Huawei, the Chinese telecoms giant, ran a bonus scheme to incentivise employees to steal technology from around the world while its top brass conducted covert operations to violate US sanctions against Iran, according to details from a flurry of criminal charges brought by the US against the Chinese company.
Huawei on Tuesday denied the allegations and said it was not aware of any wrongdoing by its chief financial officer, Meng Wanzhou, who was arrested in Vancouver at the end of 2018 on sanctions-busting charges. The Chinese government also rejected the charges.
The US Department of Justice indictment of Huawei, which sets forth almost two dozen specific allegations, represents a criminal case that embraces several dimensions and defendants.
On the central allegation of technology theft, much of the US case is related to T-Mobile, a leading US mobile phone company. T-Mobile had a robot used for testing mobile phones called “Tappy”, a key focus for Huawei as the Chinese company sought to develop its own phone testing equipment called XDeviceRobot, the indictment alleges.
“In 2012 and continuing through May 2013, Huawei China with help from Huawei USA employees undertook to steal T-Mobile’s Tappy technology for use in the development of its xDeviceRobot”, the indictment says.
It describes several instances in which Huawei China employees instructed their colleagues in the US to collect specific technological information on Tappy. In one such example, in a conference call that took place around June 30, 2012 a person identified as “F.W., a Huawei China engineer working on the xDeviceRobot project”, created a list of questions for Huawei USA colleagues to answer.
These include “requesting photos of the Tappy robot from different angles, and detailed technical specifications of Tappy, including component serial numbers, camera resolution, the sliding speed of the mechanical arm and the method of calculating the user interface response time”, according to the indictment.
On May 23, 2013, a person from Huawei identified as “A.X.” visited the Tappy lab and “surreptitiously placed one of the Tappy robot arms into his laptop bag and secretly removed it from the laboratory”, the indictment says. When T-Mobile employees discovered the robot arm was missing they contacted “A.X.”.
“A.X. initially falsely denied taking the robot arm, but then later claimed he found it in his bag,” the indictment alleges. He returned the arm the next day, describing his actions as a “mistake”.
In July 2013, Huawei China “launched a formal policy instituting a bonus programme to reward employees who stole confidential information from competitors” around the world, according to the indictment.
The size of the bonuses offered was graded by the value of the information supplied while an internal website was designated to receive such information. In the case of especially sensitive information, employees were told to send an encrypted email to a special email mailbox, the indictment says.
On allegations that Huawei broke Iran sanctions, Kirstjen Nielsen, secretary of Homeland Security, specifically pointed the finger at Ms Meng, whom the US aims to extradite from Canada. Ms Nielsen alleged that the Chinese company and Ms Meng “broke US law and have engaged in a fraudulent financial scheme that is detrimental to the security of the United States”.
The indictment claims that Huawei used an “unofficial subsidiary” called Skycom to obtain otherwise prohibited US-origin goods, technology and services — including bank services — for Huawei’s Iran-based businesses.
It also says that the Iranian government was a recipient of such goods, technology and services. The indictment adds that between February 2008 and April 2009, Ms Meng served on Skycom’s board of directors. The Chinese companies misrepresented the nature of its business in Iran to the US government by claiming that its operations did not violate US law, the indictment says.