US files criminal charges in two Huawei cases, seeks extradition of CFO Meng Wanzhou

Key Points
  • The U.S. Justice Department plans to formally request the extradition of Huawei's CFO from Canada.
  • The arrest of Meng Wanzhou Dec. 1 in Vancouver has caused a two-month-long series of tense exchanges between China and Canada over the possibility that she could be transferred to the U.S.
  • China has strongly opposed both the arrest and the prospect of extradition.
  • The Justice Department also alleged Huawei stole trade secrets related to a phone-testing robot from T-Mobile.
DOJ charges Huawei with fraud, seeks extradition of CFO
DOJ charges Huawei with fraud, seeks extradition of CFO

The U.S. Department of Justice filed criminal charges Monday against Meng Wanzhou, the chief financial officer of China tech giant Huawei and the daughter of its founder and president Ren Zhengfei.

The Justice Department also announced charges Monday against Huawei for allegedly stealing trade secrets from T-Mobile. The charges stem from a civil trade secrets lawsuit filed by T-Mobile in 2014 over a robot called "Tappy," which was used in testing smartphones.

Acting Attorney General Matthew Whitaker said during a press conference that the Justice Department is seeking the extradition of Meng Wanzhou from Canada.

"We plan to file our formal extradition request and all the necessary documentation under the extradition treaty in the appropriate time frame," Whitaker said.

The Justice Department formally filed its request for extradition on Monday, Canadian authorities confirmed to CNBC. There was a Jan. 30 deadline for the request to be submitted.

Huawei said in a statement provided to CNBC that it was "disappointed to learn of the charges brought against the company today." Here's the rest of that statement:

After Ms. Meng's arrest, the Company sought an opportunity to discuss the Eastern District of New York investigation with the Justice Department, but the request was rejected without explanation. The allegations in the Western District of Washington trade secret indictment were already the subject of a civil suit that was settled by the parties after a Seattle jury found neither damages nor willful and malicious conduct on the trade secret claim. The Company denies that it or its subsidiary or affiliate have committed any of the asserted violations of U.S. law set forth in each of the indictments, is not aware of any wrongdoing by Ms. Meng, and believes the U.S. courts will ultimately reach the same conclusion.

China, meanwhile, said through an industry ministry official that the indictment against the company is unfair and immoral, according to Reuters.

FBI, DHS and Commerce officials announced the two actions on Monday, saying the allegations go back more than a decade. "Huawei and its senior executives repeatedly refused to respect U.S. law," said FBI Director Christopher Wray, in Monday's press conference. "Huawei ... systematically sought to steal valuable trade secrets."

Alleged fraud involving Meng Wanzhou

The U.S. Eastern District office alleges Meng, the company and a Hong Kong-based subsidiary called Skycom Technologies committed wire fraud, obstructed justice, conspired to launder money and violated the International Emergency Economic Powers Act (IEEPA) by doing business with sanctioned Iran.

Huawei and Meng allegedly committed fraud by lying to banks, misrepresenting their relationship with Skycom and whether they were improperly transferring U.S. technology assets and money between Iran and the company. It is illegal for banks to knowingly allow financial transfers that involve countries sanctioned under IEEPA.

"Had the [banks] known about Huawei's repeated violations of the [Iran sanctions] they would have reevaluated their banking relationshipos with Huawei, including the provision of U.S.-dollar and Euro clearing service to Huawei," the indictment reads.

The document also gives clues as to why Meng herself was arrested in Canada, and how the U.S. will position its request for her extradition from Vancouver. The allegations say Meng traveled through New York's John F. Kennedy International Airport in early 2014, "several months" after meeting with an executive from one of the banks.

She allegedly had on one of her electronic devices a text message of "suggested talking points," according to the Justice Department, which read in part: "The core of the suggested talking points regarding Iran/Skycom: Huawei's operation in Iran comports with the laws, regulations and sanctions as required by the United Nations, the United States and the European Union."

That financial institution later decided to sever its relationship with Huawei over its possible Iranian relationships through Skycom. The company also then went on to misrepresent the reasons for that bank ending the relationship, according to the indictment.

Alleged theft from T-Mobile

According to the Huawei indictment involving T-Mobile, Huawei allegedly used its supplier relationship with the mobile phone carrier to steal information, and even parts, from a robot that tested the sensitivity of cell phones.

The T-Mobile allegations say the trade secrets theft involved a top-down effort to gain knowledge of the robot, starting with a 2012 conference call in which a Huawei China engineer queried U.S.-based Huawei employees extensively about the robot, how it worked and requested they take photos of it from different angles and obtain serial numbers.

In its previous civil case against Huawei for the alleged thefts, Huawei said the robot was "common knowledge" and that it didn't steal T-Mobile's trade secrets.

Correction: The Department of Justice plans to file extradition paperwork in the Meng Wanzhou case by a Jan. 30 deadline.

Why the US thinks Huawei has been a massive national security threat for years
Why the US thinks Huawei is a massive national security threat

—CNBC's Arjun Kharpal contributed to this report.