The Department of Justice (DOJ) unveiled criminal charges on Monday against Huawei Technologies Co. and its chief financial officer Meng Wanzhou, accusing China’s largest telecommunications company of stealing trade secrets, committing wire fraud, breaking confidentiality agreements and violating sanctions against Iran.
Two sweeping indictments allege that Huawei, its affiliate in Iran and Meng herself stole confidential information and obstructed justice as part of an elaborate and “illegal” economic scheme. Prosecutors are seeking Meng’s extradition to the U.S. She was arrested in early December by Canadian authorities at the request of the U.S. government.
In response, China said Tuesday the “unreasonable crackdown” on Huawei should be stopped and the extradition request dropped by the U.S., adding that Beijing would “firmly defend” its companies. A foreign ministry statement read on state-run TV didn’t say whether Beijing would retaliate for the charges against Huawei.
The U.S. has long suspected that China’s government uses Huawei to aid in international espionage and thus poses a national security risk — allegations which both the Chinese state and the telecom hardware giant have consistently denied.
During a press conference on Monday, Acting Attorney General Matthew Whitaker said Huawei had made a “concerted effort” to steal information stored on a T-Mobile phone-testing robot called “Tappy.” He said the Chinese company instructed its employees to violate non-disclosure and confidentiality agreements with T-Mobile by taking photos of “Tappy.” On one occasion, Whitaker added, Huawei representatives stole a piece of “Tappy” so that its engineers in China could attempt to replicate the robot.
The Justice Department accused China’s largest smartphone manufacturer of offering its employees bonuses if they stole confidential information. “The charges unsealed today clearly allege that Huawei intentionally conspired to steal the intellectual property of an American company in an attempt to undermine the free and fair global marketplace,” FBI Director Christopher Wray told reporters.
The indictments also claim that Huawei set up a shell company called Skycom to do business in Iran, in violation of economic sanctions imposed on Iran by the U.S.
For months, the Trump administration and lawmakers from both parties have denounced the company for its alleged links to China’s communist leadership. After the charges were unveiled, Democratic Sen. Mark Warner of Virginia praised the Trump administration for its crackdown against Huawei.
“There is ample evidence to suggest that no major Chinese company is independent of the Chinese government and Communist Party – and Huawei, which China’s government and military tout as a ‘national champion,’ is no exception. It has been clear for some time that Huawei poses a threat to our national security, and I applaud the Trump Administration for taking steps to finally hold the company accountable,” Warner wrote in a statement.
Whitaker and Wray were joined by Department of Homeland (DHS) Secretary Kirstjen Nielsen, Commerce Secretary Wilbur Ross and several U.S. attorneys for the announcement at DOJ headquarters.
The announcement came as U.S. officials were scheduled to meet with representatives of the Chinese government this week to try broker an elusive trade agreement and end the prolonged tariff war between the two economic giants. Apart from the trade dispute, the U.S. and China are also competing for control over 5G infrastructure, which both countries believe is key to their economic and military success.