Huawei Gets Slapped With 23 Indictments For Fraud And Theft Of Trade Secrets

On Monday, the US Department of Justice charged Huawei with wire fraud, obstruction of justice, and theft of trade secrets.

According to a 10-count indictment, the Chinese firm began stealing T-Mobile’s trade secrets in 2012. Furthermore, the Chinese phone maker encouraged its employees to steal confidential data from other firms by offering bonuses. Plus, a 13-count indictment involves four defendants including Huawei CFO Meng Wanzhou, Huawei USA, and Skycom. Notably, Meng Wanzhou is accused of financial fraud.

As stated by Director Christopher Wray of Federal Bureau of Investigation (FBI), Huawei undermines the freedom and fairness of global market place when it deliberately has plans to steal a US company of intellectual property.

He stressed that due to the seriousness of these indictments, the bureau will not tolerate companies violating the laws that enable the development of the US and its businesses.

These indictments come at the time when tensions between the US and Huawei as well as China. The US has banned the company's sale of networking equipment in the country only, but several other countries are also considering to prohibit or stop working with the company. In response, China said were those actions to be taken, there could be consequences because of the company's contribution to 5G and other wireless techs. Both countries are racing to take the lead in the 5G, and the US have warned others of Huawei and its relations to the Chinese government.

FBI Director Christopher Wray

Virginia Democrat Sen. Mark Warner, also known as the vice chairman of the Senate Select Committee on Intelligence also shared his thought on the matter. He said it’s obvious that all major Chinese firms are related to the Chinese government and Communist Party, including Huawei – the national champion as touted by its government.

T-Mobile refused to comment, and Huawei didn’t respond to request for comments.

Two charges

As in the 10-count indictment, Huawei started stealing data about Tappy, a robot T-Mobile used for testing phones. Its engineers are accused of violating agreements on confidentiality and nondisclosure for taking photos of Tappy, measuring its parts and stealing a piece from it.

When T-Mobile discovered the incident, it threatened to sue Huawei. The company, in response, said it was the rogue actors that did the theft. However, in 2017, T-Mobile still sued the Chinese firm and won a $4.8 million jury award.

Although Huawei insisted that the incident of this kind happened only once, the Justice Department, based on the emails it obtained in the investigation, determined that the theft was an intentional effort from the company.

With these charges, it’s possible that Huawei will have to pay up to $5 million of fine or, instead, three times the total value of the stolen trade secrets and attempt to steal trade secrets. In addition, it may pay a $500,000 fine for obstruction of justice and wire fraud.

According to the 13-count indictment, Huawei and Huawei USA are accused of attempts to obstruct justice, while Meng Wanzhou was alleged of bank fraud and conspiracy to commit wire and bank fraud. Plus, the indictments charge Skycom and Huawei with committing and conspiracy to commit bank fraud as well as wire fraud, violating and conspiracy to violate IEEPA, as well as conspiracy to launder money.

US Department of Justice announces the charges

In total, 23 indictments are related to Huawei’s efforts to violate US sanctions and do business with Iran. Early December 2018, Meng Wanzhou was arrested and detained in Canada following a request of the Justice Department over these claims. While discussing Meng’s bail at a Vancouver courthouse, a lawyer with Canada’s Justice Department alleged that she tricked US banks to make transactions that evaded the sanctions.

The founder's daughter

Meng is not only the company's CFO but also its founder’s daughter. And Meng’s arrest not only affects the tech industry but also blast the already precarious relationship between China and the US over trade talks.

To other countries, Huawei is also a national security issue.

Meng Wanzhou was released on bail and currently detained in Canada

Warner stated that the Chinese tech giant has apparently posed a national security threat along with his compliment to the Trump Administration for bringing the matter to light.

In contrast, Huawei has made consistent denials that of Meng’s wrongdoing. Its Chairman Liang Hua, at the World Economic Forum at Davos, requested to resolve the case quickly and release Meng.

Over the last few months, the company has been facing negative sentiment. UK carrier BT said it would remove all Huawei equipment from its 4G network and ban future deployments of the company. Japan banned any government purchase from the Chinese tech giant. EU technology chief Andrus Ansip warned about industry and security risks from Huawei and other Chinese firms.

Maribel Lopez, Lopez Research analyst said: