Criminal Company

How Huawei became America’s enemy No. 1
By Tripti Lahiri & Mary Hui

Since it was founded by former People’s Liberation Army engineer Ren Zhengfei in 1987, Huawei has grown to become the world’s top provider of telecom equipment, with over $100 billion in revenue and 180,000 global employees. 

That extraordinary success has come with barely a footprint in the US market, where the company has been a target for anxiety about Chinese hacking since the 2000s. 

Today, Huawei is the poster child for that anxiety, and finds itself in the eye of a global storm.
Huawei’s troubles in the US started early: It was met with with suspicion not long after it started competing with US router firms in the aughts, and kept hitting snags after that. 

In 2003, networking firm Cisco accused Huawei of intellectual property theft. 

In 2008, a deal with 3Com collapsed over concerns about Huawei’s ties in China. 

In 2014, T-Mobile sued Huawei for stealing, among other technology, part of a robot’s arm.
But in 2017, US president Donald Trump took office, and since then actions against Huawei have come fast and furious. 

On May 15, Trump signed an executive order that effectively bans Huawei from accessing US supply chains, his strongest action yet against the company. 

Less than a week later, Google pulled Huawei’s Android license—after a grace period allowed by the Trump administration for current users, the company’s future phones will be cut off from the most widely used operating system in the world and the Google universe. 

Suppliers from Britain, such as chip maker ARM, are set to follow Google’s lead.
Trump’s endgame is still unclear. 

Is the only safe Huawei a “dead” Huawei? 

Or is this another gambit in his ongoing trade negotiations with China? 

It may be too soon to tell: On May 23, Trump called Huawei “very dangerous” but also said the dispute might be resolved a trade deal.
What is clear is that this showdown has been a long time coming.

2001
Huawei, then a 14-year-old company with sales of $3 billion, sets up offices in the US (pdf). It also opens its first office in Britain.

2003
January: Router-maker Cisco sues Huawei for copyright violations, alleging its source code turned up in Huawei products. It later drops the suit.
November: Huawei’s joint venture with California-based networking company 3Com to make and sell routers and switches begins operations.

2005
The idea that Huawei is linked to the Chinese military surfaces prominently in a Rand Corporation report commissioned by the US Air Force. 

The think tank notes that major IT players like Huawei appear to be private-sector actors (pdf, pages 217-8), but “many of these electronics companies are the public face for, sprang from, or are significantly engaged in joint research with state research institutes.” 

It adds:
Huawei maintains deep ties with the Chinese military, which serves a multi-faceted role as an important customer, as well as Huawei’s political patron and research and development partner.
The report also says sales linked to the Chinese military could be anywhere from less than 1% of Huawei’s revenues to as high at 6%. 

2007
In July, the FBI interviews Huawei’s founder, Ren, in relation to violations of US trade sanctions on Iran.

2008
Huawei’s efforts to take a 16% stake in 3Com collapse amid lawmakers concerns (paywall) about Huawei’s ties to the Chinese military, forcing Huawei and its partner in the acquisition to abandon the bid. 

3Com was a provider of anti-hacking software for the US military, among other contracts. Lawmakers cited the 2005 Rand report.

2009
February: At Barcelona’s Mobile World Congress, Huawei releases its first Android smartphone, under license from Google.
October: Huawei hires an American, Matt Bross, from British Telecom to be its CTO, and to help it make a real foray into the US market. 

Bross apparently runs operations from his basement in St. Louis. 

“I am looking to create an environment where we can grow trust,” he tells Bloomberg in 2011. 

“The fact of the matter is that Huawei is here to stay.” (He leaves Huawei in 2012.)
November: Huawei signs a lease in Plano, Texas, for 100,000 square feet of office space for its North America sales and marketing headquarters. 

“We are honored that Huawei will grow and prosper in Plano for years to come,” the town’s mayor says in a statement.

2010
July: Phone-maker Motorola files a lawsuit accusing Huawei of corporate espionage, but later settles with the company.
November: Citing security concerns, Sprint excludes Huawei (paywall), as well as Chinese telecom ZTE, from bidding for a contract worth hundreds of millions of dollars to modernize its network. Huawei had been hoping this would be its first major US equipment contract win.

