Huawei Indictment Unsealed

2019/02/20

By: Danielle Hatch

Last month a 13-count indictment was unsealed, charging four defendants (all affiliated with Huawei Technologies Co. Ltd. (Huawei)). The indictment names Huawei, two of its subsidiaries, Huawei Device USA Inc. (Huawei USA) and Skycom Tech Co. Ltd. (Skycom) as well as Huawei’s CFO Wanzhou Meng (Meng). Huawei is the world’s largest telecommunications equipment manufacturer with operations around the world with a headquarters in the People’s Republic of China.

These charges are related to an alleged lengthy scheme devised by Huawei over the last 10+ years to deceive global financial institutions and the US government regarding Huawei’s activities in Iran. In 2007 Huawei claimed that it had not violated the US export regulations, or any other laws related to business activities in Iran. At the time these claims were made the company had an unofficial subsidiary in Iran, known as Skycom. Company employees and Meng told banking partners about the relationship between Skycom and Huawei, but explained that Huawei’s interest in Skycom was sold to an unrelated third party in 2007 so there were no issues. It was later found in 2012/2013 that Meng had served on the board of directors for Skycom and that Skycom was in fact run as an unofficial subsidiary of Iran. It was also later discovered that Huawei allegedly went as far as to fabricate a sale of Skycom to an unknown party, but the unknown party was actually controlled by Huawei making Skycom its longstanding Iranian subsidiary long after 2007. One of Huawei’s banking partners cleared over $100 million worth of Skycom-related transactions through the US banking system between 2010 and 2014.

Over the years Huawei and its principals lied to US government authorities about the relationship between Huawei and Skycom in responses to government inquiries. In 2017 when Huawei discovered that it was being investigated by the US government it began making an effort to move witnesses with knowledge about the company’s Iran-based business transactions to the People’s Republic of China in order to stay out of the US government’s jurisdiction. The company also began destroying and concealing evidence of the Iran-related activities that were directly related to transaction involving the US.

In late 2018, Canadian police arrested Meng pursuant to a provisional arrest warrant issued under Canadian law. The United States in now seeking Meng’s extradition.

Huawei and Skycom are charged with:

  • Bank fraud and conspiracy to commit bank fraud
  • Wire fraud and conspiracy to commit wire fraud
  • Conspiracy to defraud the US
  • Conspiracy to violate and substantive violations of the International Emergency Economic Powers Act (IEEPA)
  • Conspiracy to commit money laundering

Huawei and Hwauwei USA are charged with:

  • Conspiracy to obstruct justice related to the Grand Jury investigation

Meng is charged with:

  • Bank fraud
  • Wire fraud
  • Conspiracy to commit bank and wire fraud

This is just an indictment and all charges are only allegations at this point.

Justice Department: https://www.justice.gov/usao-edny/pr/chinese-telecommunications-conglomerate-huawei-and-huawei-cfo-wanzhou-meng-charged#_ftn1