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Economy & Business

Huawei Charged with Racketeering, Defying U.S. Sanctions in Business with Iran, North Korea

Area of Huawei’s Cyber Security Lab at its factory campus in Dongguan, Guangdong Province, China, March 25, 2019. (Tyrone Siu/Reuters)

Chinese telecom giant Huawei and two of its American subsidiaries were charged by the Department of Justice for racketeering and conspiracy to steal trade secrets, according to a federal indictment filed Thursday.

The new charges will be added to charges of fraud and intellectual property theft that were levelled at Huawei last January.

The DOJ detailed the allegations in a lengthy press release, showing how Huawei had engaged in a “decades-long” operation to “misappropriate intellectual property” from six rival U.S. technology firms “in an effort to grow and operate Huawei’s business.” The stolen goods included trade secrets, copyrighted code and manuals to build internet routers, antennas, and robot testers.

Huawei allegedly engages in theft in direct interactions with rival firms by entering confidentiality agreements with the intention of violating them, and by recruiting rival employees to steal company secrets.

“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 DOJ said.

The new charges also stemmed from allegations that Huawei was blatantly violating U.S. and international sanctions against countries like Iran and North Korea by conducting business through “local affiliates.”

“Reflecting the inherent sensitivity of conducting business in jurisdictions subject to U.S., E.U. and/or U.N. sanctions, internal HUAWEI documents referred to such jurisdictions with code names,” the suit states. “For example, the code ‘A2’ referred to Iran, and ‘A9’ referred to North Korea.”

The Trump administration has conducted a months-long campaign against Huawei, in response to fears that the firm’s global impact and close relationship to the Communist Party could comprise national security. But last month, the Pentagon blocked attempts by the Commerce Department to tighten regulations on Huawei’s dealings with U.S. firms, due to concerns that limiting the multi-billion-dollar company’s status as a valued customer could damage the U.S. economy.

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