By Karen Freifeld
NEW YORK, Sept 9 (Reuters) – A U.S. prosecutor described China’s Huawei as a criminal enterprise that stole from American companies to build its telecommunications empire, as the trial against the tech giant kicked off in Brooklyn federal court on Wednesday.
“Theft, lies, cover-up,” Taylor Stout, a trial attorney from the U.S. Department of Justice, said in the government’s opening statement. “For 20 years, that’s how Huawei, a massive Chinese telecommunications company, victimized American companies and abused the American financial system, all in an effort to dominate the telecommunications industry around the world.”
Huawei conspired to steal trade secrets from five U.S. companies, including operating system source code for internet routers from Cisco Systems and a robotic arm to test phones from T-Mobile, to gain an unfair competitive advantage and grow its business, the prosecutor told jurors.
“We’ll hear from people who caught Huawei red-handed trying to steal American tech,” Stout said, adding there was video of an employee stealing the robotic arm.
The defense painted a very different picture of the company and its success in court.
“It’s about competition, not conspiracy. Innovation, not theft. Ordinary business dealings, not criminal conduct,” Brian Heberlig, one of a team of lawyers representing Huawei, said in his opening. “Huawei earned its success…There was no blueprint for crime.”
Huawei is known for its telecommunications equipment, mobile phones and, in recent years, AI chips. It does business globally but its networking gear is restricted in the U.S. and suppliers are banned from exporting U.S. goods and technology to the company without approval from the Department of Commerce.
DEFENSE SAYS GOVERNMENT ‘CHERRY-PICKING’
The case against Huawei began in 2018 with an indictment charging the company and its chief financial officer with bank fraud and sanctions violations for allegedly misrepresenting its business in Iran to get around U.S. sanctions and move millions of dollars through the U.S. financial system.
In the ensuing years, it grew into a sprawling indictment that includes racketeering, a pattern of illegal activity conducted by an enterprise to generate profit.
Heberlig, defending Huawei, told jurors that prosecutors will describe routine activities by global tech companies “but will twist those ordinary activities to try to make them look criminal.”
The government was “cherry-picking isolated events that should not be viewed as evidence of an overarching conspiracy that never existed,” he said.
He said the incidents involving Cisco and T-mobile were “actions by individual employees” and that management worked to make things right after learning of them. Another incident in which an employee took unauthorized photos of a Fujitsu networking device at a trade show was a “foolish act” by one employee who was “promptly fired,” the defense attorney said.
The prosecutor also accused the company of keeping the nature of its work in Iran secret, so it could launder U.S. dollars through the financial system and could help the Iranian government spy on its own citizens.
The defense said there was no evidence Huawei knew the dollar-clearing would violate U.S. sanctions law and that the company could have kept it outside the U.S. or in another currency. He also said the banks allegedly misled by Huawei knew about its business in Iran and still competed for its business.
In 2018, Huawei’s chief financial officer, Meng Wanzhou, was detained in Vancouver after being picked up on a U.S. warrant as a part of the original indictment. She fought extradition for nearly three years before being freed to return to China in a diplomatic agreement between the U.S., China and Canada.
The charges against her were dismissed in 2022 as part of a deferred prosecution agreement but admissions she made are set to be introduced as evidence at the trial, which is expected to last three months.
The criminal case is based in part on reporting by Reuters in 2012 and 2013 about close ties between Huawei and Skycom, a firm that operated in Iran.
Reuters reported that Skycom had offered to sell at least €1.3 million ($1.5 million) worth of embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator in 2010. Reuters also reported that Meng had served on Skycom’s board of directors between February 2008 and April 2009.
(Reporting by Karen Freifeld, Editing by Rosalba O’Brien)
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