Charges involve both violating sanctions against Iran and stealing device testing technology from T-Mobile US

The U.S. Department of Justice is pursuing 23 charges against Huawei, its CFO and two company affiliates, alleging financial fraud and violations of U.S. trade rules as well as corporate espionage related to T-Mobile US’ development of a robot for testing mobile devices.

Huawei released a statement saying that it is “disappointed to learn of the charges” and denying them, saying that it is unaware of any wrongdoing by its CFO and that it believes the U.S. courts will ultimately confirm that it has not violated the law.

In New York, Huawei, its CFO Wanzhou Meng and two of the company’s affiliates — Huawei Device USA and Skycom Tech, based in Iran — face a 13-count indictment that outlines what the DOJ described as more than a decade of criminal activity that violated U.S. trade rules and sanctions on Iran.

“The criminal activity alleged in this indictment goes back at least 10 years and goes all the way to the top of the company,”Acting Attorney General Matthew Whitaker told reporters during a press conference.

Whitaker said that as early as 2007, Huawei employees allegedly “began to misrepresent the company’s relationship with its Iranian affiliate” — Skycom.

“Huawei employees allegedly told banking partners that Huawei had sold its ownership interest in Skycom—but these claims were false.  In reality, Huawei sold Skycom to itself,” Whitaker said. “By claiming that Skycom was a separate company—and not an affiliate which Huawei controlled—Huawei allegedly asserted that all of its Iran business was in compliance with American sanctions.  These alleged false claims led banks to do business with the company and, therefore, to unknowingly violate our laws.  One bank facilitated more than $100 million worth of Skycom transactions through the United States and in just four years.”

Huawei is accused of lying about other financial relationships in order to manipulate banks, and of lying to the U.S. federal government and attempting to obstruct justice “by concealing and destroying evidence and by moving potential government witnesses back to China,” according to Whitaker.

A 10-count federal indictment from a Seattle grand jury lays out corporate espionage charges which center around Huawei activities between 2012 to 2014 and which were previously the subject of a lawsuit between Huawei and T-Mobile US. The mobile carrier accused Huawei of stealing information about a device testing robot, called “Tappy,” which T-Mobile US had developed in order to improve handset quality. The trade secrets conflict over the robot ultimately led to T-Mobile US dismantling its device supplier relationship with Huawei, and a $4.8 million legal judgement against Huawei when T-Mobile US won the case in 2017.

Tappy “[performed]touches on the phone the same way a human being would – only much more frequently in a shorter period of time – and [recorded]the results. Simple in concept, but difficult in execution, the robot … reduced the costs of testing and increased the quality of the diagnostic results. Since implementing testing using the robot, phone returns for T-Mobile have declined significantly and testing time has decreased dramatically,” T-Mobile US said in its original filing.

The carrier said it had put multiple non-disclosure agreements and security procedures in place so that information about the testing robot at the company’s labs in Bellevue, Wash., was protected. T-Mobile US banned one Huawei employee from the lab after he took unauthorized pictures of the robot, and a second Huawei employee took Tappy’s robotic finger in order to make measurements and pass details about it on to colleagues in China. T-Mobile US said in its lawsuit that Huawei’s actions cost T-Mobile tens of millions of dollars because it scuttled the supplier agreement, and that Huawei was going to reap hundreds of millions of dollars in benefit from having a testing robot comparable to Tappy.

Ultimately, Huawei did admit that its employees had acted inappropriately and were fired — but maintained that their actions were the result of “zeal to better understand the customer’s quality testing requirements,” as a Huawei spokesman told The Seattle Times in 2014. The jury found that Huawei had violated its agreements with T-Mobile US and did misappropriate trade secrets, but did not find that the conduct was “willful and malicious” and awarded no damages related to that claim. The $4.8 million award was in regards to Huawei breaching agreements with T-Mobile US, including its handset and accessory supply agreement.

Now, however, the FBI says that it “obtained emails revealing that in July 2013, Huawei offered bonuses to employees based on the value of information they stole from other companies around the world, and provided to Huawei via an encrypted email address.”

“Lying, cheating, and stealing are not suitable corporate growth strategies,” said Commerce Secretary Wilbur Ross. Ross went on to characterize the indictments as law enforcement actions that “are wholly separate from our trade negotiations with China.”

“As I told high-level Chinese law enforcement officials in August: we need more law enforcement cooperation with China. China should be concerned about criminal activities by Chinese companies—and China should take action,” Whitaker said.

The post US brings charges against Huawei, alleging fraud, sanction violations, stealing trade secrets appeared first on RCR Wireless News.