Huawei Charged With Racketeering, Stealing US Technology

Huawei and four of its subsidiaries -- including two U.S. companies -- were charged with racketeering and conspiracy to steal trade secrets as part of a decadeslong scheme to steal U.S. technology, the Justice Department said Feb. 13. The indictment charges Huawei, Huawei Device Co., Huawei Device USA Inc., Futurewei Technologies Inc. and Skycom Tech Co., and Wanzhou Meng, Huawei’s chief financial officer, with attempts to steal intellectual property, including from six U.S. companies. The stolen property includes trade secret information, source codes, antenna technology and robot testing technology, the Justice Department said, all obtained after Huawei told and incentivized employees to steal confidential information from other companies.

To steal technology, Huawei allegedly entered into confidentiality agreements with companies but then violated the terms of the agreement, using the technology for their own commercial benefit. The Chinese technology giant also recruited employees from other companies to steal their former employers' intellectual property and used professors at research institutions to steal technology. The scheme included a “bonus program” for employees who stole technology or information, the Justice Department said, which “made clear” that employees who gave Huawei “valuable information” would be rewarded through payments. The efforts were largely “successful,” the Justice Department said. The company was able to “drastically” reduce costs related to research and development, giving it a “significant and unfair competitive advantage.”

Along with stealing U.S. technology and trade secrets, Huawei sold shipments to countries sanctioned by the U.S., the European Union and the United Nations, the Justice Department said, such as Iran and North Korea. Huawei allegedly tried to hide the shipments -- which were sent to sanctioned countries through “local affiliates” in the region -- by referring to the countries with code names. Huawei used the code “A2” to refer to Iran, the Justice Department said, and “A9” to refer to North Korea.

When U.S. authorities presented the evidence to Huawei officials, the officials “made repeated misstatements” and “engaged in obstructive conduct to minimize litigation risk and the potential for criminal investigations.” Employees also allegedly lied about Huawei’s relationship with Skycom, saying it was not a Huawei subsidiary. Huawei said it had “only limited operations” in Iran and did not violate U.S. sanctions.

In a statement, Huawei said the indictment is an “attempt to irrevocably damage Huawei’s reputation and its business for reasons related to competition rather than law enforcement.” The company said it will prove the charges are “both unfounded and unfair.”