Business / Tech

U.S. criminal probe into Huawei reportedly in 'advanced' stages

AFP-JIJI, Reuters

Authorities in the United States are in the “advanced” stages of a criminal probe that could result in an indictment of Chinese technology giant Huawei, according to a report.

The Wall Street Journal, citing anonymous sources, said Wednesday that the Justice Department is looking into allegations of theft involving trade secrets from Huawei’s U.S. business partners, including a T-Mobile robotic device used to test smartphones.

The Justice Department declined to comment on the report and Huawei did not respond to a request for comment.

The move would further escalate tensions between the U.S. and China after the arrest last year in Canada of Huawei’s chief financial officer Meng Wanzhou, who is the daughter of the company’s founder and remains under house arrest, awaiting proceedings.

The Meng case has inflamed U.S.-China and Canada-China relations.

Two Canadians have been detained in China since Meng’s arrest and a third has been sentenced to death on drug-trafficking charges — moves observers see as attempts by Beijing to pressure Ottawa on the case.

Huawei, the second-largest global smartphone maker and the biggest producer of telecommunications equipment, has for years been under scrutiny in the U.S. over purported links to the Chinese government. Speaking in a rare media interview Tuesday, its reclusive founder, Ren Zhengfei, forcefully denied accusations that his firm engaged in espionage on behalf of the Chinese government.

The tensions come amid efforts by President Donald Trump to get more manufacturing on U.S. soil and to slap hefty tariffs on Chinese goods for what he claims are unfair trade practices by Beijing.

In a related move, lawmakers introduced bills to ban the export of American parts and components to Chinese telecom companies that are in violation of U.S. export control or sanctions laws — with Huawei and fellow Chinese firm ZTE the likely targets.

“Huawei is effectively an intelligence-gathering arm of the Chinese Communist Party whose founder and CEO was an engineer for the People’s Liberation Army,” said Republican Sen. Tom Cotton, one of the bill’s sponsors.

Democratic Sen. Chris Van Hollen said in the same statement: “Huawei and ZTE are two sides of the same coin. Both companies have repeatedly violated U.S. laws, represent a significant risk to American national security interests and need to be held accountable.”

The bills specifically cite ZTE and Huawei, both of which are viewed with suspicion in the U.S. because of fears their switches and other gear could be used to spy on Americans. Both have also been accused of failing to respect U.S. sanctions on Iran.

The legislation is the latest in a long list of actions taken to fight what some in the Trump administration call China’s cheating through intellectual property theft, illegal corporate subsidies and rules hampering U.S. corporations that want to sell their goods in China.

In November, the U.S. Department of Justice unveiled an initiative to investigate China’s trade practices with a goal of bringing cases to court over alleged theft of trade secrets.

At that time, Washington had announced an indictment against Chinese chipmaker Fujian Jinhua Integrated Circuit Co. Ltd. for stealing trade secrets from U.S. semiconductor company Micron Technology relating to research and development of memory storage devices.

Jinhua, which has denied any wrongdoing, was put on a list of entities that cannot buy goods from U.S. firms.

Last year, Trump reached a deal with ZTE that eases tough financial penalties on the firm imposed for helping Iran and North Korea evade American sanctions. Trump said his decision in May to spare ZTE came following an appeal by Chinese President Xi Jinping to help save Chinese jobs.

In Germany, the Handelsblatt newspaper reported that the government is actively considering stricter security requirements and other ways to exclude Huawei from building fifth-generation (5G) mobile networks.

Handelsblatt, citing government sources, said government officials were discussing setting security standards that Huawei could not achieve, effectively blocking its participation. Changes to the German telecommunications law were also under consideration as a last resort, the paper said.

The deliberations would mark a shift from the German government’s position in October, when it told lawmakers it saw no legal basis to exclude any vendors from an upcoming 5G auction despite warnings from Washington.

The government told lawmakers in a more recent response that the security of 5G networks was “extremely relevant,” and would guide its upcoming decisions, Handelsblatt reported.

U.S. officials have briefed allies that Huawei is ultimately at the beck and call of the Chinese state and warned that its network equipment may contain “back doors” that could open them up to cyberespionage.

Germany’s Deutsche Telekom announced in December that it would review its vendor strategy, and France’s Orange said it would not hire the Chinese firm to build its next-generation network in France.

The shift by the national market leaders, both partly state-owned, followed Huawei’s exclusion on national security grounds by some U.S. allies, led by Australia, from building their 5G networks.