US files superseding indictment against Huawei, CFO Meng

The United States government on Thursday added fresh charges to its case against Chinese smartphone maker Huawei Technologies Co Ltd – a case that has angered China and hurt US-Chinese diplomatic relations.

The superseding indictment was filed in the federal court in Brooklyn, New York. It charges Huawei with conspiring to violate the Racketeer Influenced and Corrupt Organizations Act and to steal trade secrets from six US technology companies to grow its business.

The indictment also contains new allegations about the company’s involvement in countries subject to sanctions, such as Iran and North Korea.

Among other accusations, it says Huawei installed surveillance equipment in Iran that was used to monitor, identify, and detain protesters during the 2009 anti-government demonstrations in Tehran.

The indictment is “part of an attempt to irrevocably damage Huawei’s reputation and its business for reasons related to competition rather than law enforcement,” Huawei said in a statement.

It called the racketeering accusation “a contrived repackaging of a handful of civil allegations that are almost 20 years old.”

Huawei is the world’s largest telecommunications equipment maker. It pleaded not guilty last year to an indictment unsealed against the company in January 2019, charging it with bank and wire fraud, violating sanctions against Iran, and obstructing justice.

Its Chief Financial Officer Meng Wanzhou was arrested in December 2018 in Canada on charges that are in that indictment. She has said she is innocent and is fighting extradition.

New charges

The new trade secret theft charges relate to internet router source code, cellular antenna technology, and robotics.

For example, beginning in 2000, Huawei and its subsidiary Futurewei Technologies Inc are accused of misappropriating operating system source code for internet routers, commands used to communicate with the routers, and operating system manuals, from a company in Northern California. Futurewei was added as a defendant in the latest indictment.

Huawei then sold their routers in the US as lower-cost versions of the US company’s products, the indictment says.

Although the US company is not identified, Cisco Systems sued Huawei in Texas in 2003 over copyright infringement related to its routers.

Huawei is also accused of recruiting employees from other companies, making efforts to get intellectual property from those companies and using professors at research institutions to obtain technology.

“The indictment paints a damning portrait of an illegitimate organization that lacks any regard for the law,” US Senate Intelligence Committee chairman Richard Burr and vice chairman Mark Warner said in a joint statement.

The Republican and Democratic Senators called it “an important step in combating Huawei’s state-directed and criminal enterprise.”

The indictment also accuses Meng and Huawei of conspiring to defraud HSBC and other banks by misrepresenting Huawei’s relationship with a company that operated in Iran.

It references reporting by Reuters from seven years ago about Huawei’s ties to Skycom Tech Co Ltd, which offered to sell US-origin goods to Iran, in violation of US law. It also mentions news reports in Reuters and the Wall Street Journal that claimed Huawei assisted the government of Iran in domestic surveillance. 

In addition to accusing Huawei of lying about its operations in Iran, the latest indictment says Huawei falsely represented to banks that it had no business in North Korea.

The US Commerce Department in May put Huawei on a trade blacklist that restricted US suppliers from selling parts and components to the company.

On Thursday, in some positive news for the company, the Commerce Department announced it was extending a temporary general license for 45 days allowing US companies to continue doing some business with Huawei. The move is intended to maintain existing equipment and allow providers in rural communities more time to find alternatives to the company’s networks.

At the same time, the US is weighing new regulations to stop more foreign shipments of products with US technology to Huawei.

And Washington has continued to pressure other countries to drop Huawei from their cellular networks over its claim the equipment could be used by Beijing for spying.