Feb 13, 2020 - World

Justice Department slaps Huawei with new racketeering charges

Zachary Basu

Huawei CFO Wanzhou Meng. Photo: Don Mackinnon/AFP via Getty Images

The Justice Department on Thursday announced a 16-count superseding indictment against Chinese telecom giant Huawei and its CFO Meng Wanzhou that includes charges of racketeering and conspiracy to steal trade secrets.

Why it matters: The superseding indictment could ratchet up the potential penalties against Huawei, which was already facing charges for violating U.S. sanctions against Iran and North Korea. Meng is currently in Canada fighting extradition to the U.S., with the first stage of her hearing beginning last month.

  • It's a widely held assumption that rampant IP theft by Chinese companies has been one factor behind the extremely rapid advance of Chinese tech companies — but actual evidence to back up that assumption is rare.
  • The charges against Huawei, if held up in court, will mark a globally significant example of this phenomenon.

What they're saying:

  • "[T]he 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," said U.S. Attorney Richard Donoghue.
  • "The misappropriated 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," Donoghue continued.
  • "The superseding indictment also includes new allegations about Huawei and its subsidiaries' involvement in business and technology projects in countries subject to U.S., E.U. and/or U.N. sanctions, such as Iran and North Korea — as well as the company's efforts to conceal the full scope of that involvement."

The big picture: This is the latest development in the Trump administration's campaign against Huawei, whose equipment it believes has secret "back doors" that can be exploited by the Chinese government for espionage. The administration has banned the use of Huawei's technology by the federal government and has been lobbying U.S. allies not to use Huawei equipment to build their 5G networks.

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