Chinese telecommunications giant Huawei has been accused by US department of justice of corporate espionage. Now the company is facing US federal charges over theft and stealing of trade secrets.
Initial charges included money laundering, conspiracy to defraud the US, obstruction of justice, and sanctions violations.
Recently expanding its charges, the US Department of Justice filed a 16 count indictment against Huawei that included charges under the Racketeer Influenced and Corrupt Organizations Act (RICO). The indictment alleges that as long ago as 2000, Huawei stole trade secrets from at least six US companies. The companies are not named, but previous lawsuits by Cisco and Motorola against the Chinese company are mirrored in the indictment.
This has also led to expansion of the defendants list, which now includes Huawei CFO WanzhouMeng, 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).
The fresh allegations by US may also increase the potential punishment to be faced by the company.
Huawei didn’t respond to a request for comment, but in an interview said that the indictment “is part of the Justice Department’s attempt to irrevocably damage Huawei’s reputation and its business for reasons related to competition rather than law enforcement.”
The previous allegations already posed a significant threat to Huawei. If convicted of defrauding banks to conceal its dealings with Iran, Huawei could be excluded from the US financial system, which would make it much harder for the company to do business around the world.
The RICO charges give prosecutors yet another way to block Huawei from US banks if it isn’t convicted on the fraud charges. “It’s not just an escalation but a doubling down,” says Jacob S. Frenkel, a former federal prosecutor who’s now a government investigations and securities enforcement attorney for Dickinson Wright.
Frenkel says Huawei will most likely try to negotiate a plea deal to avoid the most extreme consequences. The new charges will give the US government more leverage in those negotiations.
Last year the US Department of Commerce added Huawei to a list of companies considered a threat to US national security, meaning it would need permission to acquire technology developed in the US, including microchips and operating systems such as Android.
Similar restrictions almost forced another Chinese telecom company out of business in 2018 when the US government imposed sanctions on ZTE for selling equipment to Iran.
The new charges come after the FBI revealed it was investigating more than 1,000 cases of Chinese theft of US technology.
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