Black Sheep

Huawei, the Chinese telecom giant, has insisted in recent years that it operates within the bounds of local and international laws and norms. When a former employee filed a legal claim alleging that he was directed by Huawei to steal rivals’ trade secrets, the firm declared, “Every employee is expected to adhere to applicable laws, regulations and business ethics in the countries where we operate.” But a new U.S. federal indictment issued this week alleges this was far from true.

Huawei, which makes smartphones as well as gear for connectivity, including the forthcoming super-fast 5G networks, has been largely barred from business in the United States for some time, partly over suspicions that it could build “back doors” into its equipment for spying or network mischief. Leading Chinese companies are often closely intertwined with, and required to be subservient to, the state. So far, tangible evidence of hardware meddling has not been made public, if it exists. However, concerns voiced in recent years about Huawei’s behavior now look prescient. According to the indictment, Huawei’s approach resembles that of the Chinese state: It is unbound by a rules-based, law-governed international order, and it is determined to succeed by using theft and duplicity.

In one case described in the indictment unveiled Monday by the Justice Department, Huawei headquarters in China instructed its employees in the United States to steal the design of a mobile-phone-testing robot developed by T-Mobile. This was a valuable piece of intellectual property that Huawei wanted for its own robot. Huawei engineers were repeatedly encouraged to carry out theft, and, the indictment says, on May 29, 2013, a Huawei engineer visiting T-Mobile slipped a robot arm into his bag and walked out of the laboratory. Overnight, he photographed the device and took critical measurements before returning it the next day, apologizing that it was taken by “mistake.” Later, Huawei responded to T-Mobile about the incident with gross deception, saying the thefts were “a moment of indiscretion” and did not reflect company policy when, in fact, the data had been sent to headquarters. Huawei even created a bonus program for workers who stole information from competitors.

This corporate deception is also behind the separate indictment of Huawei and its chief financial officer, Meng Wanzhou, the founder’s daughter, for bank and wire fraud. The indictment charges that Huawei misled the U.S. government and banks about business that violated Western sanctions against Iran. The legal proceedings against Ms. Meng, who is being held under house arrest in Canada pending an extradition request by the United States, should not be politicized in the current Sino-American trade dispute. If the charges in the indictments are true, then it is clear Huawei intentionally snubbed its nose at international norms and laws, which in turn means it could pose a potentially large national security risk to the West.

Doubts about Huawei are now being heard elsewhere, including in Australia, Poland, Britain and Germany. The next generation of connectivity — 5G networks — is far too important to put in the hands of a company that may work by lies and cover-ups.

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