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At Gathering of Spy Chiefs, U.S., Allies Agreed To Contain Huawei (#GotBitcoin?)

Spy chiefs from the West’s most powerful intelligence alliance agreed in a July meeting in Canada they needed to contain Huawei Technologies Co., according to people familiar with the matter, punctuating years of worry about the Chinese maker of telecommunications equipment.

Concerns are shared by top intelligence leaders from “Five Eyes” intelligence-sharing network—Australia, Canada, New Zealand, the U.K. and the U.S.

Soon afterward, in an unprecedented campaign, some of the chiefs began to speak out publicly about the risks associated with Chinese-made gear, especially to next-generation 5G mobile networks now starting to be rolled out world-wide.

The meeting in Canada drew together spy chiefs from the “Five Eyes” intelligence-sharing network, made up of English-speaking allies Australia, Canada, New Zealand, the U.K. and the U.S. Central Intelligence Agency Director Gina Haspel attended, according to these people.

Discussions touched on concerns about China’s cyber espionage capabilities and growing military expansion, people familiar with the meeting said. One focus was how to protect telecommunications networks from outside interference, according to one person familiar with the discussion.

Five Eyes members have long had differing levels of concern over Huawei and other Chinese equipment makers. They have also differed sharply in their tolerance for Huawei, in particular, as a supplier to their national telecommunication carriers. The U.S. has all but banned Huawei gear, while U.K. carriers have been big customers. Reflecting that divide, a person familiar with the meeting said participants agreed that an outright ban in many countries was impractical.

“The five countries are not all exactly alike in their views and willingness to speak out, but they all see the same threat,” said one of the people familiar with the meeting.

Huawei says it is employee-owned and not beholden to Beijing or any government. It says its equipment poses no more threat than any other supplier, because of the industry’s reliance on common suppliers with major Chinese operations. It declined to comment for this article. The Chinese government has said it “strongly opposes” accusations that Huawei poses national security threats.

The potential difficulties in confronting Huawei have been highlighted in recent weeks as China detained a former Canadian diplomat, Michael Kovrig after Canada arrested Huawei executive Meng Wanzhou and detained her on a U.S. extradition request in connection with alleged violations of Iran sanctions.

Canadian Woman Detained for Working Illegally in China, Beijing Says

Chinese official says the circumstances of Sarah McIver’s case differ from those of the other two Canadians being held.

China confirmed authorities are holding a Canadian woman for working illegally in the country, the third Canadian that Beijing has acknowledged detaining since Canada’s arrest of a Chinese telecommunications executive this month.

Chinese Foreign Ministry spokeswoman Hua Chunying said Thursday that the woman is undergoing administrative punishment for working illegally and promised that consular access will be provided.

Though Ms. Hua didn’t name the woman, a social-media account run by People’s Daily, the ruling Communist Party’s newspaper, identified her as Sarah McIver, and in response to a question, Ms. Hua said, “My understanding is that’s right.”

As with Canadian government statements on Wednesday, Ms. Hua tried to keep the latest case from escalating a diplomatic crisis, saying that the woman’s circumstances differed from those of former diplomat Michael Kovrig and entrepreneur Michael Spavor, who were detained last week on alleged national-security grounds.

Ms. Hua said her case is being handled by police, while the other two are with state security. “I think this is different,” she said at a media briefing. “The previous two persons were taken in for compulsory measures for engaging in activities that endanger China’s national security.”

Ms. Hua referred further questions to China’s Ministry of Public Security, which oversees the police. The ministry didn’t respond immediately to a faxed request for comment. The Canadian Embassy said it forwarded a request for comment to headquarters in Ottawa.

Beijing has sharply criticized the Canadian government for arresting Meng Wanzhou, the chief financial officer of Huawei Technologies Co. and daughter of the company’s founder, while she was changing planes in Vancouver on Dec. 1. Canada acted at the behest of the U.S., which is seeking Ms. Meng on allegations she misled banks about Huawei’s business in Iran in violation of sanctions.

Security experts and China watchers say they believe the arrests of Messrs. Kovrig and Spavor were meant to punish Canada for its role in the arrest of Ms. Meng and to persuade Ottawa to let her go. She is currently free on bail but under electronic monitoring and required to remain in the Vancouver area.

In a piece published in Toronto’s Globe and Mail last week, China’s ambassador to Canada, Lu Shaye, said Canada detained Ms. Meng in an unreasonable way.

“Those who accuse China of detaining some person in retaliation for the arrest of Ms. Meng should first reflect on the actions of the Canadian side,” he wrote.

Canadian officials have said Ms. Meng’s arrest was conducted in accordance with the rule of law and international treaty obligations.

Canadian officials said a third citizen had been detained in China, but declined to identify the person or provide other details.

