DOJ Charges China’s Huawei, Alleging Fraud, Obstruction Of Justice, And Theft Of Trade Secrets

The U.S. Justice Department on Monday announced two indictments against the Chinese telecommunications firm Huawei, which it said is accused of theft of trade secrets, obstructing justice, and lying to banks over its alleged non-compliance with U.S. sanctions against Iran.

Acting Attorney General Matthew Whitaker said a grand jury in Seattle had returned an indictment alleging 10 federal crimes on the part of two Huawei affiliates related to an alleged “concerted effort to steal information about a robot that T-Mobile used to test mobile phones.”

Whitaker said Huawei engineers had violated confidentiality agreements by “secretly taking photos of the robot, measuring it, and even stealing a piece of it.” The robot, nicknamed “Tappy,” is used to perform durability tests on phones sold by T-Mobile, according to an earlier report by the Wall Street Journal.

A grand jury in New York separately returned an indictment for 13 additional crimes allegedly committed by Huawei, a U.S. subsidiary (Huawei USA), and an Iranian affiliate (Skycom). Additionally, Huawei’s chief financial officer, Meng Wanzhou, who was arrested in Canada in December at the U.S. government’s request, was charged in what Whitaker described as criminal activity spanning more than a decade, going “all the way to the top of the company.”

Specifically, Huawei and Skycom are charged with bank fraud and conspiracy to commit bank fraud, wire fraud and conspiracy to commit wire fraud, violations of the International Emergency Economic Powers Act (IEEPA) and conspiracy to violate IEEPA, and conspiracy to commit money laundering, according to the DOJ. Further, as part of an investigation in the Eastern District of New York, Huawei and its U.S. subsidiary are charged with conspiracy to obstruct justice.

Whitaker said the U.S. is currently seeking an extradition order in Canada for Meng, who has said she is innocent of charges, which include bank fraud, wire fraud, and conspiracy to commit both.

“As early as 2007, Huawei employees allegedly began to misrepresent the company’s relationship with its Iranian affiliate, which is called Skycom,” said Whitaker. “Huawei employees reportedly told banking partners that Huawei had sold its ownership interest in SkyCom. But these claims were false. In reality, Huawei had sold Skycom to itself.”

The reason for Huawei’s deception, Whitaker said, was to conceal the fact that the company was not in compliance with American sanctions. “These alleged false claims led banks to do business with the company, and therefore to unknowingly violate our laws,” he said, adding the one bank had “facilitated more than $US100 ($139) million worth of Skycom transactions through the United States in four years.”

Huawei is also accused of lying to the U.S. government and obstructing justice, he said, including by concealing and destroying evidence and moving potential witnesses back to China and therefore out of the reach of U.S. prosecutors.

“As charged in the indictment, Huawei and its Chief Financial Officer broke U.S. law and have engaged in a fraudulent financial scheme that is detrimental to the security of the United States,” said Homeland Security Kirstjen Secretary Nielsen. “They wilfully conducted millions of dollars in transactions that were in direct violation of the Iranian Transactions and Sanctions Regulations, and such behaviour will not be tolerated.”

Huawei did not immediately respond to Gizmodo’s request for comment on the charges and related allegations.