U.S. Charges Chinese Telecom Giant Huawei With Bank Fraud, Obstruction, Stealing Trade Secrets

January 28, 2019, 11:37 PM UTC

The U.S. Department of Justice filed charges against Huawei and its chief financial officer Meng Wanzhou, accusing the Chinese telecom-equipment giant of stealing trade secrets, obstructing justice, and committing bank fraud in an effort to skirt sanctions on Iran.

In a statement, the DOJ outlined 13 counts against Meng, Huawei, and two of its subsidiaries, Huawei Device USA Inc. and Skycom Tech Co., which were allegedly involved in an effort for Huawei to conduct business in Iran. In the process, Huawei misled global banks and U.S. authorities about its ownership with the subsidiaries, the department said.

The indictment says that Huawei falsely claimed to banks and U.S. investigators that it had sold off its interest in Skycom, its longstanding affiliate in Iran, in 2007 when in fact it controlled the company. Huawei USA, an American subsidiary, conspired to obstruct justice by destroying evidence and moving witnesses with knowledge of Skycom from the U.S. back to China.

The U.S. government is seeking the extradition of Meng, who was detained by Canadian authorities in December, against the objection of Huawei. Meng faces charges of wire and bank fraud for allegedly lying to Huawei’s banking partners about Huawei’s relationship with Skycom.

“Huawei and its subsidiaries, with the direct and personal involvement of their executives, engaged in serious fraudulent conduct, including conspiracy, bank fraud, wire fraud, sanctions violations, money laundering and the orchestrated obstruction of justice,” U.S. Attorney Donoghue said in a statement. “For over a decade, Huawei employed a strategy of lies and deceit to conduct and grow its business.”

Separately, the DOJ announced a 10-count indictment against Huawei, accusing it of stealing trade secrets, committing wire fraud, and obstructing justice. Beginning in 2012, Huawei allegedly began stealing information from T-Mobile about a phone-testing robot, named “Tappy,” which tested smartphones by mimicking human fingers.

Huawei workers secretly took photos and measurements of Tappy and its parts, even stealing a piece of it, the DOJ claims, with the goal of helping Huawei build its own robot. When T-Mobile learned of the trade-secret theft, Huawei falsely claimed it was the work of rogue actors. In fact, company emails showed Huawei offered bonuses to employees who stole information from rival companies, the indictment said.