US files criminal charges against Chinese firm Huawei

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Federal prosecutors filed criminal charges on Monday against Chinese telecommunications firm Huawei, a move that is likely to inflame tensions between the U.S. and China.

Acting Attorney General Matthew Whitaker said two separate grand juries in Seattle and New York have returned indictments against Huawei affiliates, subsidiaries and executives.

The indictments allege that the company stole intellectual property from T-Mobile and also violated U.S. sanction orders, Whitaker said.

{mosads}Administration officials also said they are in the process of formally requesting the extradition of Huawei CFO Meng Wanzhou, who was arrested in Vancouver, Canada, late last year at the request of American authorities. The request will be filed by Tuesday.

The charges mark an escalation in an already tense trade battle with Beijing.

Huawei and ZTE, another Chinese telecommunications firm, have faced immense scrutiny from lawmakers over their ties to the Chinese government.

Meng, Huawei, Huawei Device USA and its Iranian subsidiary Skycomm are all facing charges, according to the officials.

The 10-count indictment charges Huawei with conspiracy to steal trade secrets, wire fraud and obstruction of justice.

“As you can tell from the number and magnitude of charges, Huawei and its senior executives repeatedly refused to respect the laws of the United States and standard international business practices,” FBI Director Christopher Wray said during a press conference.

“Huawei also intentionally and systematically sought to steal valuable intellectual property from an American company, so it could circumvent hard-earned, time-consuming research and gain an unfair market advantage,” he continued, blasting the company’s “dishonest business practices.”

The investigative chief also pointed to the national security risks that may arise from relying on a Chinese telecommunications company like Huawei, including cybersecurity and espionage threats, echoing scores of experts and lawmakers on both sides of the aisle who have issued similar warnings.

Officials have claimed that the Chinese state government has inside access to the companies, making them a national security risk for the U.S.

“As Americans, we should all be concerned by the potential for any company beholden to a foreign government — especially one that doesn’t share our values — to burrow into the American telecommunications market. That kind of access could give a foreign government the capacity to maliciously modify or steal information, conduct undetected espionage or exert pressure or control,” Wray said.

Whitaker said that the charges don’t point toward the actions of “rogue employees,” but rather “corporate-sponsored behaviors that … are alleged to have been directed as a corporate policy.”

The indictment alleges that Huawei “began a concerted effort” in 2012 to steal information about a robot used by T-Mobile known as “Tappy,” that was used to test phones.

Employees at the company tried to steal trade secrets about the robot, including parts of the device itself, but claimed to T-Mobile that it was the work of individual actors within the company, according to the court filings.

The announcement came moments after the U.S. announced that Chinese representatives will come to Washington, D.C., for critical trade negotiations.

White House press secretary Sarah Huckabee Sanders said at a briefing shortly before the charges were announced that the trade talks and law enforcement action “are not linked, they’re a totally separate process.”

However, administration officials have seized on theft of IP and trade secrets as being part of the trade dispute between the two countries, including in a report from the Office of the U.S. Trade Representative released late last year.

Tensions between China and Canada have intensified following the arrest of the Huawei executive. China detained a pair of Canadian citizens in the weeks after the action, and resentenced a Canadian man from 15 years in prison for a drug smuggling conviction to the death penalty.

Both the U.S. and Canada have objected to the death penalty sentencing, labelling it as politically motivated and arbitrary.

Shortly after the presser, Senate Intelligence Chairman Richard Burr (R-N.C.) praised the move.

“I am encouraged by the Justice Department’s actions against Huawei Technologies, which detail the company’s brazen efforts to steal corporate trade secrets, commit fraud, and obstruct justice,” Burr said in a statement. “Huawei is a global bad actor operating at the behest of the Chinese government and intelligence services.”

–Updated at 6:01 p.m.

Tags China Huawei IP theft Richard Burr Telecommunications
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