2011
February: The Committee on Foreign Investment in the United States tells Huawei to sell (paywall) the assets of bankrupt startup 3Leaf Systems, which it had acquired the previous year. 

Huawei says it didn’t flag the deal to CFIUS because it had only bought some of 3Leaf’s assets, but the panel decides to engage in a retroactive review.

April: Huawei opens a 200,000-square-foot R&D facility in Silicon Valley. 

It continues to grow revenue from equipment sales to mid-tier telecoms in remote areas of the US.

2012
October: A House committee issues a 52-page report (pdf) warning against using equipment from Huawei and ZTE. 

The report states:
In sum, the Committee finds that the companies failed to provide evidence that would satisfy any fair and full investigation. 

Although this alone does not prove wrongdoing, it factors into the Committee’s conclusions below.

Further, this report contains a classified annex, which also adds to the Committee’s concerns about the risk to the United States. 

The investigation concludes that the risks associated with Huawei’s and ZTE’s provision of equipment to U.S. critical infrastructure could undermine core U.S. national-security interests.


2013
Reuters reports that a Hong Kong-based company that tried to sell US computer equipment to Iran’s largest cellphone carrier, in violation of US trade sanctions, is closely linked to Huawei. 

The story says that Ren Zhengfei’s daughter Meng Wanzhou, “a rising star” at Huawei, served on the board of the Hong Kong firm, among other links.

2014
March: The New York Times reports (paywall) that the NSA infiltrated the servers in Huawei’s Shenzhen headquarters, obtaining sensitive information about its giant routers and complex digital switches, and monitoring the communications of top executives.

September: T-Mobile files a lawsuit against Huawei, accusing it of stealing technology, including part of a robot’s arm, from its headquarters. 

Huawei workers spied on and stole part of Tappy, a robot developed by T-Mobile in 2006 to test smartphones. 

Huawei admits that two of its employees had acted "inappropriately".

2015
January: Speaking at the World Economic Forum in Davos, Switzerland, Huawei founder Ren seeks to play down his connection with the Chinese army, saying it was “quite by chance” that he entered the military. 

“We are a Chinese company,” Ren says. 

“Of course we support the Chinese Communist Party and love our country. We comply with the laws of every country we operate in.”
September: Huawei and Google join forces (paywall) to make the Nexus 6p phone.

2016
June: The US Commerce department issues a subpoena (paywall) to Huawei as part of a probe into whether the company violated US export controls on the export or re-export of American technology to Cuba, North Korea, Syria, and Sudan over the previous five years.
December: The Treasury department gets involved with the investigation (paywall) and issues its own subpoena. 

The subpoena comes shortly after the US government restricts sales of American technology to ZTE, saying the Chinese phone-maker violated sanctions against Iran. 

US officials also release internal ZTE documents detailing how the company managed to do business with Iran, and how it modeled its approach off of a rival’s efforts in that country. 

The rival company is not named in the documents, but its description matches Huawei (paywall).

2017
A Seattle jury rules in favor of T-Mobile in its case against Huawei, determining that the latter misappropriated T-Mobile’s trade secrets, and breached a handset-supply contract between the two companies that stipulated each would protect secrets learned through their partnership. 

The jury awards T-Mobile $4.8 million in damages for the breach of contract, but does not award damages for T-Mobile’s trade-secrets claim.

2018
January: AT&T, America’s second-largest wireless carrier, is on the verge of becoming the first carrier in the US to offer Huawei’s handsets, which would be a major breakthrough. 

But it abandons the plan after lawmakers and federal regulators lobby against the idea. 

Concerns around Huawei deepen as the rollout of next-generation wireless technology approaches; a leaked White House memo on 5G names the company a strategic threat. 

Lawmakers want AT&T to cut all commercial ties with Huawei, ending their collaboration on 5G network standards.
April: Huawei lets go of several US staff (paywall), including its vice president of external affairs, William Plummer, a Nokia veteran who joined Huawei in 2010. 

