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Huawei crackdown

US taps mafia law to charge Huawei over trade secret theft

New allegation points to North Korea dealings stemming back to 2008

The latest U.S. crackdown on Huawei might complicate the ongoing trade negotiations with China to follow up on the "phase one" deal signed in January.   © Reuters

PALO ALTO, U.S. -- The Justice Department added to its already-lengthy list of charges against Huawei Technologies in an indictment announced Thursday, invoking an anti-racketeering law famed for taking down mobsters.

Huawei made successful "decades-long efforts" to steal intellectual property from victims including six U.S. technology companies, the department said in a news release. This included source code and user manuals for internet routers, antenna technology, and robot-testing technology, it said.

The company was also accused of covering up North Korea activities the indictment said began no later than 2008. Contrary to the company's claim that none of its entities had dealings there, Huawei was in fact "involved in business activities in North Korea, including numerous telecommunications projects," it alleged. Huawei told a supplier in 2013 that shipments to North Korea should not include Huawei's logo, according to the indictment.

The 16-count indictment at a federal court in New York "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," according to the news release.

It supersedes a 13-count indictment from January 2019 that included financial fraud, money laundering, obstruction of justice, and sanctions violations.

Huawei is now also charged with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act, historically used against organized crime.

The Chinese telecommunications conglomerate allegedly used confidentiality agreements with victims to gain access to intellectual property, recruiting workers at companies and directing them to misappropriate their former employers' intellectual property for its own commercial use.

Huawei also used such proxies as professors at research institutions to get its hands on technologies, the Justice Department said.

"As part of the scheme, Huawei allegedly launched a policy instituting a bonus program to reward employees who obtained confidential information from competitors," the news release said. "The policy made clear that employees who provided valuable information were to be financially rewarded."

Huawei called the latest allegations old news.

"This new 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 company said Thursday.

"The 'racketeering enterprise' that the government charged today is nothing more than a contrived repackaging of a handful of civil allegations that are almost 20 years old and that have never been the basis of any significant monetary judgment against Huawei. The government will not prevail on these charges which we will prove to be both unfounded and unfair."

Huawei elaborated Friday in a longer statement that called intellectual property disputes "common in international business."

"According to public records, from 2009 to 2019, Apple was involved in 596 intellectual property lawsuits and Samsung in 519," it said. "Huawei was involved in 209."

"No company can become a global leader by stealing from others," the statement said. "By the end of 2018, Huawei had been granted 87,805 patents, including 11,152" in the U.S. 

"None of our products or technologies have been developed through the theft of trade secrets," the statement said. "Huawei's development is the result of our huge investment in R&D and the hard work of our employees over the past three decades."

Theft of trade secrets remains a sticking point in Sino-American relations. Days ago, the U.S. indicted four members of the Chinese People's Liberation Army in the 2017 hacking of credit bureau Equifax that authorities say compromised personal information on nearly half of all Americans.

The new charges against Huawei may further complicate trade negotiations as Washington and Beijing consider following up on the "phase one" deal they signed in January.

The indicted defendants are Huawei and "official and unofficial" subsidiaries Huawei Device, Huawei Device USA, Futurewei Technologies and Skycom Tech, as well as Huawei CFO Meng Wanzhou, who was previously charged with fraud by the U.S. and awaits a Canadian court decision after her first extradition hearing last month.

Huawei is also charged with violating U.S. sanctions on Iran and with assisting the Iranian government in carrying out domestic surveillance.

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