United States files criminal charges against China’s Huawei

Posted at 6:19 PM, Jan 28, 2019
and last updated 2019-01-28 18:19:30-05

The United States has filed criminal charges against Huawei, escalating its fight against the Chinese tech giant and potentially complicating efforts by Washington and Beijing to negotiate an end to their bruising trade war.

The Justice Department on Monday unveiled two sets of charges against Huawei. One set accuses Huawei of trying to steal trade secrets from T-Mobile (TMUS). Another claims the company worked to skirt US sanctions on Iran.

The agency also revealed formal charges against Meng Wanzhou, Huawei’s chief financial officer. Meng was arrested in Canada in December, and the United States is looking to extradite her.

“Today we are announcing that we are bringing criminal charges against telecommunications giant Huawei and its associates for nearly two dozen alleged crimes,” Acting Attorney General Matthew Whitaker said in a statement. “China must hold its citizens and Chinese companies accountable for complying with the law.”

FBI Director Christopher Wray said at a press conference that Huawei “relied on dishonest business practices that contradict the economic principles that have allowed American companies and the United States to thrive.”

“The prosperity that drives our economic security is inherently linked to our national security,” Wray said. “And the immense influence that the Chinese government holds over Chinese corporations like Huawei represents a threat to both.”

A 10-count indictment, which was filed in Washington state, claims that Huawei worked for years to steal T-Mobile’s proprietary phone testing technology, known as “Tappy.”

Huawei also obstructed justice when the Washington-based telecom company threatened to sue it, according to court documents.

The government also unsealed a 13-count indictment against Huawei and Meng in Brooklyn federal court. That document details an alleged scheme by Huawei to deceive financial institutions and the US government about its business in Iran.

The company and Meng are said to have claimed that an affiliate, Skycom, was a separate company in order to conduct business in the country, when in fact it was a subsidiary.

The charges from the United States increases pressure on Huawei, one of China’s tech champions and a crucial part of the country’s efforts to dominate the rollout of superfast 5G wireless networks.

The United States has said for years that Huawei devices pose a national security threat. But government efforts to rein in alleged abuses by the company have escalated in recent months.

Meng’s arrest in December set off a geopolitical firestorm and has strained relations between the US, Canada and China. China has repeatedly called the detention of Meng, who was released on bail, a political move.

But the United States on Monday reiterated its intention to move forward with the extradition process. Meng is due back in court again in Canada on February 6.

Congress is also considering legislation that would ban the sale of US parts to any Chinese telecom firm that has violated US export control laws or sanctions, a measure that expressly targets Huawei.

“It has been clear for some time that Huawei poses a threat to our national security, and I applaud the Trump administration for taking steps to finally hold the company accountable,” Senator Mark Warner, a Democrat, said in a statement Monday.

Importantly, the charges come as the United States and China are racing to cut a deal on trade before March 1, when US tariffs on $200 billion in Chinese goods will otherwise rise to 25% from 10%. Vice Premier Liu He is scheduled to travel to the United States for two days of talks starting Wednesday.

It’s not clear how Monday’s announcement will factor into negotiations. President Donald Trump previously suggested that he may intervene in the Meng case if it would help reach a trade deal with China.