Plummer goes on to detail the company’s (and some of his own) PR missteps in a memoir called Huidu.
May: The Pentagon bans the sale of Huawei and ZTE phones in stores on military bases over concerns that the Chinese government could order the companies to track soldiers’ movements or spy on their communications.
August: The National Defense Authorization Act, which includes language barring government agencies from buying equipment or services from Huawei and ZTE, goes into effect.
October: Two leading US lawmakers—Mark Warner, a Virginia Democrat, and Marco Rubio, a Florida Republican—urge Canadian prime minister Justin Trudeau to bar Huawei from helping build its 5G networks, saying it could pose dangers for US networks. 

The call is part of a broader US effort to get foreign allies to shun Huawei, the Wall Street Journal later reports (paywall), warning the UK, for example, it could be forced to cut off intelligence sharing. 

In November, New Zealand bans Huawei from supplying technology to the country’s 5G rollout, following in the steps of Australia earlier in the year.
December: Huawei’s chief financial officer and the daughter of its founder, Meng Wanzhou, is arrested in Canada at the request of US law enforcement on suspicion of violating trade sanctions on Iran. 

The arrest is seen as a serious escalation of US action against Huawei. 

Trump is criticized for suggesting he could intervene in the Justice Department case against her if it would help secure a trade deal from China. 

2019
January: The US files criminal charges against Huawei, slamming it with two dozen allegations that include conspiring to evade US trade sanctions and steal trade secrets, and also formally seeks Meng’s extradition from Canada. 

Meanwhile, Poland arrests a Huawei employee on allegations of spying for China. 

May 15: Trump signs an executive order banning US telecommunications firms from using the equipment of “foreign adversaries.” 

The order does not name Huawei, but effectively blacklists the company and cuts it off from US supply chains. 

Days later, Google makes a shock announcement that it will terminate Huawei’s license to the Android OS, which powers 86% of the world’s phones and all of the phones sold by Huawei. 

Huawei says it’s developing its own OS, but being cut off from Google’s email and app universe would drastically reduce its appeal overseas. 

Already, mobile carriers are holding off on Huawei 5G phone sales (paywall).
May 20: The restrictions are temporarily eased: The Commerce Department says it will allow Huawei to buy US goods through Aug. 19. 

But that same day, top US chip companies including Intel and Qualcomm cut off vital Huawei supplies, while Microsoft is also said to have stopped taking software orders from the firm.
This month’s moves present the most serious threats yet to Huawei’s future.

Nation of Thieves

The Huawei indictment tells a story of deceit and corporate espionage
The Washington Post

Huawei chief financial officer Meng Wanzhou in Vancouver, British Columbia, on Dec. 12. 

HUAWEI, THE Chinese telecom giant, has insisted in recent years that it operates within the bounds of local and international laws and norms. 

When a former employee filed a legal claim alleging that he was directed by Huawei to steal rivals’ trade secrets, the firm declared, “Every employee is expected to adhere to applicable laws, regulations and business ethics in the countries where we operate.” 

But a new U.S. federal indictment issued this week alleges this was far from true.
Huawei, which makes smartphones as well as gear for connectivity, including the forthcoming super-fast 5G networks, has been largely barred from business in the United States for some time, partly over suspicions that it could build “back doors” into its equipment for spying or network mischief. Chinese companies are closely intertwined with, and required to be subservient to, the state. 

Concerns voiced in recent years about Huawei’s behavior now look prescient. 

Huawei’s approach resembles that of the Chinese state: It is unbound by a rules-based, law-governed international order, and it is determined to succeed by using theft and duplicity.
In one case described in the indictment unveiled Monday by the Justice Department, Huawei headquarters in China instructed its employees in the United States to steal the design of a mobile-phone-testing robot developed by T-Mobile. 

This was a valuable piece of intellectual property that Huawei wanted for its own robot. 

Huawei engineers were repeatedly encouraged to carry out theft, and on May 29, 2013, a Huawei engineer visiting T-Mobile slipped a robot arm into his bag and walked out of the laboratory. 

Overnight, he photographed the device and took critical measurements before returning it the next day, apologizing that it was taken by “mistake.” 

Later, Huawei responded to T-Mobile about the incident with gross deception, saying the thefts were “a moment of indiscretion” and did not reflect company policy when, in fact, the data had been sent to headquarters. 

