Another Chinese tech company is in hot water in the US.
Another Chinese tech giant is under investigation for selling to Iran
Huawei Technologies, the world’s largest telecoms equipment manufacturer, is being investigated by the US Department of Justice for potentially violating US sanctions on Iran, according to the Wall Street Journal.
It is unclear how advanced the criminal investigation is, or what kind of allegations are being made.
The probe into Huawei comes days after the Department of Justice imposed a seven-year component sales ban on Chinese telecom equipment maker ZTE, also for selling to Iran.
“Huawei complies with all applicable laws and regulations where it operates, including the applicable export control and sanction laws and regulations of the UN, US and EU,” Huawei’s US-based senior director for corporate communications told the South China Morning Post.
Huawei’s expansion into the US market has been met with resistance. Major phone carriers including AT&T and Verizon have dropped plans to sell Huawei phones, while retailer Best Buy also announced the decision in March to stop selling Huawei phones.
The reasons behind this are not clear, but in December a group of Congressmen wrote to the Federal Communications Commission expressing concerns about Huawei sales in the States, the New York Times reported.
Even the marketing campaign for the firm’s newest flagship handset, the Mate 10 Pro, has gone awry. “Wonder Woman” actor Gal Gadot, who was hired as a brand ambassador in January, raved about the phone on Twitter - using an iPhone.
The Israeli actor denied that she was an iPhone user, blaming her publicity team for the errant post.
Huawei had previously been subpoenaed by the US Commerce Department and the US Treasury Department’s Office of Foreign Assets Control, sources told the Wall Street Journal. But the Justice Department’s criminal inquiry suggests more serious misconduct - and consequently more serious repercussions.
While the commerce and treasury departments can levy sanctions and fines, the justice department can go further, imposing a corporate monitor or criminal penalties, and even charging individuals within the company.
Huawei only has a 1% market share for cellular and landline networks in the US. But the probe could lead to spillover effects for its overseas business, particularly in Europe.
Huawei follows on heels of fellow Chinese equipment maker ZTE. The US Department of Commerce has prohibited American companies from selling components and software to the firm for a period of seven years.
ZTE was punished because the US alleged it had sold millions of dollars worth of equipment to the embargoed nation of Iran, and then lied about the sales.
The US government has been suspicious of Huawei and ZTE for quite some time. In 2012, a congressional report concluded that “the risks associated with Huawei’s and ZTE’s provision of equipment to U.S. critical infrastructure could undermine core U.S. national-security interests.”
US government departments have been forbidden to conduct business with either company.
Huawei is a private company, but its founder Ren Zhengfei is a former technologist for China’s People’s Liberation Army. The Shenzhen-based firm has vehemently denied close links with the Chinese military.