Justice Department Announces Indictments Against Huawei

Acting Attorney General Matt Whitaker, center, announces an indictment of Chinese telecommunications companies including Huawei, on violations including bank and wire fraud Jan. 28 at the Justice Department in Washington.

Acting Attorney General Matt Whitaker, center, announces an indictment of Chinese telecommunications companies including Huawei, on violations including bank and wire fraud Jan. 28 at the Justice Department in Washington. Jacquelyn Martin/AP

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U.S. officials say Chinese manufacturer flouted Iran sanctions, committed fraud, and stole robots.

Not long ago, U.S. companies like T-Mobile boasted of their partnerships with Chinese companies like Huawei. The future of such business relationships is not what it once was, especially not after today, and that’s likely to further stress the already tense relationship between Washington and Beijing.

Huawei executives stole trade secrets and equipment—a robot!—from competitors, flouted U.S. sanctions on Iran, and lied to banks and investors about their activities, the U.S. Justice Department said on Monday, announcing a 13-count indictment against Huawei officials and subsidiaries for wire fraud, sanctions fraud, money laundering and other crimes.

Many of the charges concern alleged actions brought to light in 2014, when T-Mobile sued Huawei for stealing trade secrets. Among the other claims, T-Mobile said Huawei employees surreptitiously took photos and measurements of T-Mobile’s “Tappy,” a cell-phone-testing robot. At one point, Huawei spies even tried to steal the robot’s arm so it could be replicated in China.

The company also “paid cash” to employees around the world for stealing trade secrets from companies that they were working with, Annette Hayes, the First Assistant U.S. Attorney for the Western District of Washington, said in a press conference on Monday.

In 2007, the indictment alleges, Huawei violated international sanctions by doing business with Iran via a subsidiary, called Skycom. According to Acting U.S. Attorney General Matthew Whitaker, Huawei officials made it appear on paper as though they divested of the company, when in fact, “They had sold Skycom to itself.”

They then misrepresented their ownership in the Iran-dealing company to numerous U.S. banks and other investors, causing U.S. financial firms and investors to “unknowingly violate our laws,” Whitaker said.

Peter Mattis, a research fellow in China Studies at the Victims of Communism Memorial Foundation, said, “The indictments are useful for a few reasons. First, they put good information into the public realm. It wouldn't be there if the Department of Justice did not think it could hold up in court.”

The company has increasingly been in the news since Huawei Chief Financial Officer Wanzhou Meng was arrested in Vancouver in December. Meng, who figures prominently in the indictments, remains in Canada on $7.5 million in bail, according to Bloomberg. The United States is seeking her extradition.