New charges allege Huawei did business with North Korea
The US unveiled new charges against the Chinese telecoms equipment maker that also allege technology theft related to robotics and communications
The United States added to its series of charges against China’s Huawei Technologies on Thursday, accusing the Chinese telecoms giant of stealing intellectual property from six US companies and covering up its involvement in projects in North Korea.
Racketeering, obstruction of justice and money laundering have been added to the criminal case, unsealed in January last year, accusing Huawei of financial fraud.
Federal prosecutors in Brooklyn said the new charges related to a decades-long effort by Huawei and four of its subsidiaries, both in the US and in China – as well as Huawei's chief financial officer, Meng Wanzhou, who is facing extradition proceedings in Canada – to engage in racketeering activities to grow the brand into one of the most powerful telecommunications equipment and consumer electronics companies in the world.
Huawei’s efforts to steal trade secrets from six unidentified American firms were successful and resulted in the company obtaining nonpublic intellectual property about robotics, cellular antenna technology and internet router source code, the prosecutors said.
Meng was also charged on Thursday with making false representation to a bank that caused it to continue its business relationship with Huawei, according to the court document. The US government has previously alleged that Meng lied to HSBC about Huawei having dealings with Iran, which might otherwise have dissuaded the financial institution from continuing to work with the telecoms company.
“The indictment paints a damning portrait of an illegitimate organisation that lacks any regard for the law,” said Intelligence Committee chairman Richard Burr and vice chairman Mark Warner in a joint statement in response to the indictment against Huawei.
The senators said Thursday’s indictment is “an important step in combating Huawei's state-directed and criminal enterprise.”
The new indictment added more weight to Washington’s pressure campaign against Huawei, following a series of measures taken by the US government in the last year that included putting the company on a so-called Entity List in May to prohibit it from doing business in the US. That move required US firms to obtain a license to sell to the Chinese company.
Huawei responded to the new charges soon after they were announced.
“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,” the company said in an emailed statement.
”These new charges are without merit and are based largely on recycled civil disputes from last 20 years that have been previously settled, litigated and in some cases, rejected by federal judges and juries,” Huawei said, adding that the indictment was “unfounded and unfair”.
US sales to Huawei have not yet been severed, however.
The Trump administration has been extending the deadline to ban sales to Huawei to alleviate the impact on American tech firms. On Monday, the US extended by another 45 days, its fourth extension, to grant US companies to continue selling some non-critical tech components to Huawei. The deadline was set to expire on February 18.
The Trump administration has been cracking down on trade and business practices by Chinese companies deemed “unfair” to prevent China from obtaining an edge over the US in global technology advancement, and particularly in next-generation cellular tech known as 5G in which Huawei is the world leader.
The Federal Communications Commission has also announced that US rural wireless carriers can no longer use a government funding programme to purchase Huawei equipment. The regulatory watchdog is working to pass a bill that would fund a plan for rural carriers to remove and replace existing Huawei equipment.
The new charges came on the same day for new regulations to take effect that tighten Washington’s oversight of foreign investment in the US on national security grounds.
The new rules give the Committee on Foreign Investment in the United States (CFIUS), an inter-agency governmental body, broader powers to review and block any transactions in critical infrastructure, technology and personal data that are considered a potential threat to the US.
The Department of Justice, in Thursday’s new charges, also accused Huawei of being involved in a number of projects in North Korea since at least 2008 and of covering up its actions.
“The new charges in this case relate to the alleged decades-long efforts by Huawei, and several of its subsidiaries, to misappropriate intellectual property” and “to grow and operate Huawei’s business”, the Justice Department said in a news release.
The US government last year charged Meng, a daughter of Huawei founder Ren Zhengfei, with attempting to steal trade secrets, obstructing a criminal investigation and violating US economic sanctions for doing business with Iran under a shell company called Skycom.
Meng faces possible extradition to the US, and her case is being handled by the British Columbia Supreme Court in Vancouver, where she lives under house arrest.