Rogue Company

Huawei Is Under U.S. Criminal Investigation For Illegal Iran Sales: Here's What's Next

By Jean Baptiste Su

Nearly all of Huawei's telecommunication products (from smartphones to storage, servers, and network equipment) rely, in some shape or another, on American technologies.
On Wednesday, the Wall Street Journal reported that the Justice Department is investigating whether Huawei violated U.S. export sanctions related to Iran.
After the Trump Administration imposed a ban on the sale of American technologies to ZTE last week for similar export violations, this latest development feels like deja vu all over again and could cast a serious shadow over the business of the $92.5 billion Chinese company.
Earlier Wednesday, Bloomberg also reported that Huawei had dropped a planned dollar-denominated bond sale and delayed pricing of a European offering.
This is not the first time that Huawei comes under scrutiny from the U.S Government for export and sanctions violations.
Two years ago, the U.S. Commerce Department's Bureau of Industry and Security (BIS) issued a subpoena for information regarding Huawei's direct and indirect exports and re-exports of U.S. technology over the last 5 years to countries designated as supporters of international terrorism, or subject to U.S. trade sanctions and economic embargoes, including Cuba, Iran, North Korea, Sudan, and Syria.
Several months later, as reported by the New York Times, the Treasury Department’s Office of Foreign Assets Control (OFAC), which oversees compliance of a number of American sanctions programs, also sent a subpoena to Huawei to describe the "technology and services provided to Cuba, Iran, Sudan and Syria over the past five years. It also called for the identity of individuals who played a part in those transactions."
The Chinese company has over 180,000 employees globally.
If Huawei is found guilty of violating American export rules, the U.S. could follow the same playbook it used against ZTE: A large fine ($1.19 billion), active audits, compliance requirements and, in case of non-compliance, a multi-year ban on the purchase of American technology.
Following the U.S. technology ban on ZTE last week, China's second-largest telecommunications infrastructure supplier quickly acknowledged that its survival has become uncertain.
Similarly, since nearly all of Huawei's telecommunication products (from smartphones to storage, servers, and network equipment) rely, in some shape or another, on American technologies, a ban on such components would be fatal for the world's largest telecom equipment maker.