Canadian media reports identified the individual as Ms. McIver, a woman from western Canada who was teaching English in China.

Under Chinese law, police can detain foreigners found working illegally for up to 15 days, unless the cases involve drug or sex-work offenses.

“There is a great deal of discretion as to when and whether to remove foreigners,” said Jeremy Daum, a senior research fellow at the Yale China Law Center.

English teachers are in high demand in China, drawing in many young Westerners. For years, China job message boards for foreigners have warned that some schools trick some applicants into teaching jobs without proper visas.

Employees of English-language schools in China said Thursday that authorities have been cracking down in recent months on foreign English teachers without proper work papers and that the sweep hasn’t been targeted at specific nationalities.

Canadian Prime Minister Justin Trudeau said Wednesday that the case of the third Canadian detained appeared to deal with what he described as routine issues, without elaborating. In contrast, Mr. Trudeau said, Messrs. Kovrig and Spavor “were accused of serious crimes.”

Kim Nossal, an international-relations professor at Queen’s University in Kingston, Ontario, said the best tool Mr. Trudeau has is to persuade his Western allies to speak up and urge the Canadians’ release. “Because they could be next,” he said.

China’s detention of Messrs. Kovrig and Spavor and now a third Canadian has put the country in a tricky spot, as it is facing intense pressure from the U.S. to ban Huawei from being an equipment supplier in the buildup of Canada’s 5G mobile network.

“This adds another layer of difficulty” to Canada’s ruling on Huawei, said Andy Ellis, a former senior official at the Canadian Security Intelligence Service. “Now you are in a situation where the right decision might be to wait because you have citizens being held.”

The U.S., Australia and New Zealand—which belong to the “Five Eyes” intelligence-sharing pact with Canada and the U.K.—have put restrictions in place on Huawei equipment.

Canada Reveals a Third Citizen Detained by China

Trudeau says latest case doesn’t fit pattern of others following arrest of Huawei CFO in Vancouver

Canada revealed a third Canadian national in just over a week has been detained in China since the arrest in Vancouver, British Columbia, of Huawei Technologies Co.’s chief financial officer.

Prime Minister Justin Trudeau said Wednesday that this new case appears to differ from the detention last week of two Canadians—a former diplomat, Michael Kovrig, and an entrepreneur, Michael Spavor, with ties to North Korea—who are both reportedly being held on national security grounds.

Security experts and China watchers say they believe the arrests are meant to punish Canada for its role in the arrest of Huawei’s Meng Wanzhou, and persuade Ottawa to release her.

“We are looking into the details of this most recent [case] that doesn’t seem to fit the pattern of the previous two,” Mr. Trudeau said at a press conference.

Later, he said the case of the third Canadian detained appeared to deal with what he described as routine issues, without elaborating. In contrast, Mr. Trudeau said, Messrs. Kovrig and Spavor “were accused of serious crimes.”

A representative from China’s Embassy in Ottawa said diplomats there had no information regarding the case Canada revealed Wednesday.

Chinese state media reported last week the two Canadians were placed under investigation for allegedly “engaging in activities that endanger China’s national security,” a sweeping allegation frequently used against Chinese dissidents and often applied to espionage cases. China has granted Messrs. Kovrig and Spavor access to Canadian consular officials.

A spokesman for Canada’s foreign department didn’t provide further details on the person held in Chinese custody, such as the person’s identity or where the arrest took place, citing privacy issues. A spokesman said consular officials are providing assistance to the family.

Late Wednesday, two Canadian media outlets—National Post newspaper and Canadian Broadcasting Corp.—reported the individual detained is Sarah McIver, a woman from western Canada who was teaching in China. Both reports said the issue dealt with her visa. A spokeswoman for Mr. Trudeau declined to comment Wednesday night on the reports.

A Canadian Conservative Party lawmaker, Erin O’Toole, tweeted that his office informed Foreign Minister Chrystia Freeland on Tuesday about the possibility of another Canadian detained in China. “We remain very concerned about these reports & continue to urge the Prime Minister to intervene personally,” he wrote. A representative for Mr. O’Toole said the lawmaker could not divulge more information due to privacy concerns.

Canada arrested Ms. Meng and detained her on a U.S. extradition request in connection with alleged violations of sanctions against Iran.

In a piece published in Toronto’s Globe and Mail last week, China’s ambassador to Canada, Lu Shaye, said Canada detained Ms. Meng in an unreasonable way.

“Those who accuse China of detaining some person in retaliation for the arrest of Ms. Meng should first reflect on the actions of the Canadian side,” he wrote.

Ms. Freeland said the arrest of Ms. Meng was conducted in accordance with the rule of law and Canada’s international treaty obligations. Ms. Meng was released on bail last week in a provincial court in Vancouver, and must remain in that city, wear electronic monitoring and submit to a curfew.

