News and Commentary

BREAKING: China’s Huawei Charged With Racketeering, Conspiracy to Steal Trade Secrets
INDIA - 2020/02/09: In this photo illustration a telecommunications equipment company Huawei logo seen displayed on a smartphone.
Avishek Das/SOPA Images/LightRocket via Getty Images

Chinese telecommunications giant Huawei was charged with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) in a superseding indictment in Brooklyn, New York, on Tuesday

“The 16-count superseding indictment also adds a charge of conspiracy to steal trade secrets stemming from the China-based company’s alleged long-running practice of using fraud and deception to misappropriate sophisticated technology from U.S. counterparts,” the Department of Justice said in a statement. “As revealed by the government’s independent investigation and review of court filings, the new charges in this case relate to the alleged decades-long efforts by Huawei, and several of its subsidiaries, both in the U.S. and in the People’s Republic of China, to misappropriate intellectual property, including from six U.S. technology companies, in an effort to grow and operate Huawei’s business.”

The allegedly stolen intellectual property included “trade secret information and copyrighted works, such as source code and user manuals for internet routers, antenna technology and robot testing technology.”

The DOJ said that Huawei and its subsidiaries “agreed to reinvest the proceeds of this alleged racketeering activity in Huawei’s worldwide business, including in the United States.”

The DOJ added that Huawei stole trade secrets by entering into confidentiality agreements with the owners of intellectual property and then violating the contracts by taking the intellectual property and using it for Huawei’s own benefit.

“As part of the scheme, Huawei allegedly launched a policy instituting a bonus program to reward employees who obtained confidential information from competitors. The policy made clear that employees who provided valuable information were to be financially rewarded,” the statement said. “Huawei’s efforts to steal trade secrets and other sophisticated U.S. technology were successful. Through the methods of deception described above, the defendants obtained nonpublic intellectual property relating to internet router source code, cellular antenna technology and robotics. As a consequence of its campaign to steal this technology and intellectual property, Huawei was able to drastically cut its research and development costs and associated delays, giving the company a significant and unfair competitive advantage.”

The DOJ stated that Huawei lied about its alleged criminal activity when it was confronted by members of Congress and the FBI, adding that they also allegedly engaged in “obstructive conduct.”

The new charges also allege that Huawei and its subsidiaries were involved in working with Iran and North Korea despite being prohibited from doing so due to sanctions placed on those nations.

“The defendants’ activities, which included arranging for shipment of Huawei goods and services to end users in sanctioned countries, were typically conducted through local affiliates in the sanctioned countries,” the statement said. “Huawei employees also allegedly lied about Huawei’s relationship to Skycom, falsely asserting it was not a subsidiary of Huawei. The company further claimed that Huawei had only limited operations in Iran and that Huawei did not violate U.S. or other laws or regulations related to Iran. In fact, the indictment alleges Skycom was Huawei’s unofficial subsidiary that, among other services, assisted the Government of Iran in performing domestic surveillance, including during the demonstrations in Tehran in 2009.”

Attorney General William Barr highlighted during a speech last week the massive threat that Huawei poses to freedom around the globe since it is controlled by communist China and it is the world’s largest telecommunications equipment manufacturer.

This report has been updated to include additional information.