Chinese tech giant Huawei is about to face a criminal trial in New York. The Financial Times reported that U.S. prosecutors have accused Huawei of operating as an "organized crime syndicate" that has involved stealing trade secrets from competitors, misleading banks, and violating sanctions over the past 20 years. Therefore, if Huawei is convicted, Huawei may face one of the largest corporate criminal fines in U.S. history.
The Financial Times titled "Is Huawei's rise based on crime?" pointed out that according to US prosecutors, Huawei once had an ambiguously named "competition management group" within Huawei, whose purpose was to issue monthly bonuses to employees who obtained the most valuable information about competitors. Employees could also send the obtained information to a special mailbox through encrypted emails.
The charge is one of the core of Huawei's criminal case. U.S. prosecutors have argued that Huawei is suspected of operating as a criminal enterprise, and related charges span two decades, from stealing competitor secrets to misleading banks about its Iran business. The case will be heard in the Federal Court for the Eastern District of New York and is expected to last several months.
One of the secret theft accusations involves the mobile phone testing robot of the US telecommunications company T-Mobile. The indictment stated that in 2013, after a Huawei employee entered the T-Mobile laboratory, he secretly put the robot arm into his laptop bag and took it away; before T-Mobile discovered and retrieved the arm, a Huawei engineer had sent photos and dimensions of the part to other colleagues.
The accusations Huawei faces also extend to Iran and North Korea. The indictment states that Huawei uses "A2" to refer to Iran and "A9" to refer to North Korea. Huawei represents and is accused of denying to banks the company's involvement in multiple North Korean programs. The United States also accuses Huawei of helping the Iranian government install surveillance equipment that was used to monitor, identify and detain demonstrators during anti-government demonstrations in 2009.
Reports indicate that although Meng Wanzhou, the daughter of Huawei founder Ren Zhengfei, is not a defendant in this case, she may become an important player. Meng Wanzhou was arrested in Vancouver, Canada in 2018 and released in 2021. At that time, she admitted that she had misled HSBC about Huawei's business in Iran. U.S. prosecutors have now obtained permission from the court to show the jury the relevant documents she signed that year.
Relevant documents show that Meng Wanzhou once described Skycom, which mainly operates in Iran, as a "third party" that cooperates with Huawei, but in fact Huawei controls Skycom; she also told banks that Huawei had sold all shares of Skycom, but these shares were actually sold to another entity controlled by Huawei.
If Huawei is convicted, the consequences could be severe. The report pointed out that because the Racketeer and Corrupt Organizations Act (RICO) allows fines of up to twice the proceeds of the relevant crime, Huawei may face one of the largest corporate criminal fines in U.S. history. Huawei has been included in the U.S. Entity List in 2019, and its access to some foreign technologies is restricted. If it is criminally convicted again, it may make banks even more wary of dealing with Huawei.
Huawei refutes the U.S. statement, believing that the U.S. Department of Justice has cobbled together criminal charges of different natures into one criminal pattern. It also said that trade secret disputes are common disputes among large technology companies in the fierce competition, and some secret theft charges have long exceeded the statute of limitations. Huawei emphasized that the company's success comes from long-term investment in innovation and respect for intellectual property rights, and said that it has been among the six companies with the highest R&D investment in the world for nine consecutive years.
"My view is that Huawei has basically given up on the idea of one day re-entering the U.S. market," said Scott Kennedy, senior adviser at the Center for Strategic and International Studies (CSIS).
Nevertheless, if the New York court rules against Huawei, especially if it results in huge fines and compensation requirements, it may still have a significant impact on Huawei. The U.S. Department of Justice may have difficulty seizing Huawei's assets in China, but it may assert rights to Huawei's assets in the United States, such as bank accounts.
The trial also hits a sensitive political moment between the United States and China. Reports say Chinese President Xi Jinping is expected to visit Washington this month, and Trump had hinted during his first term that the Huawei case could be part of negotiations with China. Experts believe that it cannot be assumed that Trump will intervene, but it cannot be assumed that the court process can be completely isolated from the negotiation table. The Huawei case also involves technology competition, Iran sanctions and US-China diplomacy. The trial, which may last for several months, may have an impact beyond the courts.
