On January 28, 2019, the U.S. Department of Justice unsealed two indictments against Huawei corporate entities and the Huawei Chief Financial Officer Wanzhou Meng.
In the U.S. Court Eastern District of New York, a 13-count indictment was unsealed, charging four defendants, including Huawei Technologies Co. Ltd. (Huawei), and two Huawei affiliates – Huawei Device USA Inc. (Huawei USA) and Skycom Tech Co. Ltd. (Skycom) as well as Meng.
The indictment alleges that starting in 2007, Huawei employees lied about Huawei’s relationship to a company in Iran called Skycom, and falsely asserting it was not an affiliate of Huawei. The company allegedly claimed that Huawei had only limited operations in Iran and that Huawei did not violate U.S. or other laws or regulations concerning Iran. Even after the media reported in late 2012 and 2013 disclosed that Huawei operated Skycom as an unofficial affiliate in Iran and that Meng had served on the board of directors of Skycom, Huawei employees, and especially Meng, falsely claimed that Huawei had sold its interest in Skycom to an unrelated third party in 2007 and that Skycom was only Huawei’s local business partner in Iran. In reality, the indictment alleges Skycom was Huawei’s longstanding Iranian affiliate, and Huawei initiated the 2007 sale to appear as an arm’s length transaction between two unrelated parties, when Huawei actually controlled the company that bought Skycom.
The indictment charges that, in reliance of Huawei’s misrepresentation, U.S. banks continued their banking relationships with Huawei in violation of the Iran sanctions. One bank cleared more than $100 million worth of Skycom-related transactions through the U.S. between 2010 and 2014.
The indictment charges that Huawei and its principals repeatedly lied to U.S. government authorities on Huawei’s business in Iran.
In 2017, when Huawei became aware of the government’s investigation, Huawei and Huawei USA allegedly tried to obstruct the investigation by moving witnesses with knowledge about Huawei’s Iran-based business to the PRC, and by concealing and destroying evidence of Huawei’s Iran-based business that was located in the U.S.
In December 2018, Canadian authorities detained Meng in Vancouver pursuant to a provisional arrest warrant issued under Canadian law. The U.S. government is seeking Meng’s extradition to the U.S.
Indictment against Huawei Corporate Entities for Stealing Trade Secret Technology
On January 28, 2019, a 10-count indictment was unsealed in the U.S. District Court for the Western District of Washington, charging Huawei Device Co., Ltd. and Huawei Device Co. USA with theft of trade secrets conspiracy, attempted theft of trade secrets, seven counts of wire fraud, and one count of obstruction of justice. On January 16, a grand jury returned the indictment, detailing Huawei’s efforts to steal trade secrets from Bellevue, Washington based T-Mobile USA and then obstruct justice when T-Mobile threatened to sue Huawei in U.S. District Court in Seattle. The alleged conduct occurred from 2012 to 2014, and includes an internal Huawei announcement that the company was offering bonuses to employees who succeeded in stealing confidential information from other companies.
The FBI obtained emails revealing that in July 2013, Huawei offered bonuses to employees based on the value of information they stole from other companies around the world, and provided to Huawei through an encrypted email address.
The unsealing of the indictments occurs at a critical time, since the U.S. had until January 30 to send to Canada its formal extradition request for Meng. The unsealing of the indictments occurs during intensive trade negotiations between the U.S. and China over tariffs. Among the controversial issues are U.S. complaints about China’s theft of trade secrets and violations of U.S. sanctions.