The U.S. Department of Justice has officially charged the Chinese telecommunications equipment company Huawei with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) -- the same law used to bring down mafia leaders in the past
A 16-Count Charge
The 16-count indictment against the firm includes a charge of conspiracy to steal trade secrets as a “long-running practice of using fraud and deception to misappropriate sophisticated technology from U.S. counterparts,” according to DOJ’s allegations.
The list of indicted defendants includes Huawei and four official and unofficial subsidiaries:
The U.S. government also indicted Huawei’s Chief Financial Officer (CFO) Wanzhou Meng in 2018 when she was extradited from Canada on fraud charges.
How Huawei Allegedly Misappropriated U.S. Technology
In order to misappropriate technology, the Huawei would enter agreements with American companies just to gain access to their technology and then it would break those agreements and use the technology for itself. The U.S. government also noted that Huawei has been rewarding employees financially if they stole technology from competitors.
According to the DOJ, all of this has significantly improved Huawei’s position in the telecommunications equipment industry by giving the company an unfair advantage. The company allegedly used the stolen trade secrets and technology to drastically cut down its own research time and launch competing products much sooner.
The misappropriated IP included traded secrets and copyrighted information in the form of source code and user manuals for internet routers, antenna technology and robot testing technology (allegedly stolen from T-Mobile).
Lying to FBI, Obstruction of Investigations
According to the DOJ, Huawei executives have lied to the FBI in previous investigations and have also engaged in obstructive behavior to minimize litigation risk and the potential for a criminal investigation.
The allegations mention that Huawei also lied about its commercial relationships in sanctioned countries such as Iran and North Korea, as well about its relationship with Skycom, the company’s unofficial subsidiary. According to the U.S. government, Skycom has been aiding the Iranian government in domestic surveillance, including in 2009 during the Tehran demonstrations.
The U.S. government has previously accused Huawei of aiding the Chinese government in espionage. More recently, the American government accused Huawei of using the backdoor the U.S. government mandated for telecommunications equipment for its own law enforcement agencies.
Huawei has denied all previous accusations of aiding the Chinese government in espionage operations, including the recent backdoor access ones, as well as the 16-count charge the U.S. government is making against the company now.
The RICO Act
The RICO Act is a U.S. federal law that passed in the 70’s in order to close a loophole that allowed leaders of “enterprises” or organizations to escape prosecution if they had ordered someone to do a crime on their behalf, instead of doing it themselves. The law was initially used to prosecute mafia leaders, but it has since seen more widespread use.
The people found guilty of racketeering can serve up to 20 years in prison for each racketeering count.