Huawei Faces U.S. Court Trial: Prosecutors Accuse Company of Stealing Trade Secrets and Hiding Iran Operations

Multiple media outlets report that the criminal conspiracy case involving Chinese tech giant Huawei opened Wednesday (9th) at the federal court in Brooklyn, New York. U.S. prosecutors allege that for approximately 20 years, Huawei expanded its global telecommunications business by stealing competitors' technology, concealing its operations in Iran, and abusing the U.S. financial system. Huawei denies the existence of any company-level criminal scheme.

Stout, a U.S. Department of Justice attorney, described Huawei in his opening statement as a "criminal enterprise" that gained market advantage through "stealing, lying, and covering up." He stated that the prosecution will present evidence on three fronts: theft of trade secrets, evasion of Iran sanctions, and assisting in surveillance of citizens.

First, regarding trade secrets, prosecutors accuse Huawei of conspiring to steal technology from five U.S. companies, including Cisco's (CSCO-US) network router operating system source code and T-Mobile's (TMUS-US) robotic arms used for testing smartphones.

Stout said the prosecution possesses video footage of Huawei employees stealing the robotic arms and will call witnesses during the trial who personally discovered Huawei's theft of technology.

Second, prosecutors allege that Huawei concealed its actual business activities in Iran to conduct dollar transactions through the U.S. financial system. Prosecutors argue that Huawei not only used the U.S. financial system to process payments related to Iran but also assisted the Iranian government in monitoring its citizens.

The prosecution's first witness is Baheshti. Born in Iran, he moved to the U.S. for studies and became a U.S. citizen in 2000. He returned to Iran in 2003 to be closer to his wife's family.

Baheshti said that in 2009, while working for a company aiming to expand internet services to remote areas of Iran, he came into contact with Huawei. Initially expecting Huawei to help expand internet coverage, he later discovered the company was more focused on analyzing Iranian citizens and their online behavior, prompting him to begin providing information to the U.S. government. Baheshti left Iran in 2011 after learning he was under investigation.

Huawei's defense attorney Heberlig denied the prosecution's claims, emphasizing that this case is about market competition, not criminal conspiracy. He stated that Huawei's growth stems from engineering capabilities, investment, innovation, and competition, and that there has never been a corporate-level criminal plan.

Heberlig accused the prosecution of selectively choosing isolated incidents and portraying normal business activities of multinational tech companies as criminal acts. He stated that the incidents involving Cisco and T-Mobile were the actions of individual employees, and management took corrective measures once they became aware.

Regarding an employee who secretly photographed Fujitsu network equipment during an exhibition, Heberlig called it a "stupid act" by that individual, and Huawei promptly fired the employee, arguing that this cannot prove a company-wide criminal conspiracy.

On the issue of Iran operations, the defense stated there is no evidence that Huawei knew its dollar clearing activities might violate U.S. sanctions regulations. Huawei could have avoided the U.S. financial system or used other currencies for transactions. The defense also claimed that banks allegedly misled by Huawei actually understood Huawei's business in Iran and actively sought to do business with the company.

This case originated in 2018.

U.S. prosecutors initially charged Huawei and its CFO Meng Wanzhou with making false statements about the company's business relationship with Iran to evade U.S. sanctions and transfer millions of dollars through the U.S. financial system.

As prosecutors later expanded the scope of charges, the case evolved into a criminal conspiracy involving multiple illegal activities.

Meng Wanzhou was detained in Vancouver, Canada, in 2018 under a U.S. arrest warrant. After nearly three years of extradition proceedings, she returned to China through a diplomatic arrangement among the U.S., China, and Canada.

The charges against Meng personally were dismissed in 2022 under a deferred prosecution agreement, but facts she admitted to in that agreement are expected to be used as evidence in this trial.

Some of the charges in this case also stem from investigations in 2012 and 2013 into Huawei's relationship with Skycom, an Iranian company. Reports indicate that Skycom planned to sell Hewlett-Packard computer equipment worth at least 1.3 million euros—subject to export restrictions—to Iran's largest mobile operator. Meng Wanzhou served as a director of Skycom from February 2008 to April 2009.

The trial is expected to last about three months. Huawei is currently the world's largest supplier of wireless telecommunications network equipment, but the U.S. restricts its network equipment on national security grounds and prohibits suppliers from exporting U.S. goods and technology to Huawei without a license from the U.S. Department of Commerce.