Huawei faces racketeering trial in the US
A criminal trial against Chinese technology giant Huawei has begun in New York. US prosecutors accuse the company of a years-long racketeering scheme, theft of trade secrets, bank fraud, and violating sanctions against Iran and North Korea. If convicted, Huawei could face some of the largest corporate criminal fines in US history.
On September 8, jury selection began in federal court in Brooklyn. Opening statements were expected no earlier than September 9. Huawei denies the charges and pleads not guilty.
The case dates back to the first presidential term of Donald Trump. The US Department of Justice filed an expanded indictment against Huawei and related companies in 2020, accusing them of conspiracy under the RICO Act and systematic misappropriation of intellectual property from American technology companies.
Prosecutors allege a system of rewards for others' technology
One of the central aspects of the case involves the activities of a so-called "competition management group" within Huawei. According to US prosecutors, it paid employees bonuses for obtaining valuable confidential information from competitors, which employees could send through a special encrypted mailbox.
The Justice Department claims that for many years Huawei obtained competitors' source code, antenna technologies, documentation, and other trade secrets by using competitors' employees, confidentiality agreements, and intermediaries. Prosecutors argue this allowed the company to reduce costs and time on research and gain a competitive advantage.
One of the most notable incidents involves a T-Mobile lab. According to the indictment, a Huawei employee in 2013 removed part of a testing robot from the lab, hiding it in a laptop bag. Before returning the component, the Huawei engineer allegedly managed to send colleagues photos and measurements of it.
Iran and the role of Huawei's CFO
Another major part of the case involves Huawei's business in Iran. Prosecutors believe the company effectively controlled Hong Kong-registered Skycom, through which it conducted operations in the sanctioned country, while presenting Skycom to banks as an independent partner.
A key figure in this part of the trial will be Huawei CFO Meng Wanzhou, daughter of company founder Ren Zhengfei. She is not a defendant. In 2021, Meng agreed to a statement of facts in which she admitted misleading HSBC about Huawei's relationship with Skycom and its business in Iran. The court allowed prosecutors to present this document to the jury.
The US side also claims that Huawei used coded designations for work in sanctioned countries—specifically "A2" for Iran and "A9" for North Korea. The company is also accused of helping Iranian authorities install equipment to monitor participants in anti-government protests in 2009.
Huawei could face massive fines
The financial consequences of the trial could be significant. US racketeering laws allow for fines of up to twice the amount of revenue obtained through the wrongdoing. According to the Financial Times, a conviction could mean some of the largest corporate criminal fines in the US.
Indirect consequences could be equally important. Huawei is already on the US Entity List and faces restrictions on access to advanced technology and semiconductors. A conviction could further make international banks more cautious about working with the company.
Nevertheless, Huawei has continued to grow rapidly even after US sanctions. The company is expanding beyond telecommunications into electric vehicles, semiconductors, and artificial intelligence, and is localizing supply chains to reduce dependence on American technology. Its revenue last year reached $127 billion.
Huawei calls the case political
Huawei rejects the US prosecutors' version. The company says its success results from long-term investment in research and development and respect for intellectual property. In court filings, Huawei also argued that the prosecution was used by Washington as a pressure tool in its trade confrontation with China.
The trial could last several months and takes place amid renewed technological competition between the US and China. The Financial Times notes that the case could become an additional irritant in US-China relations ahead of the expected visit of Chinese President Xi Jinping to the US.
Based on materials from: Financial Times, US Department of Justice, Associated Press
