Justice Department Details Charges Against Chinese Huawei and Its CFO

By MICHAEL BALSAMO 

FBI Director Christopher Wray, standing with Commerce Secretary Wilbur Ross (left) and Acting Attorney General Matthew Whitaker, remarks on the charges against Huawei during a press conference today at the Department of Justice in Washington, D.C.

WASHINGTON — The Justice Department unsealed criminal charges Monday against Chinese tech giant Huawei, two of its subsidiaries and a top executive, who are accused of misleading banks about the company’s business and violating U.S. sanctions.
The company is also charged in a separate case with stealing trade secrets from T-Mobile, according to federal prosecutors.
Prosecutors are seeking to extradite the company’s chief financial officer, Meng Wanzhou, and allege she committed fraud by misleading banks about Huawei’s business dealings in Iran.

She was arrested on Dec. 1 in Canada.
The criminal charges in Brooklyn and Seattle come as trade talks between China and the U.S. are scheduled for this week.
“As I told high-level Chinese law enforcement officials in August we need more law enforcement cooperation with China,” acting Attorney General Matt Whitaker said at a news conference with other Cabinet officials, including Commerce Secretary Wilbur Ross and Homeland Security Secretary Kirstjen Nielsen. 

“China should be concerned about criminal activities by Chinese companies and China should take action.”
U.S. prosecutors charge that Huawei used a Hong Kong shell company to sell equipment in Iran in violation of U.S. sanctions. 

Huawei had done business in Iran through a Hong Kong company called Skycom and Meng misled U.S. banks into believing the two companies were separate, according to the Justice Department.
The announcement Monday includes a 10-count grand jury indictment in Seattle, and a separate 13-count case from prosecutors in the Eastern District of New York.
“As you can tell from the number and magnitude of the charges, Huawei and its senior executives repeatedly refused to respect U.S. law and standard international business practices,” said FBI Director Chris Wray.
A Huawei spokesman did not immediately return phone messages seeking comment.
Huawei is the world’s biggest supplier of network gear used by phone and internet companies and has long been a front for spying by the Chinese military and security services.
Prosecutors also allege that Huawei stole trade secrets, including the technology behind a robotic device that T-Mobile used to test smartphones, prosecutors said. 

A jury in Seattle ruled that Huawei had misappropriated the robotic technology from T-Mobile’s lab in Washington state.
Meng was arrested in Canada because the U.S. and China don’t have an extradition treaty. 

But new rules enacted in the past few years have made it easier for U.S. prosecutors to indict overseas corporate defendants without coordinating with foreign governments, said Ronald Cheng, a partner with the O’Melveny and Myers law office in Los Angeles and former U.S. judicial attache in Beijing.
Because it’s usually difficult to go after corporate officers, Chinese companies accused of IP theft need to worry more about asset forfeiture, which has in some cases been considerable. 

In July, the Chinese wind turbine maker Sinovel Wind Group LLC was ordered to pay more than $50 million in restitution after being convicted of stealing trade secrets from the U.S. company AMSC.
Cheng, who was reached in Hong Kong, said there’s considerable concern among Chinese business executives about stepped up enforcement in such cases, which began in earnest with the Obama administration, including a 2014 indictment alleging theft of solar power trade secrets.
“I think the government would say that this is part of a large pattern of conduct” by Chinese companies, Cheng said of Monday’s indictments.
The Huawei case has set off a diplomatic spat with the three nations, which has threatened to complicate ties between the U.S. and Canada. 

Donald Trump said he would get involved in the Huawei case if it would help produce a trade agreement with China and told Reuters in an interview in December that he would “intervene if I thought it was necessary.”
The arrest of Meng, the daughter of Huawei’s founder at Vancouver’s airport, has in particular led to the worst relations between Canada and China since the Tiananmen Square massacre in 1989. 

China detained two Canadians shortly after Meng’s arrest in an apparent attempt to pressure Canada to release her. 

A Chinese court also sentenced a third Canadian to death in a sudden retrial of a drug case, overturning a 15-year prison term handed down earlier.
David Martin, Meng’s lawyer in Canada, didn’t immediately respond to a message seeking comment. 

Meng is out on bail in Vancouver and is due back in court Feb. 6 as she awaits extradition proceedings to begin.
Canada arrested Meng at the request of the United States. 

