BROOKLYN
A 13-count indictment was unsealed on in federal court in Brooklyn charging four defendants with bank fraud, including Huawei Technologies Co. Ltd., the world’s largest telecommunications equipment manufacturer, with headquarters in the People’s Republic of China or PRC and operations around the world.
The indicted defendants include Huawei and two Huawei affiliates — Huawei Device USA Inc. and Skycom Tech Co. Ltd.— as well as Huawei’s Chief Financial Officer Wanzhou Meng.
The defendants Huawei and Skycom are charged with bank fraud and conspiracy to commit bank fraud, wire fraud and conspiracy to commit wire fraud, violations of the International Emergency Economic Powers Act or IEEPA and conspiracy to violate IEEPA, and conspiracy to commit money laundering.
Huawei and Huawei USA are charged with conspiracy to obstruct justice related to the grand jury investigation in the Eastern District of New York.
Meng is charged with bank fraud, wire fraud, and conspiracies to commit bank and wire fraud.
“As charged in the indictment, Huawei and its subsidiaries, with the direct and personal involvement of their executives, engaged in serious fraudulent conduct, including conspiracy, bank fraud, wire fraud, sanctions violations, money laundering and the orchestrated obstruction of justice,” stated U.S. Attorney Richard P. Donoghue. “For over a decade, Huawei employed a strategy of lies and deceit to conduct and grow its business.”
“These charges lay bare Huawei’s alleged blatant disregard for the laws of our country and standard global business practices,” said FBI Director Christopher Wray. “Companies like Huawei pose a dual threat to both our economic and national security and the magnitude of these charges make clear just how seriously the FBI takes this threat. Today should serve as a warning that we will not tolerate businesses that violate our laws, obstruct justice, or jeopardize national and economic well-being.”
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Overview of the Indictment
The charges, in this case, relate to a long-running scheme by Huawei, its CFO, and other employees to deceive numerous global financial institutions and the U.S. government regarding Huawei’s business activities in Iran.
As alleged in the indictment, beginning in 2007, Huawei employees lied about Huawei’s relationship to a company in Iran called Skycom, falsely asserting it was not an affiliate of Huawei.
The company further claimed that Huawei had only limited operations in Iran and that Huawei did not violate the U.S. or other laws or regulations related to Iran.
Most significantly, after news publications in late 2012 and 2013 disclosed that Huawei operated Skycom as an unofficial affiliate in Iran and that Meng had served on the board of directors of Skycom, Huawei employees, and in particular Meng, continued to lie to Huawei’s banking partners about Huawei’s relationship with Skycom.
They falsely claimed that Huawei had sold its interest in Skycom to an unrelated third party in 2007 and that Skycom was merely Huawei’s local business partner in Iran.
In reality, Skycom was Huawei’s longstanding Iranian affiliate, and Huawei orchestrated the 2007 sale to appear as an arm’s length transaction between two unrelated parties, when in fact Huawei actually controlled the company that purchased Skycom.
As part of this scheme to defraud, Meng allegedly personally made a presentation in August 2013 to an executive of one of Huawei’s major banking partners in which she repeatedly lied about the relationship between Huawei and Skycom.
According to the indictment, Huawei relied on its global banking relationships for banking services that included processing U.S.-dollar transactions through the United States.
U.S. laws and regulations generally prohibited these banks from processing transactions related to Iran through the United States.
The banks could have faced civil or criminal penalties for processing transactions that violated U.S. laws or regulations. Relying on the repeated misrepresentations by Huawei, these banks continued their banking relationships with Huawei.
One bank cleared more than $100 million worth of Skycom-related transactions through the United States between 2010 and 2014.
In furtherance of this scheme to defraud, and as alleged in the indictment, Huawei and its principals repeatedly lied to U.S. government authorities about Huawei’s business in Iran in submissions to the U.S. government, and in responses to government inquiries.
For example, Huawei provided false information to the U.S. Congress regarding whether Huawei’s business in Iran violated any U.S. law.
Similarly, as indicated in the indictment, in 2007 — months before Huawei orchestrated the purported sale of Skycom to another Huawei-controlled entity — Huawei’s founder falsely stated to FBI agents that Huawei did not have any direct dealings with Iranian companies and that Huawei operated in compliance with all U.S. export laws.
After one of Huawei’s major global banking partners (identified as Financial Institution 1 in the indictment) decided to exit the Huawei relationship in 2017 because of Huawei’s risk profile, Huawei allegedly made additional misrepresentations to several of its remaining banking partners in an effort to maintain and expand those relationships.
Huawei and its principals are alleged to have repeatedly and falsely claimed that Huawei had decided to terminate its banking relationship with Financial Institution 1, when in fact it was Financial Institution 1 that had decided to terminate the banking relationship.
Through these misrepresentations, Huawei was able to continue its banking relationships with its other banks.
In 2017, when Huawei became aware of the government’s investigation, Huawei and its subsidiary Huawei USA allegedly tried to obstruct the investigation by making efforts to move witnesses with knowledge about Huawei’s Iran-based business to the PRC, and beyond the jurisdiction of the U.S. government, and by concealing and destroying evidence of Huawei’s Iran-based business that was located in the United States.
In December 2018, Canadian authorities apprehended Meng in Vancouver pursuant to a provisional arrest warrant issued under Canadian law. The U.S. government is seeking Meng’s extradition to the United States.
The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The indictment unsealed Monday is assigned to U.S. District Judge Ann M. Donnelly of the Eastern District of New York.
The government’s investigation is ongoing.