Caixin
Jan 29, 2019 07:22 AM
BUSINESS & TECH

U.S. Charges Huawei and CFO With Fraud, Trade Secret Theft

The charges are the latest headwinds to hit the Chinese tech giant. Photo: VCG
The charges are the latest headwinds to hit the Chinese tech giant. Photo: VCG

The U.S. Justice Department filed multiple criminal charges against China’s Huawei Technologies Co., its affiliates and its chief financial officer, Meng Wanzhou, and said it is seeking Meng’s extradition to the U.S. from Canada.

The Justice Department unveiled Monday two indictments against Huawei, filed almost 3,000 miles (4,800 kilometers) apart, including nearly two dozen alleged crimes of bank and wire fraud, obstruction of justice and technology theft.

In one case, filed in the Eastern District of New York in Brooklyn, the indicted defendants include Huawei and two Huawei affiliates — Huawei Device USA Inc. and Skycom Tech Co. Ltd. — as well as Huawei’s Meng, the justice department said in a statement.

The U.S. prosecutors accused Huawei of misleading a global bank and U.S. authorities about its relationship with subsidiaries Huawei Device USA Inc. and Skycom Tech Co. Ltd. to conduct business in violation of U.S. sanctions on Iran.

Huawei and Skycom are charged with bank fraud and conspiracy to commit bank and wire fraud, conspiracy to commit money laundering and other violations. Huawei and Huawei USA were charged with conspiracy to obstruct justice. Meng was charged with bank fraud, wire fraud, and conspiracy to commit bank and wire fraud.

The indictment came nearly two months after Meng was arrested in Vancouver by Canadian authorities on the request of the U.S. Meng was released on bail and remains in Vancouver awaiting extradition decisions. The U.S. has until the end of January to submit a formal request to Canada for Meng’s extradition. Both Meng and Huawei have denied the allegations.

In a separate case, filed in the Western District of Washington state in Seattle, the Justice Department also accused Huawei of stealing trade secrets, committing wire fraud and obstructing justice by allegedly stealing robotic technology from telecom carrier T-Mobile US Inc. to test smartphones’ durability.

Under the maximum sentencing provisions applicable to corporate entities, conspiracy and attempt to commit trade secret theft are punishable by a fine of as much as $5 million, or three times the value of the stolen trade secret, whichever is greater. Wire fraud and obstruction of justice are punishable by a fine of as much as $500,000.

The charges are the latest headwinds to hit the Chinese tech giant, which has been facing growing hurdles from foreign regulators over national security concerns. Several countries have blocked Huawei’s products from their next generation of 5G telecom networks.

Recent setbacks prompted Huawei's elusive founder Ren Zhengfei, Meng's father, to meet with media recently to deny spying allegations against the company and attempt to defuse doubts about Huawei.

Contact reporter Han Wei (weihan@caixin.com)

Read Caixin's full coverage of Huawei and the Meng Wanzhou case

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