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US charges Huawei with fraud and stealing trade secrets

Sky News logo Sky News 28/01/2019

US authorities have charged Huawei with fraud - and have accused the Chinese tech giant of stealing trade secrets from T-Mobile.

a sign hanging off the side of a building: Huawei is one of the biggest smartphone makers in the world © Getty Huawei is one of the biggest smartphone makers in the world

The Justice Department unsealed two indictments against the smartphone maker, including counts of bank fraud, conspiracy to commit wire fraud, and violating the International Emergency Economic Powers Act.

Huawei is banned from selling its phones in the US © Getty Huawei is banned from selling its phones in the US

Thirteen charges were filed in New York, and another 10 filed in Washington included an allegation that the company stole trade secrets from T-Mobile, a US phone firm.

Huawei has insisted it settled its dispute with T-Mobile in 2017, over accusations that it had stolen experimental robotics technology known as Tappy.

It was designed to mimic human fingers and was used to test smartphones that were in production.

The indictment claims that Huawei then tried to obstruct justice when T-Mobile threatened to sue its foreign rival in a federal court in Seattle.

It also includes an internal Huawei announcement that the company offered bonuses to employees who successfully stole confidential information from other firms.

FBI director Christopher Wray said the allegations showed that the US must "consider carefully the risks that companies like Huawei pose if we allow them into our telecommunications infrastructure".

a person wearing a white shirt and black hair: Meng Wanzhou is a long-serving executive at the company. Pic: Huawei © Other Meng Wanzhou is a long-serving executive at the company. Pic: Huawei

The Chinese authorities have condemned the indictments, a Ministry of Industry and Information Technology spokesperson describing them as "unfair and immoral".

On Tuesday China's foreign ministry called on Washington to "stop the unreasonable crackdown" on Huawei and other companies.

A statement read on state TV news accused US authorities of mobilising state power smear some Chinese companies "in an attempt to strangle fair and just operations."

It said there was a "strong political motivation and political manipulation."

The charges, which relate to alleged conduct between 2012 and 2014, come almost two months after the chief financial officer of Huawei was arrested in Canada.

Meng Wanzhou was detained on 1 December and remains in Vancouver, fighting extradition south of the border over claims she committed fraud by misleading US banks about business deals Huawei has in Iran.

Donald Trump wearing a suit and tie: Donald Trump has suggested he could intervene in the case © Getty Donald Trump has suggested he could intervene in the case

It is alleged that the firm used a shell company in Hong Kong - Skycom - to sell equipment in the Middle Eastern country, which would be a violation of US sanctions.

The charges add more pressure on Huawei, with the US government trying to prevent American companies and those based in allied countries from buying routers and other technologies it manufactures.

Last week, Vodafone said it had suspended the use of Huawei equipment in its core networks amid security concerns over claims the hardware could be used by Beijing for spying or to seize control of critical infrastructure.

The US, along with Australia and New Zealand, have already banned Huawei from their faster 5G networks because of alleged links to the Chinese regime, and Germany and India have also expressed concerns.

However, Donald Trump has said he would get involved in the Huawei case if it would help produce a trade agreement with China.

The US president said he would step in if it would be good for what will "certainly be the largest trade deal ever made".

He added that talks were taking place with Beijing by phone and he would not raise tariffs on Chinese imports until he was sure about a deal.

Despite being completely locked out of the US, Huawei surpassed Apple earlier last year to become the number two smartphone maker in the world - only behind Samsung.

It has been helped by securing an increased share of the UK market, with TechRadar reporting that its acclaimed P20 handset had contributed to a rise from 2.7% to 13.7% in the three months leading up to July 2018.

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