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Politics U.S. launches new criminal probe of Huawei over alleged trade-secret thefts

Consumer Electronics show attendees pass the Huawei Technologies booth on Jan. 10, 2019, at the Las Vegas Convention Center.

ROBERT LEVER

U.S. prosecutors have launched another criminal investigation of China’s Huawei Technologies – for stealing American trade secrets – as the United States campaigns to persuade allies such as Canada and Britain to ban the telecom-equipment maker’s gear from next-generation 5G networks.

The question of whether Huawei as China’s flagship tech company can be trusted lies at the heart of decisions by the United States and a growing list of allies, including Australia and New Zealand, to bar Huawei from 5G mobile networks that promise faster download speeds and more reliable connections.

Cybersecurity experts as well three former heads of Canadian spy agencies, have raised concerns that Huawei could be asked by Beijing to incorporate back doors into their equipment for spying or sabotage purposes. Under Chinese law, approved in 2017, companies are required to “support, co-operate with, and collaborate in national intelligence work.”

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The latest criminal investigation, reported by the Wall Street Journal on Wednesday, arose out of civil lawsuits, including one in Seattle, where Huawei was found liable for misappropriating robotic technology from wireless network operator T-Mobile. The lawsuit alleged two Huawei Device USA employees stole information related to a smartphone-testing robot.

News of this probe broke one day after Huawei’s founder, Ren Zhengfei, broke his silence on mounting troubles engulfing his company. Speaking to journalists on Tuesday in Shenzhen, where the company is headquartered, Mr. Ren, a former People’s Liberation Army engineer, maintained that his firm does not spy for China.

Huawei had “never received any request from any government to provide improper information,” Mr. Ren told reporters.

Meng Wanzhou, Mr. Ren’s daughter, is the chief financial officer of Huawei and the focus of another criminal investigation into the Chinese company by U.S. prosecutors. She was arrested at the Vancouver airport last month on allegations of misleading banks about Huawei’s control of a company operating in Iran and is currently out on bail awaiting a U.S. request to extradite her to the United States.

Ms. Meng’s arrest and the growing cybersecurity fears over Huawei have produced a crisis for China’s largest private company as it seeks to win new markets in the West for its mobile infrastructure gear. It and Scandinavian rivals Ericsson and Nokia are among the few major producers of the routers, switches and antenna equipment needed to build mobile networks and Huawei wants to win a much bigger share of the contracts for supplying the building blocks of Western wireless networks.

On Friday, Poland arrested a Chinese employee of Huawei and a former Polish security official on spying allegations. Reuters identified the Huawei employee as a man named Wang Weijing, and reported he was arrested but not charged. A LinkedIn profile for Mr. Wang showed he has worked for Huawei’s Polish division since 2011, and previously served as attaché to the Chinese general consul in Gdansk, Poland, from 2006 to 2011.

Lynette Ong, a University of Toronto political scientist with joint appointment at the Asian Institute and the Munk School of Global Affairs, said trouble is piling up for Huawei.

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“Huawei is really losing the PR game – from Canada to Poland and now back to the United States," she said. “It’s in so much worse position than it was one and a half months ago.”

Prof. Ong said Huawei is plagued by “huge baggage” – namely the Chinese government, which has a reputation for “very belligerent behaviour.”

In the Meng case, U.S. authorities allege the Huawei chief financial officer deceived international banks into clearing transactions with Iran – in violation of U.S. sanctions – by claiming the two companies making the deal were independent of Huawei, when in fact Huawei controlled them.

The Seattle investigation is the latest to fight what some in the Trump administration call China’s cheating through intellectual property theft, illegal corporate subsidies and rules hampering U.S. corporations that want to sell their goods in China.

T-Mobile alleged in a 2014 lawsuit, filed in federal court in Seattle, that Huawei employees stole technology relating to a smartphone-testing robot T-Mobile had in a lab in Bellevue, Wash. The robot, Tappy, used human-like fingers to simulate tapping on mobile phones. According to T-Mobile’s lawsuit, Huawei employees photographed the robot and attempted to remove one of its parts.

In May of 2017, a Seattle jury said Huawei should pay T-Mobile $4.8-million in damages.

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Canada and Britain are the two remaining members of the Five Eyes intelligence-sharing alliance that have yet to make a decision on barring Huawei from 5G.

Conservative national security critic Pierre Paul-Hus said the criminal cases against Huawei should be enough evidence for Prime Minister Justin Trudeau to join other allies and ban the Chinese telecom from selling its 5G equipment in Canada.

“It is clear that our international allies have concerns with Huawei and have vocalized these concerns to Canada on a number of occasions. It is time for Justin Trudeau to listen to our allies and partners, take our national security seriously, and ban Huawei from our 5G network upgrade,” Mr. Paul-Hus said.

With a report from Reuters

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