Huawei Is A Criminal Enterprise – U.S Prosecutor

A U.S. prosecutor has described Huawei as a criminal enterprise that built its global telecommunications empire through theft and deception, opening a major federal trial that has become a test of the long-running technological and geopolitical confrontation between the United States and China.

“Theft, lies, cover-up,” Taylor Stout, a trial attorney for the U.S. Department of Justice, said in the government’s opening statement. “For 20 years, that’s how Huawei, a massive Chinese telecommunications company, victimized ‌American companies and abused the American financial system, all in an effort to dominate the telecommunications industry around the world.”

The government says Huawei conspired to steal trade secrets from five American companies, including source code for internet routers from Cisco Systems and a robotic arm used by T-Mobile to test mobile phones. Prosecutors say the alleged theft gave Huawei an unfair competitive advantage as it expanded into markets around the world.

“We’ll hear from people who caught Huawei red-handed trying to steal American tech,” Mr. Stout said, adding that there was video of an employee stealing the robotic arm.

Huawei’s lawyers offered jurors a sharply different account, portraying the company as a technology business that succeeded through engineering and competition rather than an organized effort to steal American technology.

“It’s about competition, not conspiracy. Innovation, not theft. Ordinary business dealings, not criminal conduct,” Brian Heberlig, one of a team of lawyers representing Huawei, said in his opening. “Huawei earned its success … There was no blueprint for crime.”

The trial, unfolding in federal court in Brooklyn, is the latest chapter in a confrontation that has transformed Huawei from a relatively little-known Chinese telecommunications supplier into one of the most closely scrutinized technology companies in the world.

Founded in 1987 by Ren Zhengfei, a former Chinese military engineer, Huawei grew from a small telecommunications equipment reseller into a global company supplying network infrastructure to mobile operators and governments. Its rise made it a major competitor to Western telecommunications companies while also making it a focus of American national security concerns.

The United States has long argued that Huawei’s links to China create potential security risks and has sought to restrict the company’s access to American technology. Huawei has denied that its equipment poses a security threat.

Washington’s campaign against the company intensified in 2019, when the Trump administration placed Huawei on a U.S. trade blacklist, restricting American companies from supplying it with U.S. technology without government approval. The measures were aimed at cutting Huawei off from critical components, particularly advanced semiconductors.

Huawei nevertheless survived the restrictions and has increasingly focused on developing its own technology, including smartphones, telecommunications equipment and artificial-intelligence chips.

Its networking equipment remains restricted in the United States, while suppliers are generally barred from exporting U.S. goods and technology to Huawei without approval from the Commerce Department.

The criminal case predates many of those restrictions.

The investigation began publicly in 2018, when U.S. prosecutors charged Huawei and its chief financial officer, Meng Wanzhou, with bank fraud and sanctions violations. The government accused the company of misrepresenting its business in Iran to circumvent U.S. sanctions and move millions of dollars through the American financial system.

The case later expanded into a sprawling indictment that includes racketeering, a charge involving a pattern of illegal activity conducted through an enterprise to generate profit.

Huawei’s defense team says prosecutors are turning isolated incidents involving individual employees into evidence of a corporate conspiracy.

Heberlig told jurors that prosecutors would describe routine activities by global technology companies “but will twist those ordinary activities to try to make them look criminal.”

The government was “cherry-picking isolated events that should not be viewed as evidence of an overarching conspiracy that never existed,” he said.

He said the incidents involving Cisco and T-Mobile were “actions by individual employees” and that management took steps to address them after learning what had happened. An incident in which an employee took unauthorized photographs of a Fujitsu networking device at a trade show was, he said, a “foolish act” by an employee who was “promptly fired.”

Prosecutors have also accused Huawei of concealing the nature of its work in Iran so it could move U.S. dollars through the financial system and help the Iranian government spy on its citizens.

The defense disputes those claims, saying there was no evidence Huawei knew that dollar-clearing transactions violated U.S. sanctions law. Huawei could have kept the transactions outside the United States or used another currency, the defense argued. Lawyers also said banks that prosecutors say were misled by Huawei knew about its Iranian business and nevertheless competed for its business.

The case has also kept attention on Ms. Meng, whose arrest in Canada in 2018 became one of the most politically sensitive episodes in the U.S.-China technology conflict.

Ms. Meng was detained in Vancouver after being picked up on a U.S. warrant connected to the original indictment. She fought extradition for nearly three years before being released and returning to China under a diplomatic agreement involving the United States, China and Canada.

The charges against her were dismissed in 2022 under a deferred prosecution agreement, but admissions she made are expected to be introduced as evidence at the trial.

The proceedings are expected to last about three months.

The case is based in part on Reuters reporting from 2012 and 2013 about Huawei’s relationship with Skycom, a company that operated in Iran. Reuters reported that Skycom had offered to sell at least €1.3 million ($1.5 million) worth of embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator in 2010. Reuters also reported that Ms. Meng had served on Skycom’s board between February 2008 and April 2009.

The trial comes as the technological competition between Washington and Beijing has expanded far beyond telecommunications. The two countries are now competing over advanced semiconductors, artificial intelligence, cloud computing and other technologies viewed as strategically important to national security and economic power.

The case is an effort to establish that Huawei’s global rise was aided by conduct that crossed the line from aggressive competition into criminal activity.

Stay ahead of the Stories shaping our world. Subscribe to Impact Newswire and join our 
WhatsApp Channel for updates on global tech, business, and innovation—all in one place.

Dive deeper into the future with the Cause Effect 4.0 Podcast, where we explore the ideas, trends, and technologies driving the global AI conversation.

Got a story to share? Contact Us to reach a global audience with Impact Newswire.