This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 14, 2020).
By Corinne Ramey and Kate O'Keeffe
Huawei Technologies Co. and two of its U.S. subsidiaries were
charged with racketeering conspiracy and conspiracy to steal trade
secrets in a federal indictment unsealed Thursday, opening another
front in the Trump administration's battle against the Chinese
The new charges amp up pressure on Huawei from the U.S., where
Trump administration officials are fighting to persuade allies to
lock the telecommunications giant out of their next generation
mobile networks because of national security concerns. The U.S. has
long said Huawei could be coerced by Beijing into using its
equipment to spy on, or disrupt, foreign networks, which the
The new indictment, filed in federal court in Brooklyn, N.Y.,
builds on allegations the U.S. leveled in January 2019 accusing
Huawei of financial fraud and violating U.S. sanctions on Iran.
Federal prosecutors in Brooklyn said the new charges related to a
decadeslong effort by Huawei and its subsidiaries, in the U.S. and
China, to steal intellectual property, including from six U.S.
The charges closely track a series of allegations by companies
identifiable as Cisco Technology Inc., T-Mobile US Inc., Motorola
Inc., and others documented in a Wall Street Journal article last
Prosecutors said Huawei's efforts were successful and resulted
in the company obtaining nonpublic intellectual property about
robotics, cellular-antenna technology and internet-router source
code. The alleged thefts allowed the company to cut costs and
research-and-development delays, giving it an unfair competitive
advantage, according to prosecutors.
Huawei called the new charges against it and U.S. units Huawei
Device USA Inc. and Futurewei Technologies, Inc. unfounded and
unfair. "This new indictment is part of the Justice Department's
attempt to irrevocably damage Huawei's reputation and its business
for reasons related to competition rather than law enforcement,"
the company said. "The 'racketeering enterprise' that the
government charged today is nothing more than a contrived
repackaging of a handful of civil allegations that are almost 20
Huawei has said it doesn't spy for any government and is
committed to complying with laws in global markets. "We respect the
integrity of intellectual property rights -- for our own business,
as well as peer, partner and competitor companies," it said in a
statement to the Journal last year.
Huawei is the world's biggest telecommunications manufacturer
and a leader in next-generation 5G networks. The Trump
administration has restricted U.S. suppliers from working with
Huawei and pressured European allies to stop doing business with
it. Last month, the U.K. agreed to continue to allow Huawei
equipment to be used in the noncore parts of its latest 5G network
build-out, sparking widespread concern in Washington.
Thursday's indictment also makes new allegations about Huawei's
involvement in countries subject to stiff U.S. economic sanctions
such as Iran and North Korea.
Prosecutors said the defendants shipped Huawei goods and
services to sanctioned countries, often using local affiliates.
Internal Huawei documents used code names for such places,
including "A2" for Iran and "A9" for North Korea, according to
Huawei unofficially operated a company called Skycom Tech Co. to
obtain goods and technology from the U.S. for use in Iran in
violation of U.S. sanctions, according to the indictment. The
company could then claim it didn't know about any illegal acts
committed by Skycom on its behalf, the indictment said.
Huawei also helped Iran's government by installing surveillance
equipment to monitor, identify and detain protesters during the
2009 antigovernment demonstrations in Tehran, the indictment
alleged. A spokesman for Iran's mission to the United Nations
didn't respond to a request for comment.
Huawei employees also took steps to conceal its involvement in
North Korea, according to prosecutors.
"For example, shipping instructions provided by Huawei to a
supplier in 2013 included the instruction that, for shipments to
'A9/NK/NORTH KOREA, ' there should be 'No HW [HUAWEI] logo,'" the
The new trade-secret theft charges come more than 15 years after
U.S. companies first began alleging the Chinese firm had stolen
their technology. The Trump administration is now taking up the
issue and framing it as part of a broader global debate over
national security and Chinese companies like Huawei.
The Journal last year reported claims that Huawei's
transformation from a little-known Chinese firm to a global
juggernaut came at the expense of U.S. businesses.
In August, the Journal reported that the Justice Department was
looking into new instances of alleged technology theft by Huawei,
some of which were described in the latest indictment.
The article also detailed allegations that Huawei's corporate
culture was driven by the company's top leaders, and that alleged
wrongdoing wasn't the result of rogue employees.
Cisco, identifiable as company 1 in the latest indictment, in
2003 accused Huawei of copying its software and manuals. The firm's
general counsel flew to Shenzhen to confront founder Ren Zhengfei
with evidence of Huawei's theft, which included typos from Cisco's
manuals that also appeared in Huawei's, the Journal reported.
Mr. Ren gave a one-word response: "Coincidence."
A Cisco spokesman declined to comment on the indictment and
earlier said the company doesn't disclose information about private
Huawei settled the suit in July 2004, after admitting it had
copied some of Cisco's router software.
CNEX Labs Inc., a Silicon Valley chip startup identifiable as
company 6 in the indictment, in 2018 filed a lawsuit against Huawei
that was particularly notable because the firm alleged Eric Xu,
Huawei's rotating chairman, participated in a conspiracy to steal
Prosecutors repeated the allegation in the new indictment.
Huawei acknowledged in the civil case that Mr. Xu "was in the chain
of command that had requested" information about CNEX, but it
denied wrongdoing. A jury in June found Huawei had stolen CNEX's
technology but declined to award damages.
CNEX declined to comment on the new charges.
The indictment also describes an episode in July 2004 at the
Supercomm trade show in Chicago. An employee of Huawei with a name
badge reading "Weihua" -- a scramble of Huawei -- was discovered in
the middle of the night taking photographs of the circuitry inside
the equipment at a rival technology company's booth, according to
Huawei described the employee as acting in his personal
capacity, according to the indictment.
--Dan Strumpf contributed to this article.
Write to Corinne Ramey at Corinne.Ramey@wsj.com and Kate
O'Keeffe at email@example.com
(END) Dow Jones Newswires
February 14, 2020 02:47 ET (07:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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