The Chinese have been furious at Canada ever since and arrested Canadian ex-diplomat Michael Kovrig and businessman Michael Spavor on Dec. 10 on vague allegations of endangering national security.

Chinese Peril: Huawei and ZTE Smartphones

Six top US intelligence chiefs caution against buying ZTE and Huawei phones

• The directors of the CIA, FBI, NSA and several other intelligence agencies express their distrust of Huawei and fellow Chinese telecom company ZTE.
• During a hearing, the intelligence chiefs commended American telecom companies for their resistance to the Chinese companies.
• Huawei has been trying to enter the U.S. market, first through a partnership with AT&T that was ultimately called off.

By Sara Salinas

Chinese esionage: Six top US intelligence chiefs caution against buying ZTE and Huawei phones

FBI Director Christopher Wray (L) and CIA Director Mike Pompeo (2nd L) testify on worldwide threats during a Senate Intelligence Committee hearing on Capitol Hill in Washington, DC, February 13, 2018.

Six top U.S. intelligence chiefs told the Senate Intelligence Committee on Tuesday they would not advise Americans to use products or services from Chinese smartphone maker Huawei.
The six — including the heads of the CIA, FBI, NSA and the director of national intelligence — first expressed their distrust of Huawei and fellow Chinese telecom company ZTE in reference to public servants and state agencies.
When prompted during the hearing, all six indicated they would not recommend private citizens use products from the Chinese companies.
"We're deeply concerned about the risks of allowing any company or entity that is beholden to Chinese government that doesn't share our values to gain positions of power inside our telecommunications networks," FBI Director Chris Wray testified.
"That provides the capacity to exert pressure or control over our telecommunications infrastructure," Wray said.

"It provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage."

Huawei and ZTE smartphones are Chinese espionage's favorite tools.

Huawei has been trying to enter the U.S. market, first through a partnership with AT&T that was ultimately called off. 

At the time, Huawei said its products would still launch on American markets.
Last month, Huawei CEO Richard Yu raged against American carriers, accusing them of depriving customers of choice. 

Reports said U.S. lawmakers urged AT&T to pull out of the deal.
At the hearing, the intelligence chiefs commended American telecom companies for their measured resistance to the Chinese companies.
"This is a challenge I think that is only going to increase, not lessen over time for us," said Adm. Michael Rogers, the NSA's director. 

"You need to look long and hard at companies like this."

China's Fifth Column: the Chinese Students and Scholars Associations

Chinese Government Gave Money to Georgetown Chinese Student Group
Growing Chinese influence on campuses nationwide has cast a pall over academic freedom.
BY BETHANY ALLEN-EBRAHIMIAN 

A statue of John Carroll, founder of Georgetown University, sits before Healy Hall on the school's campus August 15, 2006 in Washington, DC. Georgetown University was founded in 1789 and it is the oldest Catholic and Jesuit university in the U.S. 

Chinese students or Chinese spies?

Founded in the early 2000s, the Georgetown University Chinese Students and Scholars Association hosts an annual Chinese New Year gala, organizes occasional academic forums, and helps Chinese students on campus meet and support each other. 

The group has also accepted funding from the Chinese government amounting to roughly half its total annual budget, according to documents and emails obtained by Foreign Policy.
The total sum may not be large, but the documents confirm a link between the Chinese government and Chinese student organizations on American campuses that is often suspected but difficult to verify.
A budget request submitted by the Georgetown University CSSA to the school’s graduate student government in September 2011 disclosed that the group received $800 each semester that school year from the Chinese Embassy in Washington, D.C. 

The group requested an additional $750 each semester from the university on top of the money it received from the embassy.
The disclosure of Chinese government funding came after a question on the budget request form asking if the club received any outside sources of funding. 

The group said that the government funding was used to host events, such as the annual Chinese New Year party.
The funding has not been previously made public; copies of the documents were provided to FP by a source concerned about Chinese Communist Party influence on university campuses.
The FBI shares that concern. 

