The Eternal Criminal

China's Huawei targeted again in US criminal probe

By Jackie Wattles

New York -- US federal prosecutors are working on a criminal investigation into Chinese telecom equipment giant Huawei.
Investigators are looking into whether the firm stole trade secrets from US business partners, The Wall Street Journal reported Wednesday, citing unnamed sources.
The reported probe would complicate efforts by the US and Chinese governments to reach a deal to end the trade war that has shaken financial markets around the globe. 

Intellectual property theft is one of the issues at the heart of the dispute between the two economic superpowers, and Huawei has already come under pressure from the US government on other fronts.
The Journal reported that the investigation was spurred in part by civil litigation between Huawei, which makes phones and other telecom equipment, and T-Mobile. 

T-Mobile had accused Huawei of stealing information related to a robot used for testing mobile phones.
The Journal reported that the criminal probe is at an "advanced stage."
Huawei, the world's biggest maker of telecommunications equipment, declined to comment directly on the report. 

But it said in a statement that the disputes with T-Mobile were settled in 2017 "following a jury verdict finding neither damage, unjust enrichment nor willful and malicious conduct for T-Mobile's trade secret claim."
The Department of Justice did not immediately respond to a request for comment from CNN Business. 

It declined comment to The Wall Street Journal.

The report was published one day after the reclusive founder of Huawei, Ren Zhengfei, shrugged off allegations from Washington that Huawei is a threat to US national security.

The company has also been prevented from supplying next-generation 5G equipment to Australia and New Zealand.
In another sign of the suspicion Huawei faces in Washington, a group of US lawmakers on Wednesday introduced legislation aimed at tightening the rules for Chinese telecommunications companies.
The proposed law, the Telecommunications Denial Order Enforcement Act, would ban the sale of US parts to any Chinese telecom firm that has violated US export control laws or sanctions.
Last year, the US government imposed such a ban on Huawei's smaller rival ZTE but lifted it a few months later after Donald Trump intervened. 

Trump described the move as "a favor" to Chinese dictator Xi Jinping.

The new legislation, introduced by a bipartisan group of lawmakers including Sen. Tom Cotton of Arkansas and Sen. Chris Van Hollen of Maryland, aims to prevent the penalties being withdrawn until the Chinese company in question has shown a pattern of compliance with US rules and cooperation with US investigations for one year.
"Huawei is effectively an intelligence-gathering arm of the Chinese Communist Party whose founder and CEO was an engineer for the People's Liberation Army," Cotton said in a statement. 

"It's imperative we take decisive action to protect US interests and enforce our laws."
The new bill follows the arrest of Huawei chief financial officer, Ren's daughter Meng Wanzhou, last month in Canada.
She's accused of helping Huawei cover up violations of sanctions on Iran, according to Canadian prosecutors. 

Meng was released on bail in mid-December, setting her up for a lengthy legal fight over extradition to the United States.
The Chinese Foreign Ministry called Meng's arrest "lawless, reasonless and ruthless." 

Nation of Thieves

China’s theft of U.S. trade secrets under scrutiny
By Mara Hvistendahl

Counterfeit drugs seized at John F. Kennedy International Airport in 2012. A new report estimates that counterfeiting, stolen trade secrets, and pirated software cost the United States as much as $600 billion a year.

When it comes to intellectual property (IP) theft, there’s the rest of the world, and then there’s China, a new report says. 

In 2015, mainland China and Hong Kong accounted for 87% of counterfeit goods seized by the U.S. Customs and Border Patrol. 

China’s share of trade secrets theft, though harder to track, is not far behind, claims the Commission on the Theft of American Intellectual Property in Washington, D.C., a bipartisan nongovernmental group co-chaired by former Utah Governor Jon Huntsman Jr., who served as U.S. ambassador to China from 2009 to 2011.
Stolen trade secrets, pirated software, and counterfeiting cost the United States between $225 billion and $600 billion per year, the commission estimates. 

The report singled out as suspect China’s targeting of biotechnology and quantum communications technology. 

“The massive theft of American IP threatens our nation’s security as well as vitality,” said former Director of National Intelligence Admiral Dennis Blair, co-chair of the commission, in a press release.
Scholars often take issue with efforts to put a price tag on IP theft. 

In court, for example, companies frequently cite as losses the amount spent researching a product or idea. 

But by the time a product comes to market, that figure may be a poor reflection of its true value. 

“The industry standard for competitive edge in IP is in some cases just a couple of years,” says Greg Austin, a cybersecurity expert at the EastWest Institute in New York City and author of Cyber Policy in China. 

Also up for debate is how best to address IP theft. 

The Obama administration pursued a strategy heavy on prosecutions of Chinese-born U.S. scientists (see here, here, and here), along with symbolic moves against overseas offenders, such as the 2014 indictment of five members of a People’s Liberation Army hacking unit. 

Policy tools improved under Obama went “largely unused,” the report said. 

For instance, a 2015 law enabling the president to sanction foreign countries, companies, and individuals for IP theft has not yet been invoked.
The commission urges the Trump administration to “make IP theft a core issue.” 

Among the policy prescriptions outlined are expanding the number of green cards available to science students—to discourage Chinese U.S.-educated scientists from returning to their home countries and contributing to their development—and ensuring that “top U.S. officials from all agencies” push China “toward becoming a self-innovating country.”
Derek Scissors, an economist at the American Enterprise Institute in Washington, D.C., who commented on a draft of the report but was not involved with writing it, says those recommendations could have been more targeted: “First, start sanctioning companies that receive stolen IP. Change their risk calculations. When that’s in place, what else is truly required will become clearer.”