The chance you’ll see Huawei phones and routers in the US grew bleaker today, as Chinese telecom firm has officially been criminally charged by the US government.
Huawei, now the No. 2 smartphone manufacturer in the world ahead of Apple, faces 23 criminal charges spanning two separate indictments by the US Department of Justice. It breaks down to 13 counts of financial fraud, Iran sanctions violations, and money laundering, and 10 counts of theft and charges stemming from that action.
“Criminal activity goes back at least 10 years and goes all the way to the top of the company,” said US Attorney General Matthew Whitaker in a press conferencing unsealing the indictments.
Doing business with Iran and covering it up
The first set of criminal charges surround a Huawei CFO Wanzhou Meng and a little known affiliate named Skycom. Meng, who happens to be the Huawei co-founder’s daughter, was arrested in Canada in early December and faces extradition to the US.
Skycom is said to be a Huawei affiliate that was doing business in Iran, though the US government accuses Huawei of covering up this fact with lying and committing bank and wire fraud to cover its tracks. It was all in an effort to undermine US sanctions, according to the Department of Justice.
“As early as 2007, Huawei employees began to misrepresent its relationship with its Iranian affiliate,” said Whitaker. “Huawei employees had allegedly told banking partners that Huawei had sold its ownership interest in Skycom.”
That didn’t happen according to the indictment, with Whitaker noting, “In reality, Huawei had sold Skycom to itself.”
You may recall that Chinese telecom firm and Huawei rival ZTE illegally did business with Iran and meticulously covered it up. It culminated in fines and a seven-year ban on doing business with US companies, essentially giving a ‘death sentence’ to the Android phone maker.
In ZTE’s most recent case, President Trump stepped in to let ZTE off the hook. This decision came at the urging of Chinese President Xi and around the same time China helped facilitate a meeting between the US President and North Korea’s leader.
Tappy on trial
The second indictment against Huawei surrounds the theft of trade secrets in 2012. T-Mobile made a phone-testing robot named ‘Tappy’
Huawei allegedly wanted to build their own robot for testing phones, so its engineers secretly took photos measurements of ‘Tappy.’ It’s also accused of stealing a piece of the robot so that the Huawei engineers in China could try to replicate it, according to the Department of Justice.
When T-Mobile threatened to sue, Huawei claimed that this theft was by ‘route actors’ within the company. However, the US government says it has emails that point to a conspiracy to steal secrets from T-Mobile and that it was indeed a company-wide effort.