US reported to be investigating Huawei over ‘exports to Iran’

26 April 2018 | Alan Burkitt-Gray

Huawei is facing similar sort of action over Iran from US authorities to that which is threatening the future of Chinese rival ZTE.

According to a report yesterday from the Wall Street Journal, followed up by the Reuters news agency, the US Department of Justice (DoJ) has started an investigation into whether Huawei has broken US sanctions by selling telecoms equipment to Iran.

The reports say that the investigations started in 2016, the same year that the DoJ first published its accusations against ZTE. Then, the US charged that ZTE had set up shadow companies through which to smuggle equipment – including US-made hardware, software and chips – to Iran.

No details of the alleged accusations against Huawei have yet emerged.

A senior official from Huawei, based at the head office in Shenzhen, China, told Capacity: “Huawei complies with all applicable laws and regulations where it operates, including the applicable export control and sanction laws and regulations of UN, US and EU. We have no comment on the specific [Wall Street] Journal story.”

Back in 2016 US sources leaked PDF documents allegedly prepared in 2011 by ZTE.

They included a ZTE proposal for “import and export control risk avoidance” in Chinese and in English. There was also a ZTE document apparently approving the strategy. signed by then CEO and other executive, also in Chinese and English. Internal evidence suggests that the English translation is by US investigators.

These documents not only set out ZTE’s smuggling strategy but also referred to another Chinese company, code-named F7, that was also involved. “For the same [Iranian] project, F7 designated an independent company to directly sign two-party contracts with customers,” said the document.

Two pages later the ZTE document says F7 had a “joint venture company with Symantec”. There was a joint venture, called Huawei Symantec, that was created in 2008 and was disbanded in 2012.

If the case against Huawei continues and follows a similar line to that against ZTE, and if the DoJ sets out charges, it can be expected that US sources will leak any similar documents it has to hand.

But it is too early to predict. Reuters is reporting that the investigation is being run from the US attorney’s office in Brooklyn, New York. A spokesman for that office has refused to confirm or deny any such investigation, said Reuters.

A year after ZTE agreed a penalty with the US, the company is facing potential closure after US authorities decided it had lied when it said it had reprimanded executives involved in the Iran conspiracy. Now the US has banned US hardware, software and chip suppliers – from Microsoft to Qualcomm – from supplying ZTE for seven years.