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US indicts Huawei, Meng with fraud, IP theft charges, raise security concerns

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The US on Monday charged Chinese tech giant Huawei and its chief financial officer and two affiliates with bank and wire fraud to get around US sanctions on Iran in a crackdown on the company legally required to act as a front for China’s Communist Party.

The Justice Department said Huawei tricked a global bank by claiming it had no relationship with Skycom, which the US claims Huawei controls. Skycom sold more than $100 million in banned technologies to Iran, the US alleges.

In another case, the Justice Department accused Huawei of stealing trade secrets, wire fraud and obstructing justice for allegedly stealing robotic technology from carrier T-Mobile to test smartphones’ durability.

Read more:China sentenced a Canadian man to death in the latest escalation of the countries’ feud over Huawei

T-Mobile had accused Huawei of stealing the technology, called “Tappy,” which mimicked human fingers and was used to test smartphones. Huawei has said that the two companies settled their disputes in 2017.

“Both sets of charges expose Huawei’s brazen and persistent actions to exploit American companies and financial institutions and to threaten the free and fair global marketplace,” FBI director Christopher Wray told a press briefing announcing the charges.

FBI Director Christopher Wray addresses a news conference with Acting U.S. Attorney General Matthew Whitaker to announce indictments against China’s Huawei Technologies Co Ltd, several of its subsidiaries and its chief financial officer Meng Wanzhou, in a pair of cases accusing the company of everything from bank and wire fraud to obstructing justice and conspiring to steal trade secrets from T-Mobile US Inc., at the Justice Department in Washington, U.S., January 28, 2019.
REUTERS/Joshua Roberts

“As you can tell from the number and magnitude of the charges, Huawei and its senior executives repeatedly refused to respect US law and standard international business practices,” he continued.

Wray said Huawei stole T-Mobile’s technology to “circumvent hard-earned, time-consuming research and gain an unfair market advantage.”

Wray’s comments mirror the concerns of US businesses that operate in China and say the Chinese government forces technology transfer through a number of mechanisms.

Huawei has insisted it does not share data with the Chinese government and said it would refuse any requests from the government for data, but Chinese law demands all companies and citizens cooperate with the government when asked.

“There is ample evidence to suggest that no major Chinese company is independent of the Chinese government and Communist Party – and Huawei, which China’s government and military tout as a ‘national champion,’ is no exception,” said Sen. Mark Warner of Virginia in an emailed statement to INSIDER. Warner is the vice chairman of the Senate Intelligence Committee.

“It has been clear for some time that Huawei poses a threat to our national security, and I applaud the Trump Administration for taking steps to finally hold the company accountable,” Warner said.

John Hemmings, Director of the Asia Studies Centre at the Henry Jackson Society told INSIDER: “The US is convinced that whoever dominates AI, Quantum computing, 5G, the internet of things, militarily and economically important technologies, will be like whoever has the jet engine, whoever has the dreadnoughts”

Huawei chief financial officer Meng Wanzhou arrives at a parole office with a security guard in Vancouver, British Columbia.
Darryl Dyck/The Canadian Press via AP

India accused Huawei of trying to hack into its telecom equipment in 2014, and the African Union accused Huawei of similar behavior in 2018.

Wray has previously warned of China as”not just a whole-of-government threat, but a whole-of-society threat,” due to China’s efforts to rival the US as a superpower and become technological world leader.

China has accused the US of trumping up the charges against Huawei and its CFO Meng Wanzhou as part of a protectionist mindset looking to thwart China’s rise.

Read more: Canada fired its Chinese ambassador after his ‘mind-boggling’ remarks on the arrest of Huawei’s CFO

After Canada detained Meng pending the indictments, China detained two Canadian citizens in the country in a move experts saw as transparent retribution.

Acting Attorney General Matthew Whittaker said in announcing the indictments that he was “deeply grateful to Canada” for detaining Meng so that she could be tried.

Reuters contributed to this report.

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