Huawei even created a bonus program for workers who stole information from competitors.
This corporate deception is also behind the separate indictment of Huawei and its chief financial officer, Meng Wanzhou, the founder’s daughter, for bank and wire fraud. 

The indictment charges that Huawei misled the U.S. government and banks about business that violated Western sanctions against Iran. 

The legal proceedings against Meng, who is being held under house arrest in Canada pending an extradition request by the United States, should not be politicized in the current Sino-American trade dispute. 

It is clear Huawei intentionally snubbed its nose at international norms and laws, which in turn means it could pose a potentially large national security risk to the West.
Doubts about Huawei are now being heard elsewhere, including in Australia, Poland, Britain and Germany. 

The next generation of connectivity — 5G networks — is far too important to put in the hands of a company that may work by lies and coverups.

Rogue Nation, Rogue Company

Huawei and Meng Wanzhou Face Criminal Charges
By David E. Sanger, Katie Benner and Matthew Goldstein

The Justice Department unveiled charges against Meng Wanzhou, the chief financial officer of Huawei, for helping evade American sanctions on Iran.

WASHINGTON — The Justice Department unveiled sweeping charges on Monday against the Chinese telecom firm Huawei and its chief financial officer, Meng Wanzhou, outlining a decade-long attempt by the company to steal trade secrets, obstruct a criminal investigation and evade economic sanctions on Iran.
The pair of indictments, which were partly unsealed on Monday, come amid a broad campaign by the United States to thwart China’s biggest telecom equipment maker.
Officials have long suspected Huawei of working to advance Beijing’s global ambitions and undermine America’s interests and have begun taking steps to curb its international presence.
The charges underscore Washington’s determination to prove that Huawei poses a national security threat and to convince other nations that it cannot be trusted to build their next generation of wireless networks, known as 5G. 
The indictments, based in part on the company’s internal emails, describe a plot to steal testing equipment from T-Mobile laboratories in Bellevue, Wash.
They also cite internal memos, obtained from Meng, that link her to an elaborate bank fraud that helped Huawei profit by evading Iran sanctions.
The acting attorney general, Matthew G. Whitaker, flanked by the heads of several other cabinet agencies, said the United States would seek to have Meng extradited from Canada, where she was detained last year at the request of the United States.
The charges outlined Monday come at a sensitive diplomatic moment, as top officials from China are expected to arrive in Washington this week for two days of talks aimed at resolving a months long trade war between the world’s two largest economies.
Trump administration officials have insisted that Meng’s detention will not affect the trade talks, but the timing of the indictment coming so close to in-person discussions is likely to further strain relations between the two countries.
Meng is the daughter of Huawei’s founder and one of the most powerful industrialists in the country. Her arrest has outraged the Chinese government, which has since arrested two Canadians in retaliation.
The indictment now presents Canada with a politically charged decision: whether to extradite Meng to face the fraud charges, or make a political determination to send her back to Beijing.
A spokesman for Huawei, Joe Kelly, said it “is not aware of any wrongdoing by Meng, and believes the U.S. courts will ultimately reach the same conclusion.”
The indictment unsealed against Meng is similar to the charges leveled against the Huawei executive in filings made by federal prosecutors in connection with the bail hearing in Canada.
It claimed that Huawei defrauded four large banks into clearing transactions with Iran in violation of international sanctions through a subsidiary called Skycom.
Federal authorities did not identify the banks, but in an earlier court proceeding in Canada after Meng’s arrest, prosecutors had identified one of the banks as HSBC.
The most serious new allegation in the indictment, which could have bearing on the extradition proceeding in Canada, is the contention by federal prosecutors that Huawei sought to impede the investigation into the telecom company’s attempt to evade economic sanctions on Iran by destroying or concealing evidence.
Huawei moved employees out of the United States so they could not be called as witnesses before a grand jury in Brooklyn. 
The company destroyed evidence in order to hinder the inquiry.
Richard P. Donoghue, the United States attorney for the Eastern District of New York, said that the telecom firm’s actions began in 2007 and “allowed Iran to evade sanctions imposed by the United States and to allow Huawei to profit.”
The arrest of a top executive for sanctions evasion is unusual.
In 2015, Deutsche Bank was fined $258 million for violating American sanctions on Iran and Syria. No executives involved in the scheme were indicted, though six employees were fired.
