The Trump administration announced criminal charges against one of China’s largest telecommunications companies Monday, a dramatic move that promises to ratchet up tensions on the eve of trade talks this week between the two countries.
Acting Attorney General Matthew Whitaker told reporters in Washington a pair of indictments had been unsealed in two separate cases. A Brooklyn grand jury charged Huawei as a company, and its chief financial officer, Wanzhou Meng, with money laundering, bank fraud, wire fraud and conspiracy. Huawei also was charged with conspiracy to obstruct justice.
A separate indictment accuses Huawei of stealing trade secrets from U.S. telecom firm T-Mobile. Those charges stem from a civil lawsuit filed by T-Mobile in 2014 over a robot called “Tappy,” which was used in testing smartphones.
“Huawei intentionally conspired to steal intellectual property from an American company in an attempt to undermine the free and fair marketplace,” the Justice Department said in a statement.
Meng, who was arrested in Canada in December, is accused of orchestrating a scheme to violate U.S. sanctions on Iran.
The Brooklyn indictment says Huawei used a Hong Kong shell company to sell equipment in Iran in violation of U.S. sanctions. Meng misled U.S. banks into believing that Hawei had no interest in the Hong Kong company, called Skycom, according to the Justice Department.
The indictment also charges Huawei with conspiracy to obstruct justice by destroying evidence and moving employees out of the U.S. so they could not be called as witnesses.
Meng is a daughter of Huawei’s founder, Ren Zhengfei, who served as an engineer in the People’s Liberation Army from 1974 to 1983. The U.S. is seeking her extradition.
“For over a decade, Huawei employed a strategy of lies and deceit to conduct and grow its business,” said Richard Donoghue, U.S. attorney for the Eastern District of New York.
FBI Director Christopher Wray said the charges “lay bare Huawei’s alleged blatant disregard for the laws of our country and standard global business practices.”
Huawei (pronounced “Wah-way”) is second only to Samsung as the world’s largest supplier of smartphones and has been heavily involved around the world in building the next generation of cellphone networks, known as 5G. The Trump administration has been pushing other countries to exclude the firm from that work, citing security risks.
Last year, six different U.S. intelligence agencies urged Americans not to buy Huawei phones — which are virtually unavailable in the U.S. And President Donald Trump signed a law blocking federal government agencies from using most of the company’s products.
The indictment against a leading Chinese company — and the harsh language senior Trump administration officials used to characterize its conduct — mark a sea change from the Obama administration, which was careful in how it characterized Chinese behavior, even as it secretly saw Chinese hackers siphoning U.S. intellectual property.
Separately, The Wall Street Journal reported on Jan. 16 that federal prosecutors are pursuing a criminal investigation of Huawei for allegedly stealing trade secrets from U.S. business partners, including technology used by T-Mobile to test smartphones.
The investigation grew in part out of civil lawsuits against Huawei, the Journal reported, including one in which a Seattle jury found Huawei liable for misappropriating robotic technology from T-Mobile’s lab in Bellevue, Washington.
In 2012, the House intelligence committee published an investigation concluding that Huawei and another Chinese telecom giant, ZTE, posed a threat to U.S. national security. The firms are essentially arms of the Chinese government, the House concluded, which aid and abet Chinese espionage and could implant spyware that could allow the Chinese government to easily intercept communications or mount cyberattacks on critical infrastructure, such as nuclear plants and power grids.
The companies deny spying for China.
American intelligence officials have long been concerned that Chinese firms insert “back doors” in telecommunications equipment that facilitates eavesdropping. If Chinese companies dominate the construction of 5G networks worldwide, officials fear Chinese spies won’t need back doors — they will have direct access to global telecommunications.
Still, U.S. officials have not put forward hard evidence linking Huawei to spying, and critics have pointed out that American spy agencies vacuum large swaths of private information — with court orders — from U.S. technology companies.
Talks aimed at resolving disputes over Chinese technology and trade policies are due to resume in Washington on Wednesday, led by the U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He.