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DOJ charges Huawei with racketeering, theft of trade secrets

The government says its investigation into Huawei is ongoing.

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Huawei phones are virtually invisible in the US despite their massive presence around the world.

Angela Lang/CNET

The US Department of Justice is charging Huawei and two of its US subsidiaries with racketeering and conspiracy to steal trade secrets. The new federal indictment, unsealed Thursday, accuses the Chinese telecommunications giant of using "fraud and deception" to steal technology from US companies. 

The indictment builds on charges the US filed against Huawei, the world's No. 1 telecom supplier and No. 2 phone manufacturer, in January 2019.

The new charges relate to alleged efforts by Huawei and its subsidiaries to steal intellectual property, including material from six US companies. The Justice Department said Huawei, through deceptive practices like violating terms of agreements and rewarding employees for turning over confidential information on competitors, managed to obtain nonpublic information related to internet router source code, cellular antenna technology and robotics.  

The indictment also includes new allegations related to Huawei's business with countries subject to sanctions, including Iran and North Korea. Huawei is accused of assisting the Iranian government, through unofficial subsidiary Skycom, with domestic surveillance. 

Huawei didn't immediately respond to a request for comment but reportedly told Cheddar: "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. The 'racketeering enterprise' that that government charged today is nothing more than a contrived repackaging of a handful of civil allegations that are almost 20 years old and that have never been the basis of any significant monetary judgment against Huawei. The government will not prevail on these charges which we will prove to be both unfounded and unfair." 

The updated charges escalate an already turbulent relationship between Huawei and the US government. The core issue is concerns about Huawei's coziness with the Chinese government and fears that its equipment could be used to spy on other countries and companies. Last year, the Commerce Department blacklisted Huawei following a May executive order from President Donald Trump that effectively banned the company from US communications networks. 

Specifically, the new charges include allegations that Huawei entered into confidentiality agreements with companies and owners of intellectual property and then violated the terms of those agreements by misappropriating the information for use in their own commercial products. Huawei also allegedly recruited former employees of companies and asked them to disclose trade secrets and intellectual property. The Justice Department also accuses the company of using professors at research institutions to steal intellectual property and provide it to Huawei.  

The Justice Department says Huawei was successful in amassing stolen intellectual property that allowed the company to reduce research and development costs and gain an advantage over competitors. 

Huawei is considered one of the leading suppliers of 5G gear. The company also supplies other 4G LTE equipment and has gained a foothold in many markets by being a price leader in telecommunications equipment. 

Earlier this week, Huawei was accused of using backdoors intended for law enforcement to access networks it helped build that are being used by phones around the world. The details were disclosed to the UK and Germany at the end of 2019 after the US had noticed access since 2009 across 4G equipment, according to a report from The Wall Street Journal, citing US officials. 

Huawei has long denied any wrongdoing and continues to maintain its innocence. 

The Trump administration has pressured other countries in Europe and around the world to keep Huawei equipment out of their 5G networks. The Federal Communications Commission has also banned Huawei products from government-subsidized network installations. 

"The indictment paints a damning portrait of an illegitimate organization that lacks any regard for the law," Senate Select Committee on Intelligence Chairman Richard Burr, a Republican from North Carolina, and Vice Chairman Mark Warner, a Democrat from Virginia, said in a joint statement. "Intellectual property theft, corporate sabotage, and market manipulation are part of Huawei's core ethos and reflected in every aspect of how it conducts business."

Last month, six senators, including Burr and Warner, introduced legislation that would help subsidize companies developing more-secure 5G gear. The bill would allocate at least $750 million to companies developing 5G wireless technology. It would also create a $500 million fund to be doled out to companies deploying "trusted and secure" equipment around the world. 

Originally published Feb. 13, 10:44 a.m. PT.
Update, 1:30 p.m.: Adds more background and information and a statement from leaders of the Senate intelligence committee; 3:25 p.m.: Adds reported Huawei comment.

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