Meng is under house arrest at one of two residences that she owns in Vancouver.
American officials said Monday that they will request her extradition before a deadline on Wednesday. 
The next stage of her case will be decided at the Supreme Court of British Columbia.
“Companies like Huawei pose a dual threat to both our economic and national security,” said Christopher A. Wray, the F.B.I. director, who joined Mr. Whitaker and two other cabinet members, Wilbur Ross, the commerce secretary, and Kirstjen Nielsen, the homeland security secretary.
Mr. Wray argued that “the magnitude of these charges make clear just how seriously the F.B.I. takes this threat.”
“Today should serve as a warning that we will not tolerate businesses that violate our laws, obstruct justice or jeopardize national and economic well-being,” he added.
Parts of the indictment were redacted and left open the question of whether the United States had secretly indicted Meng’s father, Ren Zhengfei, a former People’s Liberation Army officer and member of the Communist Party.
A United States government interview with Ren from 2007 is cited in one of the indictments, to make the case that he misled investigators, and the name of at least one of those indicted is blacked out from the publicly filed version of the indictment.
Mr. Whitaker fueled the speculation about an indictment of Ren when he told reporters on Monday that the criminal activity “goes all the way to the top of the company.”
The Justice Department also accused Huawei of conspiring to steal trade secrets from a competitor, T-Mobile.
The charges relate to a criminal investigation that stemmed from a 2014 civil suit between the two companies.
In that case, T-Mobile accused Huawei of stealing proprietary robotics technology that the telecom company used to diagnose quality-control issues in cellphones.
Huawei was found guilty in May 2017.
The indictment cited internal emails from Huawei and its American subsidiary that set up a bonus system for employees who could illicitly obtain the T-Mobile testing system.
“These are very serious actions by a company that appears to be using corporate espionage not only to enhance their bottom line but to compete in the world economy,” Mr. Whitaker said.
The legal drama now shifts to Canada, where the government has warned that it will not extradite Meng if it appears that the request is being made for political reasons.
Trump said after her arrest that he would consider using her case for leverage in the upcoming trade negotiations, which fueled speculation that the United States may be more interested in Meng’s value in winning trade concessions than in obtaining a conviction.
Canada’s ambassador to Beijing was fired over the weekend by Prime Minister Justin Trudeau for suggesting that the case against Meng was political and that Canada might accede to Chinese demands and return her home.
Mr. Whitaker declined to say Monday whether the White House would interfere in the criminal case against Meng.
But the array of officials present at the announcement was clearly intended to demonstrate a coordinated government effort to go after Huawei.
“Given the seriousness of these charges, and the direct involvement of cabinet officials in their rollout, today’s announcements underscore that there is a unified full-court press by the administration to hold China accountable for the theft of proprietary U.S. technology and violations of U.S. export control and sanctions laws,” said David Laufman, the former chief of the Justice Department’s counterintelligence and export control section.
The indictments could further complicate the trade talks that the administration is holding this week with Beijing.
The Trump administration is seeking significant changes to China’s trade practices, including what it says is a pattern of Beijing pressuring American companies to hand over valuable technology and outright theft of intellectual property.
“The Americans are not going to surrender global technological supremacy without a fight, and the indictment of Huawei is the opening shot in that struggle,” said Michael Pillsbury, a China scholar at the Hudson Institute who advises the Trump administration.
Lawmakers like Senator Mark Warner, Democrat of Virginia, who have long argued for action to be taken against Chinese technology providers including Huawei and ZTE, a smaller firm that has faced similar accusations, called the indictment “a reminder that we need to take seriously the risks of doing business with companies like Huawei and allowing them access to our markets.”
Mr. Warner said that he would continue to press Canada to reconsider using any Huawei technology as it upgrades its telecommunications network.
On Tuesday, American intelligence officials are expected to cite 5G investments by Chinese telecom companies, including Huawei, as a worldwide threat. 
And the United States has been drafting an executive order, expected in the coming weeks, that would effectively ban American companies from using Chinese-origin equipment in critical telecommunications networks.

