Things are not getting any better with the world’s second largest smartphone-maker. The US Department of Justice has charged Huawei with theft of trade secrets, wire fraud and obstruction of justice.
Huawei could be looking at a fine of either up to US$5 million or three times the value of the stolen trade secret for conspiracy and attempt to steal trade secrets. The company could also face a fine of up to US$500,000 for wire fraud and obstruction of justice.
A 10-count indictment alleges Huawei stole trade secrets from T-Mobile starting in 2012. Huawei also allegedly offered bonuses to employees who stole confidential information from other companies, notably US carrier T-Mobile. In addition, a 13-count indictment charged four defendants, including Huawei and Chief Financial Officer Meng Wanzhou, with financial fraud. The indicted defendants also include affiliates Huawei USA and Skycom.
FBI Director Christopher Wray said in a statement,
“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,”
“To the detriment of American ingenuity, Huawei continually disregarded the laws of the United States 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 United States to thrive.”
The charges come amid heightened scrutiny for Huawei. The US has already banned Huawei from selling networking equipment, and a number of other countries have either already ceased working with the company, or are considering a ban. The Chinese government and Huawei have said the moves could have ramifications since the company contributes to industry-standard wireless technologies like 5G.
“There is ample evidence to suggest that no major Chinese company is independent of the Chinese government and Communist Party — and Huawei, which China’s government and military tout as a ‘national champion,’ is no exception,” said Sen. Mark Warner, a Virginia Democrat who’s vice chairman of the Senate Select Committee on Intelligence.
The Charges
According the first set of indictments, Huawei allegedly stole information about a phone-testing robot from T-Mobile. Huawei engineers allegedly violated confidentiality and nondisclosure agreements by taking pictures and measurements of the robot – even obtaining a piece of it. When T-Mobile found out and threatened to sue, Huawei claimed the theft was orchestrated by rogue personnel in the company.
T-Mobile did sue in 2017 and won its case against Huawei.
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.
In the second set of indictments, Meng was charged with bank fraud, wire fraud and conspiracies to commit bank and wire fraud. Huawei and Huawei USA are charged with conspiracy to obstruct justice. Huawei and Skycom are charged with bank fraud and conspiracy to commit bank fraud, wire fraud and conspiracy to commit wire fraud, violating the International Emergency Economic Powers Act (IEEPA) and conspiracy to violate IEEPA, and conspiracy to commit money laundering.
The charges are related to the company’s alleged efforts to evade US sanctions and do business with Iran.
Huawei has consistently denied any wrongdoing by Meng. At the recent World Economic Forum at Davos, Huawei Chairman Liang Hua called for a quick resolution of the case and the release of Meng.
Over the past few months, Huawei has face quite a backlash. UK carrier BT said it would stop using Huawei equipment for its 4G network and ban it from any future 5G deployments. Japan reportedly banned government purchases from Huawei.
