British Columbia

New U.S. charges claim Huawei stole trade secrets, did business in North Korea

The U.S. Department of Justice has hit telecommunications giant Huawei with new charges, including stealing trade secrets and violating sanctions by doing business with North Korea.

New indictment filed in New York does not include any new charges against CFO Meng Wanzhou

A new superseding indictment filed in the U.S. accuses Huawei of stealing trade secrets and of doing business in North Korea.

The U.S. Department of Justice has hit telecommunications giant Huawei with new charges, including stealing trade secrets and violating sanctions by doing business with North Korea.

A new superseding indictment filed Wednesday in the Eastern District of New York also adds racketeering conspiracy charges to the allegations already facing Huawei.

The 16-count indictment includes the charges of bank fraud, wire fraud, conspiracy to commit bank fraud and conspiracy to commit wire fraud laid last year against the company's chief financial officer, Meng Wanzhou, who is currently fighting extradition to the U.S. from Vancouver.

Meng, who is the daughter of Huawei founder Ren Zhengfei, faces no new charges in the superseding indictment.

The existing charges allege she lied to banks about Huawei's control of a subsidiary that was violating U.S. economic sanctions against Iran.

A 'formal policy' to steal secrets

The new allegations against Huawei come as the Canadian government is deciding whether to allow the company to be part of Canada's 5G network.

The U.S. has excluded Huawei from its telecommunications grid and is pressuring its allies to follow suit. Last month, U.K. Prime Minister Boris Johnson announced the Chinese company could play a limited role in Britain's 5G network.

Huawei chief financial officer Meng Wanzhou arrives at B.C. Supreme Court for her extradition hearing. She is currently awaiting a ruling on the issue of 'double criminality.' (Ben Nelms/CBC)

The allegations laid out in the superseding indictment build on U.S. fears that Huawei has long engaged in intellectual property theft.

American prosecutors accuse Huawei of entering into confidentiality agreements with the owners of intellectual property and then violating those agreements by misappropriating the information.

They also allege Huawei "launched a formal policy instituting a bonus program to reward employees who obtained confidential information from competitors."

And they accuse the company of using third-party university professors as proxies to gain access to trade secrets.

None of the allegations has been tested in court.

In an emailed statement issued by Huawei on Thursday, the company said the charges are without merit and largely based on civil disputes that have already been settled in the courts. It says it will prove the allegations are unfounded.

"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."

Involvement in North Korea

In one case outlined in the superseding indictment, a Huawei employee was allegedly "discovered in the middle of the night" after a trade show "removing the cover from a networking device and taking photographs of the circuitry inside."

The individual allegedly wore a badge listing his employer as "Weihua" — Huawei spelled with its syllables reversed.

Michael Spavor, left, and former Canadian diplomat Michael Kovrig, are in Chinese custody, both having been charged with spying.
Michael Spavor, left, and former Canadian diplomat Michael Kovrig, right, were taken into custody after the arrest of Meng Wanzhou in Vancouver. They have been in Chinese jails for more than a year. (The Associated Press/International Crisis Group/The Canadian Press)

The company allegedly claimed he was a junior engineer. But the superseding indictment claims he was a "senior R&D engineer" who had worked at Huawei for seven years.

The new charges also outline concerns that financial institutions had about Huawei's presence in North Korea.

The indictment says Huawei representatives and employees repeatedly denied Huawei's involvement in numerous projects in North Korea.

But U.S. authorities claim Huawei was active in North Korea since at least 2008.

"Internal Huawei documents referred to the geographic locations of projects in North Korea with the code 'A9,'" the court document says.

"Huawei employees took steps to conceal Huawei's involvement in projects in North Korea."

The new indictment says Iran was referred to internally at Huawei by the code A2.

Awaiting ruling on 'double criminality'

Meng is awaiting a ruling on a key part of her extradition hearing that was held in January in B.C. Supreme Court.

The judge overseeing the case is expected to rule in the coming months on the question of double criminality — whether the offence Meng is accused of committing would be considered a crime if it had occurred in Canada.

She is accused of lying to an HSBC executive in Hong Kong in 2013 about Huawei's ownership of a Tehran subsidiary that allegedly attempted to sell American computer equipment in violation of U.S. economic sanctions.

The banks allegedly made decisions based on her assertions that put them at risk of violating sanctions.

Meng's lawyers claim the offence would not amount to a crime in Canada because Canadians did not have the same economic sanctions against Iran at the time the U.S. gave the authority to proceed with the case.

But the Crown alleges Meng's offence is fraud, plain and simple.

If Meng wins the double criminality argument, the extradition would come to a halt. If not, the case would move to arguments in June over an alleged violation of Meng's rights at the time of her arrest.

Meng was arrested at Vancouver International Airport in December 2018 on what was supposed to be a stopover on her way from Hong Kong to Mexico City. Her final destination was Argentina.

The 47-year-old has been living under house arrest in one of two multimillion-dollar homes she owns in Vancouver since she was released on $10 million bail a little more than a week after her arrest.

She is forced to wear a GPS monitoring bracelet under the terms of her release and is under the constant guard of a private security firm for which she foots the bill.

Meng says she is innocent of all the charges against her.

The case has sent relations between China and Canada into a tailspin, with the detention of two Canadians within a week of Meng's arrest.

Entrepreneur Michael Spavor and former diplomat Michael Kovrig were later formally arrested and now face accusations of spying in China, where they are incarcerated without access to lawyers or family.

China also cut off Canadian canola and meat imports in the past year, lifting a ban on pork and beef in November.



Jason Proctor


Jason Proctor is a reporter in British Columbia for CBC News and has covered the B.C. courts and the justice system extensively.