Criminal Company

US unveils criminal charges against Huawei and Meng Wanzhou 
By Kiran Stacey in Washington and Tom Mitchell in Beijing

Acting US Attorney General Matthew Whitaker reiterated the Justice Department’s desire to have Huawei CFO Meng Wanzhou extradited to the United States.

The US has accused China’s Huawei and its chief financial officer of stealing American technology and breaking US sanctions against Iran, in a criminal indictment that sharply escalates the two countries’ technological rivalry.
 The move will overshadow trade talks this week aimed at averting an all-out trade war between the world’s two largest economies.
 Matthew Whitaker, acting attorney-general, announced the action against the world’s biggest telecoms equipment maker on Monday as China’s trade negotiators, led by Vice-Premier Liu He, arrived in Washington for talks scheduled to open on Wednesday.
 Depending on the penalties sought by the justice department, the Trump administration’s salvo could disrupt the global operations of a Chinese corporate champion and land its chief financial officer, Meng Wanzhou, in prison.
 Meng is the daughter of Huawei’s founder, Ren Zhengfei, and is currently in Vancouver as she fights a US extradition request in Canadian courts.
Canada’s justice department late Monday said it had received a formal extradition request from the US, the Canadian Broadcasting Corporation reported.
 Mr Whitaker told a press conference: “These are very serious actions by a company that appears to be using corporate espionage and sanctions violations not only to enhance their bottom line, but also to compete in the world economy. This is something the United States will not stand for.”
 He added: “This goes back 10 years and goes all the way to the top of the company.” 
 Huawei said it was “disappointed to learn of the charges brought against the company today”, adding that it had sought discussions with the US justice department after Meng’s arrest but “the request was rejected”.
 US officials said the investigations into Huawei had been going on for years.
But they began to come to a head in December, when Canadian officials arrested Meng in Vancouver on US charges, a move that triggered protests from China, which has since detained at least two Canadian citizens.
 Mr Whitaker said the US would formally lodge an extradition request with Canada in the coming days. 
 Meng’s arrest is a particularly sensitive political issue given Huawei’s status as a Chinese national champion.
 Eswar Prasad, a professor of trade policy at Cornell University, predicted the charges would make an eventual trade deal less likely.
 It is also likely to give the US further leverage when urging allies to do more to shut the Chinese company out of their markets. 
 Mark Warner, the Democratic vice-chairman of the Senate intelligence committee, said: “This is a reminder that we need to take seriously the risks of doing business with companies like Huawei and allowing them access to our markets. I will continue to strongly urge our ally Canada to reconsider Huawei’s inclusion in any aspect of its 5G infrastructure.” 
 US officials including Wilbur Ross, the commerce secretary, outlined on Monday the charges being brought against both Meng and the company.
 The charges of corporate espionage, they said, related to Huawei’s attempts to steal the technology used by T-Mobile, one of its US business partners, in a robot called Tappy, which was used to test mobile telephones.
 Annette Hayes, first assistant US attorney for the western district of Washington state, said US officials had internal emails from Huawei showing this was a “determined and unrelenting effort”, and not a rogue operation by some within the company.
“This was Huawei’s modus operandi,” she said.
 T-Mobile declined to comment.
The sanctions-busting charges relate to Huawei’s ownership of a company called Skycom, which was reported to have offered to sell embargoed Hewlett-Packard equipment to Iran’s Mobile Telecommunication Co in 2013.
The indictment filed in the eastern district of New York alleges that Skycom illegally employed a US citizen in Iran, and that Huawei lied to US banks about its financial interest in Skycom.
As a result, the indictment says, US funds were illegally funnelled to Iran. 
 US officials said they had evidence that Meng was personally involved in these criminal actions. 
 The legal action might have additional consequences for the company as a whole.
 One lawyer involved in action against Huawei in the US said: “The fact that Wilbur Ross was at the press conference indicates the US might end up putting Huawei on the export control list.”
 Banning US companies from exporting to Huawei is seen in Washington as the “nuclear option” against the Chinese company, given its reliance on US software and microchips.
 Stocks in China turned sharply lower following the filing of the charges and declines on Wall Street on Monday.
The Shenzhen Composite fell as much as 2.6 per cent by mid-morning, but later erased some of that decline to trade down 1 per cent in the late afternoon.