DOJ indictment alleges Huawei fraud, trade secrets theft

The charges, which Huawei strongly denied, included allegations that Huawei stole intellectual property from six unnamed U.S. tech firms and defrauded four international banks as the company violated U.S. sanctions against Iran and North Korea.

The 16-count indictment filed in federal court in New York named four official and unofficial subsidiaries as co-defendants and also included the company’s chief financial officer, Wanzhou Meng. In 2018, Meng was arrested in Canada on U.S. charges related to evading Iran-targeted sanctions and bank fraud.

The indictment alleges a corporate culture at Huawei that rewarded employees for stealing intellectual property of competitors.

“As part of the scheme, Huawei allegedly launched a policy instituting a bonus program to reward employees who obtained confidential information from competitors,” read a DOJ press release on the indictment. “The policy made clear that employees who provided valuable information were to be financially rewarded.”

Huawei was also accused of doing business with Iran and North Korea in violation of U.S. sanctions against those countries.

“The defendant’s activities, which included arranging for the shipment of Huawei goods and services to end users in sanctioned countries, were typically conducted through local affiliates in the sanctioned countries,” the DOJ press release said. In addition, a Huawei subsidiary, Skycom, “assisted the Government of Iran in performing domestic surveillance, including the demonstrations in Tehran in 2009.”

Huawei strongly denied the allegations in a statement later Thursday:

“This new indictment is part of the Justice Department’s attempt to irrevocably damage Huawei’s reputation and its business for reasons related to competition rather than law enforcement,” a spokesman said. “The ’racketeering enterprise’ that the government charged today is nothing more than a contrived repackaging of a handful of civil allegations that are almost 20 years old and that have never been the basis of any significant monetary judgment against Huawei.  The government will not prevail on these charges which we will prove to be both unfounded and unfair.”  

The latest charges build upon two separate federal indictments filed in January 2019 that alleged Huawei stole trade secrets from T-Mobile USA and actively misrepresented its affiliation with a subsidiary doing business in Iran.

Huawei filed federal patent infringements lawsuits against Verizon in two Texas federal courts Feb. 6. Verizon called the move “a sneak attack on our company and the entire tech ecosystem.”

Separately, U.S. officials earlier this week said Huawei could access global mobile networks through “back doors” designed to be used solely by law enforcement and have been able to do so for more than a decade, according to a report in the Wall Street Journal. 

Huawei has rejected those allegations.

President Donald Trump has consistently talked tough against Huawei. His administration has resisted the Chinese government’s demand that the United States to drop its prosecution of Huawei as part of the U.S.-China trade deal. The first portion of the deal, signed in January, contained no such concessions.

Last year, the national security arm of the U.S. Department of Commerce added Huawei and its affiliates to the bureau’s “Entity List,” and the move was seen as a prelude to a U.S. ban on all products from the Chinese telecom giant. Huawei had previously sued the U.S. government for imposing what the company called “unconstitutional sales restrictions.”

At the same time, the U.S. government reportedly has issued waivers to several U.S. companies, allowing them to sell computer chips, software, and other components to Huawei.