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The Feds come to get Huawei, and more charges may follow

DoJ Huawei press conference.jpg

The US may lay further criminal charges against Huawei, following yesterday’s indictments covering an alleged 23 crimes.

Richard Donoghue, US attorney with the Department of Justice (DoJ), said that the indictments were “partly unsealed” – in other words, revealed – implying that others are still sealed and not yet published.

The charges are “the result of a long-term investigation of Huawei”, said Donoghue. “The investigation is ongoing.”

One of the indictments has a number of redactions, including two on the first page, one apparently listing a number of still unnamed defendants. (See link at end.)

The DoJ lined up a powerful array of government colleagues to announce the charges against Huawei, including Matthew Whitaker, acting attorney-general, Kirstjen Nielsen (pictured), head of the Department of Homeland Security, Wilbur Ross, head of the Department of Commerce, and Christopher Wray, director of the FBI.

There were two separate allegations, one that the company stole intellectual property of T-Mobile US, the subsidiary of Deutsche Telekom, and the other involving sales to Iran in breach of sanctions.

Whitaker said: “I want to repeat that the charges in today’s indictments are only allegations, and the defendants are presumed innocent until proven guilty.” Other speakers made similar remarks. 

The Iran allegations were against not only Huawei and its subsidiaries, but also against Meng Wanzhou, the company’s CFO, who is facing extradition to the US from Canada, where she is on bail. Meng is the daughter of Huawei’s founder, Ren Zhengfei.

Huawei responded: “We are disappointed to learn of the charges brought against the company today. After Ms Meng’s arrest, the company sought an opportunity to discuss the Eastern District of New York investigation with the Justice Department, but the request was rejected without explanation. The allegations in the Western District of Washington [state] trade secret indictment were already the subject of a civil suit that was settled by the parties after a Seattle jury found neither damages nor willful and malicious conduct on the trade secret claim.”

Huawei added: “The company denies that it or its subsidiary or affiliate have committed any of the asserted violations of US law set forth in each of the indictments, is not aware of any wrongdoing by Ms Meng, and believes the US courts will ultimately reach the same conclusion.”

Donoghue, who is based in the Eastern District of New York, said: “Ms Meng is charged based on her own personal conduct.”

Whitaker explained: “When a bank’s customers lie to it about their sanctions-related business, that exposes the bank to the risk of violating the law, especially when they continue to provide those bad actors access to our US financial system.  Our sanctions on Iran are the law of the land in this country – and we’re going to enforce the law, with both civil and criminal penalties.”

Wray said the FBI is likely to give Canada the details of charges against Meng today. She was arrested on 1 December at Vancouver airport, where she had just landed from Hong Kong, and her next court appearance is due on Wednesday 6 February.

Meng faces charges relating to four banks. One of them “cleared more than $100 million worth of transactions” relating to Skycom, a company that sold Huawei products in Iran – including US hardware and software that is banned from that market. The US is saying that Huawei was pretending Hong Kong-based Skycom to be an independent company, even though it is in reality a subsidiary.

Nielsen said the joint investigation had used “a broad array of techniques to follow the money”. Ross said that Huawei “often used US financial systems to facilitate their illegal activities”. He pointed out that one of his first actions as Commerce Secretary “was to punish ZTE” for its trade with Iran. ZTE last year accepted a fine of $1.4 billion and US supervision for 10 years.

“Lying, stealing and cheating are not suitable corporate growth strategies,” said Ross.

Wray said: “Huawei and its senior executives repeatedly refused to respect US law. … There is no place, none, for this kind of criminal behaviour.”

On the alleged theft of T-Mobile designs, Annette Hayes, from the DoJ in Washington state, said: “Thefts were part of an organised effort by the company.” The US is claiming Huawei had an employee incentive programme to encourage theft of intellectual property, though US employees were reminded it was against American law.

Whitaker said actions were by “more than just rogue employees”, saying it was “corporate policy”.

Detailed indictments are on the DoJ website (PDFs): Huawei, Skycom and Iran and T-Mobile intellectual property.