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 Dear readers. 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).

 

Chinese Telecommunications CONGLOMERATE HUAWEI

and Subsidiaries Charged in Racketeering Conspiracy and Conspiracy to Steal Trade Secrets

INDICTED

Meng Wanzhou, also known as Cathy Meng and Sabrina Meng, is a Chinese business executive. She is deputy chairwoman of the board and chief financial officer of China's largest private company, telecom giant Huawei founded by her father Ren Zhengfei.

Mon, March 29, 2021, 8:45 PM

Lawyers for Meng Wanzhou, Huawei Technologies' chief financial officer, argued Monday that the US conspiracy and fraud charges against her are only a "concern of China" and unrelated to the United States.

Extraditing Meng from Canada would undermine Chinese sovereignty in international law, they said.

Referring to allegations that Meng lied to HSBC bank during a 2013 presentation about a Huawei subsidiary's activities in Iran -- the pillar of the US prosecution and extradition request -- defense lawyer Gib van Ert said the meeting was in China and should not concern the United States or Canada.

"If any laws were broken that day, that's the concern of China in whose territory the events occurred," van Ert, a new member of Meng's legal team, told a Canadian court.

"What happened on August 22, 2013 in a Hong Kong restaurant between a Chinese national and an Anglo-Chinese bank is -- as a matter of international law -- no business of the US."

The newest line of attack in Meng's bid to avoid extradition to the United States comes just one week after Ottawa and Washington imposed economic sanctions against senior Chinese government officials, escalating already heightened international tensions.

The United States alleges Meng misled HSBC by distancing Huawei Technologies from subsidiary Skycom regarding its activities in Iran in breach of US sanctions.

Meng and Huawei deny any wrongdoing.

Van Ert also said Meng is suffering "personal and real" consequences of being "marooned in a foreign country," and warned the Canadian judge she would drag Canada into American violations of international law if she sends Meng to the United States.

"The consequences for that violation for Ms. Meng are personal and real," van Ert said. "She has spent two years of her life and counting marooned in a foreign country, far from home, friends and her ordinary life.

"All that is done is quite stark violation of basic principles of international law; if Canada assists in extraditing Ms. Meng to the US, it will itself violate international law."

Meng has been under supervision and nightly curfew in her US$11-million Vancouver mansion since her December 2018 arrest.

Canada's attorney general responded to the allegations of international law violations in a court filing.

"Questions of a requesting state's jurisdiction to prosecute are primarily for the courts of the foreign state," Canadian lawyers wrote in February 24 court filings. "The Applicant cannot establish an abuse."

China's foreign ministry lashed out at Canada's sanctions, retaliating with its own against Canadian officials.

"The Chinese government is firmly determined to safeguard its national sovereignty, security and development interests," a Chinese spokesman said March 22.

Earlier this month, China held trials for two Canadians jailed days after Meng's arrest, plunging diplomatic relations into crisis



DOWNLOAD INDICTMENT HERE BY CLICKING ON PICTURE BELOW

United States District Court Eastern District of New York

Charges also Reveal

Huawei’s Business in North Korea and Assistance to the Government of Iran in Performing Domestic Surveillance

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; Richard P. Donoghue, U.S. Attorney for the Eastern District of New York and Christopher A. Wray, Director, FBI, announced the charges.

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).  The new superseding indictment also contains the charges from the prior superseding indictment, which was unsealed in January 2019.

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 FBI’s New York Field Office, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (HSI) New York Field Office, U.S. Department of Commerce Office of Export Enforcement’s (OEE) New York Field Office and the Defense Criminal Investigative Service’s (DCIS) Southwest and Northeast Field Offices are jointly conducting the investigation.  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 Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and the 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 the Criminal Division’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.