Huawei denies allegations contained in US Department of Justice indictments

Chinese giant claims the company, its workers, and US subsidiary are in the clear, and American courts will agree with it.
Written by Chris Duckett, Contributor

Huawei has denied any of the "asserted violations" made by the US Department of Justice in a pair of indictments unsealed on Monday.

The first being a 10-count indictment alleging the company conspired to steal intellectual property from T-Mobile and subsequently obstructed justice, and the second is a 13-count indictment against the company and its CFO Meng Wanzhou.

"The Company denies that it or its subsidiary or affiliate have committed any of the asserted violations of US law set forth in each of the indictments, is not aware of any wrongdoing by Ms Meng, and believes the US courts will ultimately reach the same conclusion," Huawei said.

Addressing each indictment, Huawei dismissed the intellectual property theft indictment on the basis that a Seattle jury "found neither damages nor willful and malicious conduct on the trade secret claim".

However, the US is charging the company with obstruction of justice on this case. The alleged activity happened during 2012-13 and relates to Huawei's attempt to build a robot similar to the one T-Mobile was using at the time to test mobile phones. It is alleged that a number of emails were exchanged between Huawei China and Huawei USA employees, containing authorised photos of the T-Mobile Tappy robot, as well as other confident information in violation of non-disclosure agreements. The activity culminated in a Huawei China employee gaining unauthorised access to the robot twice, it is alleged, and a Huawei USA employee stealing one of the robot's arms for photographing and measuring until it was returned the next day.

The US is further alleging the company covered up the theft, and that Huawei China launched an employee bonus program for theft of competitor's secrets, which Huawei USA human resources had to point out to American employees as being "expressly prohibited".

"The email emphasized that 'in some foreign countries and regions such a directive and award program may be normal and within the usual course of business in that region'," the Department of Justice wrote.

On the charges relating to its conduct with its Iranian-affliate Skycom and its CFO, Huawei said soon after Meng's arrest in Vancouver on December 1 that the US government had rebuffed its approaches.

"After Ms. Meng's arrest, the company sought an opportunity to discuss the Eastern District of New York investigation with the Justice Department, but the request was rejected without explanation," Huawei said.

The US is alleging Huawei told banks it had sold Skycom when it had not, and used the false sale to claim it was in compliance with US sanctions on Iran despite that not being the case, resulting in banks working with the company also violating the sanctions.

Acting Attorney-General Matthew Whitaker also alleges Huawei lied to the US government and attempted to obstruct justice by concealing and destroying evidence, and moved potential government witnesses back to China.

"As charged in the indictment, Huawei and its subsidiaries, with the direct and personal involvement of their executives, engaged in serious fraudulent conduct, including conspiracy, bank fraud, wire fraud, sanctions violations, money laundering, and the orchestrated obstruction of justice," US Attorney Richard Donoghue said.

"For over a decade, Huawei employed a strategy of lies and deceit to conduct and grow its business."

FBI director Christopher Wray said companies like Huawei pose a threat to national and economic security.

"These charges lay bare Huawei's alleged blatant disregard for the laws of our country and standard global business practices," he said.

The US is seeking the extradition of Huawei CFO Meng Wanzhou from Canada, where she is currently released on bail in Vancouver, awaiting a hearing on February 6.

At the same time US authorities were unsealing the indictments, Australia telco TPG said it was ending its mobile network rollout due to a ban on Huawei 5G equipment handed down by Canberra.

As well as Australia, Huawei's 5G equipment in recent months has also far been banned or limited by the US, and New Zealand, while the UK's BT said it will be stripping Huawei from EE's mobile core.

On Friday, the New York Times reported Vodafone Group had temporarily stopped buying Huawei for its 5G core network.

China urges end to US crackdown on Huawei

China has urged Washington to "stop the unreasonable crackdown" on Huawei and other companies following the unsealing of the US indictments.

A foreign ministry statement read on Tuesday on state TV news complained US authorities "mobilised state power to blacken" some Chinese companies "in an attempt to strangle fair and just operations".

It said there was a "strong political motivation and political manipulation".

"We strongly urge the United States stop the unreasonable crackdown on Chinese companies including Huawei and treat Chinese companies fairly and justly," the statement said.

It also said Beijing will "firmly defend" Chinese companies but gave no indication how it might respond to the US indictment of Huawei.

Updated at 5.52pm AEST, January 29, 2019: additional comments about the Chinese foreign ministry's statement were added.

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