One indictment accuses Huawei of stealing secrets for a T-Mobile USA phone-testing robot named Tappy, echoing a civil suit filed in 2014. The other criminal case alleges Huawei committed bank fraud by violating sanctions against doing business with Iran.
U.S. prosecutors filed criminal charges against Huawei Technologies, China’s largest technology company, alleging it stole trade secrets from American rival T-Mobile USA and committed bank fraud by violating sanctions against doing business with Iran.
Huawei has been the target of a broad U.S. crackdown, including allegations it sold telecommunications equipment that could be used by China’s Communist Party for spying. The charges filed Monday also mark an escalation of tensions between the world’s two largest economies, which are mired in a trade war that has roiled markets.
In a 13-count indictment in Brooklyn, New York, the government alleged Huawei, two affiliated companies and Chief Financial Officer Wanzhou Meng of bank and wire fraud as well as conspiracy in connection with business in Iran.
A 10-count indictment in Washington state accused the company of stealing trade secrets from T-Mobile and offering bonuses to employees who succeeded in getting technology from rivals.
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That charge builds on a 2014 civil suit by T-Mobile in which it claimed Huawei sought to replicate a cellphone-testing robot, nicknamed Tappy, that after its employees illicitly obtained parts, software and specifications from T-Mobile’s Bellevue lab. A jury later awarded T-Mobile $4.8 million for the misappropriated trade secrets.
The twin criminal cases “expose Huawei’s brazen and persistent actions to exploit American companies and financial institutions, and to threaten the free and fair global marketplace,” Christopher Wray, director of the Federal Bureau of Investigation, said at a press conference in Washington announcing the charges.
Huawei didn’t respond immediately to requests for comment on the allegations.
Prosecutors in Manhattan said that Huawei concealed its relationship with Skycom Tech Co. Ltd, a company in Iran, in violation of U.S. laws. Meng “personally made a presentation in August 2013 to an executive of one of Huawei’s major banking partners in which she repeatedly lied about the relationship,” prosecutors said in a statement announcing the charges. Skycom was also charged.
Charges include bank and wire fraud, conspiracy and violations of the International Emergency Economic Powers Act. In addition, Huawei and Huawei USA are accused of conspiring to obstruct justice.
Prosecutors also alleged that Huawei began a “concerted effort” in 2012 to steal information from T-Mobile and even offered bonuses to employees who could get their hands on the technologies of rivals.
When T-Mobile’s civil suit was filed in 2014, a U.S. Huawei spokesman blamed the episode on “two Huawei employees acting inappropriately in their zeal to better understand the customer’s quality testing requirements,” and said they had been fired.
However, the criminal indictment unsealed in Seattle describes a constant stream of demands from Huawei’s headquarters in China that its employees in Bellevue obtain information that T-Mobile declined to provide.
Huawei engineers secretly took photos of T-Mobile’s robot, took measurements of parts of the robot and, in one instance, stole a piece of the robot, prosecutors said.
Meng, 46, the daughter of the company’s founder, was arrested in Canada Dec. 1 on allegations that she committed fraud to sidestep sanctions against Iran. Meng is free in Vancouver, staying at her $4.2 million mansion with GPS monitoring, after posting bail of C$10 million ($7.5 million) as she fights extradition to the U.S. to face criminal charges.
The U.S. is asking that the Canadian authorities extradite Meng. Canada’s justice minister then has up to 30 days to assess the request. If he issues an “authority to proceed,” that means Canada is officially moving to extradition hearings. If so, they would likely be scheduled months later.