The DOJ announced Monday that it brought thirteen financial fraud-related charges against Chinese telecom company Huawei and three other related defendants, including its CFO Wanzhou Meng.
The unsealed indictment charges Meng, Huawei, and two Huawei subsidiaries — Huawei Device USA Inc. (Huawei USA) and Skycom Tech Co. Ltd. (Skycom).
Meng, 46, who’s also known as Sabrina Meng and Cathy Meng, is the daughter of Huawei founder Ren Zhengfei.
The charges relate to an alleged long-running plot by Huawei, Meng, and other employees to deceive global financial institutions and the U.S. government regarding Huawei’s business activities in Iran.
Starting in 2007, Huawei employees allegedly misrepresented the company’s relationship to Skycom, an unofficial subsidiary in Iran. Huawei falsely claimed it only had limited operations in Iran and that it did not violate laws related to sanctioned country, the DOJ said.
After the press reported in late 2012 and 2013 that Huawei operated Skycom as an unofficial subsidiary in Iran, and that Meng had served on the board of directors of Skycom, she and other Huawei employees lied to Huawei’s banking partners about its relationship with Skycom.
They falsely claimed that Huawei had sold its interest in Skycom to an unrelated third party in 2007, the DOJ said.
The DOJ alleged that Skycom was Huawei’s longstanding Iranian subsidiary and Huawei orchestrated the 2007 sale of Skycom to appear more distant from the company.
In reality Huawei controlled the company that purchased Skycom.
According to the DOJ, in August 2013 Meng made a presentation to an executive of one of Huawei’s major banking partners, where she “repeatedly lied about the relationship between Huawei and Skycom.”
Huawei relied on its banking partners to process U.S. dollar transactions through the United States. One bank cleared more than $100 million worth of Skycom-related transactions through the United States between 2010 and 2014.
Huawei also “repeatedly lied to U.S. government authorities” about the relationship between Huawei and Skycom in submissions to the U.S. government, the DOJ said.
Huawei and Skycom were charged with bank fraud and conspiracy to commit bank fraud, wire fraud and conspiracy to commit wire fraud, conspiracy to defraud the United States, conspiracy to violate and substantive violations of the International Emergency Economic Powers Act (IEEPA), and conspiracy to commit money laundering, the DOJ said.
Huawei and Huawei USA were charged with conspiracy to obstruct justice related to the grand jury investigation in the Eastern District of New York.
Meng was charged with bank fraud, wire fraud, and conspiracy to commit bank and wire fraud.
The DOJ said Huawei and its subsidiaries engaged in serious fraudulent conduct, including conspiracy, bank fraud, wire fraud, sanctions violations, money laundering with “direct and personal involvement of their executives.”
“As I told Chinese officials in August, China must hold its citizens and Chinese companies accountable for complying with the law,” Acting Attorney General Matthew Whitaker said.
In a seperate indictment also unsealed Monday, Huawei was charged with theft of trade secrets conspiracy, attempted theft of trade secrets, seven counts of wire fraud, and one count of obstruction of justice.
According to the DOJ, Huawei attempted to steal and replicate phone testing technology from T-Mobile.
An FBI investigation discovered emails describing bonuses that Huawei offered to employees based on the value of information they stole from other companies and provided to Huawei using an encrypted email address.
In December, Meng was arrested in Vancouver, Canada. The DOJ said in Monday’s statement it is seeking her extradition to the United States.
Harry Cassin is the managing editor of the FCPA Blog.