy" in 2012.”

In a bid to build their own robot to test phones before they were shipped to T-Mobile and other carriers, Huawei engineers were claimed to have violated confidentiality and non-disclosure agreements with T-Mobile by secretly taking photos of Tappy, taking measurements of parts of the robot, and in one instance, stealing a piece of the robot so that the Huawei engineers in China could try to replicate it.

After T-Mobile interrupted these activities, and then threatened to sue, Huawei said the theft was done by rogue actors within the company and was not a concerted effort by Huawei corporate entities in the US and China.

"As emails obtained in the course of the investigation reveal, the conspiracy to steal secrets from T-Mobile was a company-wide effort involving many engineers and employees within the two charged companies," the statement said.

“Today we are announcing that we are bringing criminal charges against telecommunications giant Huawei and its associates for nearly two dozen alleged crimes” US acting Attorney-General Matthew Whitaker said.

“As I told Chinese officials in August, China must hold its citizens and Chinese companies accountable for complying with the law. I’d like to thank the many dedicated criminal investigators from several different federal agencies who contributed to this investigation and the Department of Justice attorneys who are moving the prosecution efforts forward. They are helping us uphold the rule of law with integrity.”

“The charges unsealed today clearly allege that Huawei intentionally conspired to steal the intellectual property of an American company in an attempt to undermine the free and fair global marketplace,” said FBI director Christopher Wray. “To the detriment of American ingenuity, Huawei continually disregarded the laws of the US in the hopes of gaining an unfair economic advantage. As the volume of these charges prove, the FBI will not tolerate corrupt businesses that violate the laws that allow American companies and the US to thrive.”

“This indictment shines a bright light on Huawei’s flagrant abuse of the law – especially its efforts to steal valuable intellectual property from T-Mobile to gain unfair advantage in the global marketplace,” said First Assistant US Attorney Annette Hayes of the Western District of Washington.

“We look forward to presenting the evidence of Huawei’s crimes in a court of law, and proving our case beyond a reasonable doubt. Fair competition and respect for the rule of law is essential to the functioning of our international economic system.”

iTWire has contacted Huawei for comment.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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