Yesterday, at an annual open hearing at the Senate intelligence committee, in response to a question about the national security risk posted by Chinese international students, FBI Director Chris Wray said, “The use of nontraditional collectors, especially in the academic setting — whether it’s professors, scientists, students — we see in almost every field office that the FBI has around the country.”
Chinese Students and Scholars Associations first appeared in the United States in the 1980s, as international students from China began attending American universities. 

Now Chinese students, numbering close to 330,000, comprise the largest group of international students in the United States. 

There are now around 150 CSSA branches in the United States, and many more around the world; the organizations share a name but no central organization or headquarters. 

Other Chinese student organizations do exist — the Chinese Student Association at the University of California, Berkeley, for example, was founded in 1951 and is independent — but most have been overshadowed by the proliferation of CSSAs.
The primary function of CSSAs is to help Chinese students adjust to life in a foreign country, to bring Chinese students together on campus, and to showcase Chinese culture. 

The groups typically host events such as annual galas, holiday celebrations, and academic forums.
But they also serve as a way for the Chinese government to maintain a close eye on Chinese students abroad.
“It’s a deliberate strategy to make sure that the Chinese students and scholars living abroad don’t become a problem,” said Anne-Marie Brady, a fellow at the Woodrow Wilson International Center for Scholars, which published Brady’s report last year detailing Chinese Communist Party influence in New Zealand, including the CSSAs at major universities there.
A former Chinese Ministry of State Security official, Li Fengzhi, who later defected to the United States, said that the Chinese government views CSSAs as a means to conduct information collection and propaganda.
“CSSAs are non-profit associations, whose members are students volunteered to provide help to their fellow Chinese students and scholars at the host university,” a Chinese Embassy spokesperson wrote in an email, when asked if the Chinese Embassy continues to provide the CSSAs at Georgetown or other area colleges with funds. 

“In order to organize such activities, they need to raise funds from the public, such as their host universities, companies, organizations and the Chinese embassy.”
The spokesperson did not provide an answer when asked if the Chinese Embassy ever gives CSSAs political directives.
Georgetown University did not respond to a request for comment.
No other Georgetown University graduate student group included in the 2011-2012 funding request report received money from a foreign government, according to the documents reviewed by FP.
Under Xi Jinping, the Communist Party has vastly expanded its campaign to surveil and control overseas Chinese, including international students. 

In 2016, the Chinese Ministry of Education issued a directive to Chinese students abroad, urging them to follow the party. 

The directive also provided instructions to “build a multidimensional contact network linking home and abroad — the motherland, embassies and consulates, overseas student groups, and the broad number of students abroad — so that they fully feel that the motherland cares.”
Amid this campaign, it has become increasingly risky for Chinese students abroad to criticize Chinese government policies, even within the privacy of the classroom. 

One Australian professor told Inside Higher Ed in January that on two separate occasions, Chinese students have told him that comments they made during his class were reported to authorities back in China — indicating that another student in the class had relayed that information.
Wang Dan, a professor of contemporary Chinese history and a participant in the 1989 Tiananmen Square demonstrations, has noted that Chinese students rarely speak up in discussion salons he holds in the United States — but that party sympathizers will show up to take photos and recordings of who attends and what is said at such events. 

In a 2017 New York Times op-ed, Wang called it a “campaign of fear and intimidation.”
Chinese students have also challenged academic freedom at American universities with growing frequency. 

Chinese student organizations are often directly involved in these efforts, mobilizing their members to express anger at speech that goes the against Chinese Communist Party line.
For example, in February 2017, the University of California, San Diego, announced that the commencement speaker that June would be the Dalai Lama, the exiled Tibetan Buddhist spiritual leader whom the Chinese Communist Party considers a dangerous separatist. 

The UC San Diego CSSA soon posted a response on Facebook expressing strong opposition to the invitation — and saying that they had consulted with the Chinese Consulate on the matter. 

The CSSA asked to meet with university administration and demanded that the Dalai Lama’s speech exclude any political content.
The UC San Diego administration allowed the Tibetan leader’s speech to proceed uninhibited.
In May 2017, Yang Shuping, an undergraduate at the University of Maryland, praised American democracy in a commencement address, saying that she enjoyed America’s “fresh air of free speech” compared to the repressive environment back in China. 

Her remarks went viral on the Chinese internet, and she faced a massive online backlash, including the posting of her family’s home address in China.
The University of Maryland CSSA created a video directly criticizing Yang’s remarks and calling them “rumor.” 

