United States files formal racketeering charges against Huawei
The US Department of Justice and the Federal Bureau of Investigation Tightening ramped up its crusade against Huawei and its subsidiaries with today’s announcement that sixteen charges have been officially filed against Huawei. This dramatic case against the China-based tech giant could have with serious geopolitical ramifications.
The full legal filing can be found here.
Upon reading the document, it can be found that Huawei is being accused conspiring to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) stature. The US authorities assert that Huawei, its employees and other firms that are affiliated with the company took advantage of classified agreements with American organizations over the course of the past twenty years in order to gain access to the trade secrets of said organizations. The document goes on to say that the trade secrets and intellectual property were then used by Huawei and affiliates in a malicious manner to support Huawei's business dealings.
An instance of such a case is given in the legal document, where an unnamed company’s (dubbed Organization 1 in the indictment) routers’ source code was allegedly illegally taken by Huawei, and subsequently utilized Huawei’s own products. Given the unique circumstances, it almost certain that Company 1 is Cisco, which is described in the document as “a U.S. technology company headquartered in the Northern District of California.”
The indictment also gives other examples of alleged corporate espionage activity by Huawei, albeit in a more straightforward manner. Such a case describes a Chicago exhibition, where a Huawei engineer “… was discovered in the middle of the night after the show had closed for the day in the booth of a technology company … removing the cover from a networking device and taking photographs of the circuitry inside. Individual-3 wore a badge listing his employer as ‘Weihua,’ HUAWEI spelled with its syllables reversed.” Huawei responded to the allegation by stating that the person being referred to, acted of his own volition.
In yet another case, a tech firm seeking to partner with Huawei shipped the company a presentation deck with trade-secret information so as to produce enthusiasm from Huawei. The legal document describes it as such:
“Immediately upon receipt of the slide deck, each page of which was marked ‘Proprietary and Confidential’ by Company 6, HUAWEI distributed the slide deck to HUAWEI engineers, including engineers in the subsidiary that was working on technology that directly competed with Company 6’s products and services. These engineers discussed developments by Company 6 that would have application to HUAWEI’s own prototypes then under design.”
The aforementioned are just a few out of many instances of Huawei's alleged attempts to steal U.S. trade secrets and intellectual property.
As per a Department of Justice statement, “As part of the scheme, Huawei allegedly launched a policy instituting a bonus program to reward employees who obtained confidential information from competitors. The policy made clear that employees who provided valuable information were to be financially rewarded.” The statement refers to this section of the document:
“A ‘competition management group’ was tasked with reviewing the submissions and awarding monthly bonuses to the employees who provided the most valuable stolen information.”
Aside from IP theft, Huawei and company are accused of intentionally providing false information to government officials as well as trying to obstruct the investigations into the organization. The legal filing states:
“For example, an official HUAWEI manual labeled ‘Top Secret’ instructed certain individuals working for HUAWEI to conceal their employment with HUAWEI during encounters with foreign law enforcement officials.”
Moreover, Huawei has also been accused of wrongdoing in association with its dealings in nations like Iran and North Korea. The US authority’s statement charges Huawei with using code words and meticulously vetted local partners to disguise its business in these countries so as to avoid sanctions that are set on the two nations. The US DoJ also stated that the Chinese tech firm and its associates gave false information to congressional agents when inquired about the Huawei’s dealings with the two nations.
Among those indicted is Meng Wanzhou, the CFO of Huawei who has been under house arrest in Canada due to formal charges of fraud.
In response to the serious allegations against them, Huawei representatives have release a corporate statement stating, “This new indictment is part of the Justice Department’s attempt to irrevocably damage Huawei’s reputation and its business for reasons related to competition rather than law enforcement. The ‘racketeering enterprise’ that the government charged today is nothing more than a contrived repackaging of a handful of civil allegations that are almost 20 years old and that have never been the basis of any significant monetary judgment against Huawei. The government will not prevail on these charges which we will prove to be both unfounded and unfair.“
The Trump White House has focused intently on Huawei recently, and placed priority on stopping the tech company from accessing Western markets. It is important to note that the administration’s prior attempts have generally benign, with both the United Kingdom and Germany recently letting Huawei access their telecommunications systems.