Charges also Reveal Huawei’s Business in North Korea and
Assistance to the Government of Iran in Performing Domestic Surveillance
WASHINGTON – A superseding indictment was returned yesterday
in federal court in Brooklyn, New York, charging Huawei Technologies Co., Ltd.
(Huawei), the world’s largest telecommunications equipment manufacturer, and
two U.S. subsidiaries with conspiracy to violate the Racketeer Influenced and
Corrupt Organizations Act (RICO).
The 16-count superseding indictment also adds a charge of
conspiracy to steal trade secrets stemming from the China-based company’s
alleged long-running practice of using fraud and deception to misappropriate
sophisticated technology from U.S. counterparts.
The indicted defendants include Huawei and four official and
unofficial subsidiaries — Huawei Device Co., Ltd. (Huawei Device), Huawei
Device USA Inc. (Huawei USA), Futurewei Technologies, Inc. (Futurewei) and
Skycom Tech Co. Ltd. (Skycom) — as well as Huawei’s Chief Financial Officer
(CFO) Wanzhou Meng (Meng).[1] The new
superseding indictment also contains the charges from the prior superseding
indictment, which was unsealed in January 2019.
Richard P. Donoghue, United States Attorney for the Eastern
District of New York; Brian A. Benczkowski, Assistant Attorney General of the
Justice Department’s Criminal Division; John C. Demers, Assistant Attorney
General of the Justice Department’s National Security Division; and Christopher
A. Wray, Director, Federal Bureau of Investigation (FBI), announced the
charges.
Mr. Donoghue thanked the FBI, Homeland Security
Investigations (HSI), U.S. Department of Commerce Office of Export Enforcement
(OEE) and the Defense Criminal Investigative Service (DCIS) agents who are
investigating this case for their tireless work and dedication.
As revealed by the government’s independent investigation
and review of court filings, the new charges in this case relate to the alleged
decades-long efforts by Huawei, and several of its subsidiaries, both in the
U.S. and in the People’s Republic of China, to misappropriate intellectual
property, including from six U.S. technology companies, in an effort to grow
and operate Huawei’s business. The
misappropriated intellectual property included trade secret information and
copyrighted works, such as source code and user manuals for internet routers,
antenna technology and robot testing technology. Huawei, Huawei USA and Futurewei agreed to
reinvest the proceeds of this alleged racketeering activity in Huawei’s
worldwide business, including in the United States.
The means and methods of the alleged misappropriation
included entering into confidentiality agreements with the owners of the
intellectual property and then violating the terms of the agreements by misappropriating
the intellectual property for the defendants’ own commercial use, recruiting
employees of other companies and directing them to misappropriate their former
employers’ intellectual property, and using proxies such as professors working
at research institutions to obtain and provide the technology to the
defendants. As part of the scheme,
Huawei allegedly launched a policy instituting a bonus program to reward
employees who obtained confidential information from competitors. The policy made clear that employees who
provided valuable information were to be financially rewarded.
Huawei’s efforts to steal trade secrets and other
sophisticated U.S. technology were successful.
Through the methods of deception described above, the defendants obtained
nonpublic intellectual property relating to internet router source code,
cellular antenna technology and robotics.
As a consequence of its campaign to steal this technology and
intellectual property, Huawei was able to drastically cut its research and
development costs and associated delays, giving the company a significant and
unfair competitive advantage.
When confronted with evidence of wrongdoing, the defendants
allegedly made repeated misstatements to U.S. officials, including FBI agents
and representatives from the U.S. House Permanent Select Committee on
Intelligence, regarding their efforts to misappropriate trade secrets. Similarly, the defendants engaged in
obstructive conduct to minimize litigation risk and the potential for criminal
investigations, including the very investigation that led to this prosecution.
The superseding indictment also includes new allegations
about Huawei and its subsidiaries’ involvement in business and technology
projects in countries subject to U.S., E.U. and/or U.N. sanctions, such as Iran
and North Korea – as well as the company’s efforts to conceal the full scope of
that involvement. The defendants’
activities, which included arranging for shipment of Huawei goods and services
to end users in sanctioned countries, were typically conducted through local
affiliates in the sanctioned countries.
Reflecting the inherent sensitivity of conducting business in
jurisdictions subject to sanctions, internal Huawei documents allegedly
referred to such jurisdictions with code names.
For example, the code “A2” referred to Iran, and “A9” referred to North
Korea.
Huawei employees also allegedly lied about Huawei’s
relationship to Skycom, falsely asserting it was not a subsidiary of
Huawei. The company further claimed that
Huawei had only limited operations in Iran and that Huawei did not violate U.S.
or other laws or regulations related to Iran.
In fact, the indictment alleges Skycom was Huawei’s unofficial
subsidiary that, among other services, assisted the Government of Iran in
performing domestic surveillance, including during the demonstrations in Tehran
in 2009.
The charges in the superseding indictment are allegations,
and the defendants are presumed innocent unless and until proven guilty beyond
a reasonable doubt in a court of law.
The government’s investigation is ongoing. Individuals with knowledge of misconduct by
Huawei, its subsidiaries, employees or agents should contact the FBI’s New York
Field Office at 1-800-CALL-FBI.
The investigation is being jointly conducted by the FBI’s
New York Field Office, HSI’s New York Field Office, OEE’s New York Field Office
and DCIS’s Southwest and Northeast Field Offices. Agents from the FBI, HSI and OEE offices in
Dallas provided significant support and assistance. The government’s case is being handled by the
U.S. Attorney’s Office for the Eastern District of New York, the Justice
Department Criminal Division’s Money Laundering and Asset Recovery Section
(MLARS) and the Justice Department National Security Division’s
Counterintelligence and Export Control Section (CES).
Assistant U.S. Attorneys Alexander A. Solomon, Julia Nestor,
David K. Kessler and Sarah Evans, MLARS Trial Attorneys Laura Billings and
Christian Nauvel and CES Trial Attorneys Thea D. R. Kendler and David Lim are
in charge of the prosecution, with assistance provided by Assistant U.S.
Attorney Brendan G. King of the Civil Division of the U.S. Attorney’s Office
for the Eastern District of New York and Trial Attorneys Margaret O’Malley and
John Riesenberg of DOJ’s Office of International Affairs. Additional Criminal Division and National
Security Division Trial Attorneys and Assistant U.S. Attorneys within U.S.
Attorney’s Offices for the Northern District of Texas, the Northern District of
Illinois, the Eastern District of Texas, the Western District of Washington and
the Northern District of California have provided valuable assistance with
various aspects of this investigation.
The Defendants:
Huawei Technologies Co. Ltd.
Huawei Device Co., Ltd.
Huawei Device USA Inc.
Futurewei Technologies, Inc.
Skycom Tech Co. Ltd.
E.D.N.Y. Docket No.
18-CR-457 (AMD)
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