Justice Department Announces Indictments Against Huawei

By Patrick Tucker

January 28, 2019

Not long ago, U.S. companies like T-Mobile boasted of their partnerships with Chinese companies like Huawei. The future of such business relationships is not what it once was, especially not after today, and that’s likely to further stress the already tense relationship between Washington and Beijing.

Huawei executives stole trade secrets and equipment — a robot! — from competitors, flouted U.S. sanctions on Iran, and lied to banks and investors about their activities, the U.S. Justice Department said on Monday, announcing a 13-count indictment against Huawei officials and subsidiaries for wire fraud, sanctions fraud, money laundering, and other crimes.

Many of the charges concern alleged actions brought to light in 2014, when T-Mobile sued Huawei for stealing trade secrets. Among the other claims, T-Mobile said Huawei employees surreptitiously took photos and measurements of T-Mobile’s “Tappy,” a cell-phone-testing robot. At one point, Huawei spies even tried to steal the robot’s arm so it could be replicated in China.

The company also “paid cash” to employees around the world for stealing trade secrets from companies that they were working with, Annette Hayes, the First Assistant U.S. Attorney for the Western District of Washington, said in a press conference on Monday.

In 2007, the indictment alleges, Huawei violated international sanctions by doing business with Iran via a subsidiary, called Skycom. According to Acting U.S. Attorney General Matthew Whitaker, Huawei officials made it appear on paper as though they divested of they company, when in fact, “They had sold Skycom to itself.”

They then misrepresented their ownership in the Iran-dealing company to numerous U.S. banks and other investors, causing U.S. financial firms and investors to “unknowingly violate our laws,” Whitaker said.

Peter Mattis, a research fellow in China Studies at the Victims of Communism Memorial Foundation, said, “The indictments are useful for a few reasons. First, they put good information into the public realm. It wouldn't be there if the Department of Justice did not think it could hold up in court.”

The company has increasingly been in the news since Huawei Chief Financial Officer Wanzhou Meng was arrested in Vancouver in December. Meng, who figures prominently in the indictments, remains in Canada on $7.5 million in bail, according to Bloomberg. The United States is seeking her extradition.

By Patrick Tucker // Patrick Tucker is technology editor for Defense One. He’s also the author of The Naked Future: What Happens in a World That Anticipates Your Every Move? (Current, 2014). Previously, Tucker was deputy editor for The Futurist for nine years. Tucker has written about emerging technology in Slate, The Sun, MIT Technology Review, Wilson Quarterly, The American Legion Magazine, BBC News Magazine, Utne Reader, and elsewhere.

January 28, 2019