Zhu Lihan, a former president of the association, told a Chinese newspaper, “Insulting the motherland to grab attention is intolerable. The university’s support for such slandering speech is not only ill-considered, but also raises suspicion about other motives.”

Yang later apologized for her remarks.

The Han Peril: Born to Spy

"Chinese Students Are a Threat." --  FBI Director Chris Wray 

Daily Beast

FBI Director Chris Wray

China is massively exporting students-spies.

Sino-Americans are blasting FBI Director Chris Wray for telling Congress that Chinese students in the United States are covertly gathering intelligence for their government back home.

Wray’s comments came during the Senate intelligence committee’s annual open hearing on the greatest threats to the country. 

A host of Intelligence Community leaders shared a litany of concerns about dangers from around the globe. 

Then Sen. Marco Rubio, a Florida Republican, asked Wray about “the counterintelligence risk posed to U.S. national security from Chinese students, particularly those in advanced programs in science and mathematics.”
Wray took it from there.
“The use of non-traditional collectors, especially in the academic setting—whether it’s professors, scientists, students—we see in almost every field office that the FBI has around the country,” he said. 

“It’s not just in major cities. It’s in small ones as well, it’s across basically every discipline. And I think the level of naivete on the part of the academic sector about this creates its own issues.”
What’s more, Wray added, the Bureau is actively investigating Chinese government-backed groups that "facilitate dialogues" between Chinese and American academics. 

It was a rare revelation of active FBI investigations—one that drew rage from Sino-Americans.

The FBI declined to comment on a request for additional details about Wray’s comments. 

A spokesperson for Senator Rubio did not immediately respond to a request for comment.

Wray isn’t the first FBI official to raise concerns about Chinese government activity and Chinese students spying for China.
Edward You, an agent in the FBI’s Weapons of Mass Destruction Directorate, told members of Congress last March that the Bureau has concerns about Chinese government-backed efforts to gather massive amounts of data on Americans’ health. 

In some cases, he said, Chinese government-backed hackers have stolen health data. 

But in other cases, Americans give away this data to Chinese government-backed labs that specialize in DNA sequencing and diagnostic tests, You said. 

American health and academic institutions work with these labs, sharing tens of thousands of Americans’ personal health information with these Chinese government-backed entities. 

He described the situation as “a ticking time bomb.”
Rubio spurred Monday’s comments, and said that while the Kremlin poses major threat, China is “the biggest issue of our time.” 

The Trump administration has considered curbing the number of Chinese students studying STEM to “ensure that intellectual property is not transferred to China.”
“They’re exploiting the very open research and development environment that we have, which we all revere,” Wray said in response. 

“But they’re taking advantage of this. One of the things we’re trying to do is to view the Chinese threat as not just a whole of government threat, but a whole-of-society threat, on their end. And I think it’s going to take a whole-of-society response by us. It’s not just the Intelligence Community, but it’s raising awareness within our academic sector, within our private sector, as part of defense.”
With Chinese students taking up a “large majority” of graduate STEM enrollment, it seems that the FBI has taken this to be an intelligence risk.
Intersections of the academic world and Chinese espionage aren’t unprecedented. 

In 2015, the Justice Department announced the indictment of six Chinese nationals, including two who met while working on a Defense Department-funded research project as students at a Southern California university. 

They later stole trade secrets from their employers, which they shared with a university in China, according to the indictment, which said that university went on to use the information to get military contracts.
Court filings show the prosecution is underway.
Espionage isn’t the only concern Rubio and Wray discussed at the hearing. 

Rubio asked Wray if he worries about the Chinese government-funded Confucius Institutes, which partner with American universities. 

The senator said one concern, which he recently shared with Institute-partnered universities in Florida, is that these programs aim to covertly change American public opinion on the Chinese government by whitewashing its human rights abuses.
The FBI Director said the Bureau has opened investigations into some of them.
“We do share concerns about the Confucius Institutes,” Wray said. 

“We’ve been watching that development for a while. It’s just one of many tools that they take advantage of. We have seen some decrease recently in their own enthusiasm and commitment to that particular program, but it is something that we’re watching warily and in certain instances have developed appropriate investigations into them.”