At his press conference, Mr. Trudeau defended the government’s approach in seeking the Canadians’ release. “Sometimes politicizing or amplifying the level of public discourse on this may be satisfying in the short term but would not contribute to the outcome we all want—which is for Canadians to be safe and secure.”

Kim Nossal, an international-relations professor at Queen’s University in Kingston, Ontario, said the best tool Mr. Trudeau has is to persuade his Western allies to speak up and urge the Canadians’ release. “Because they could be next,” he said.

Last week, Secretary of State Mike Pompeo warned China that “the unlawful detention of two Canadian citizens is unacceptable,” and said they ought to be returned. Mr. Nossal said, however, that Washington has hurt Ottawa’s cause after President Trump said he might intervene in Ms. Meng’s case if it meant securing a trade pact between the U.S. and China.

China’s detention of Messrs. Kovrig and Spavor and now a third Canadian has put the country in a tricky spot, as it is facing intense pressure from the U.S. to ban Huawei from being an equipment supplier in the buildup of Canada’s 5G mobile network.

“This adds another layer of difficulty” to Canada’s ruling on Huawei, said Andy Ellis, a former senior official at the Canadian Security Intelligence Service. “Now you are in a situation where the right decision might be to wait because you have citizens being held.”

The U.S., Australia and New Zealand—which belong to the “Five Eyes” intelligence-sharing pact with Canada and the U.K.—have put restrictions in place on Huawei equipment.

After the meeting in Canada, first reported by The Australian Financial Review, some of the typically reticent intelligence officials who were there made unusual public comments about what they saw as a growing threat posed by Huawei.

Australian Signals Directorate Director-General Mike Burgess warned in October that entire transport and utility grids could be crippled if 5G—the new mobile network technology that promises ultra-fast connections—were compromised.

The head of the British Secret Intelligence Service, or MI6, Alex Younger said earlier this month the government needed to decide how comfortable it was with allowing Huawei to supply a 5G mobile network in the U.K.

A day later, Canadian Security Intelligence Service head David Vigneault told a business audience the agency had observed increased state-sponsored espionage in fields such as 5G, though he didn’t cite any specific states.

Officials haven’t publicly said whether their fears are based on theoretical vulnerabilities, or specific issues with hardware or software that has caused alarm. The U.K. has said it identified unspecified “shortcomings” in Huawei’s engineering processes, that exposed new risks to the country’s telecommunication networks. It has asked Huawei to fix those failings.

Publicly, U.S. officials have said their biggest worry is that Beijing could compel Huawei to use its knowledge of its equipment to spy on or sabotage foreign telecommunications networks.

The U.S. has warned allies and foreign telecommunications companies to stay clear of Chinese telecom suppliers like Huawei, though some have pushed back. The U.S. has been pressuring German authorities for months to drop Huawei, according to people familiar with the matter, but the Germans have asked for more specific evidence to demonstrate the security threat.

German authorities and telecom executives have yet to turn up any evidence of security problems with Chinese equipment vendors, according to a person familiar with the matter. In February, executives at one German telecom carrier notified two German federal offices that it was in receipt of a warning message from U.S. authorities regarding Chinese equipment, according to a person familiar with the matter. Those offices, the Federal Office for Information Security and the domestic intelligence service, responded that “there is currently no reliable knowledge” regarding such concerns about the Chinese vendors.

On Friday, Deutsche Telekom AG said it was reviewing its procurement strategy for vendor equipment given “the global discussion about the security of network elements from Chinese manufacturers.” The Bonn-based carrier, which uses network components from Huawei as well as Ericsson AB, Nokia Corp. and Cisco Systems Inc., is preparing for Germany’s 5G spectrum auction expected in the spring.

Australia has been moving more aggressively. The government blocked Huawei equipment from 5G mobile networks and fiber roll outs. New Zealand followed in late November with intelligence officials blocking cellphone company Spark from using Huawei equipment in s 5G roll out, citing “significant national security risks.” Britain’s BT Group PLC said last week that it would remove Huawei equipment from the core of its existing 4G mobile network as part of a long-planned upgrade.

Executives of one British carrier said that government authorities have assured them they will not be required to remove and replace existing Huawei equipment. Discussions with British officials center on whether the government should allow Huawei to be used in only 5G cellular-antenna equipment, which the carrier says presents only a small security risk.

The U.S. has been concerned about Huawei since at least 2007, when national-security officials reviewed and eventually blocked the company’s bid to acquire an American tech company. Australia and New Zealand have worried about the potential threat posed by Huawei equipment since 2010, according to officials. Australia banned Huawei in 2012 from contracts for a new multibillion-dollar national fiber broadband network.

In 2012, as part of their formal investigation of Huawei, members of the U.S. House Intelligence Committee spoke to Australian and British intelligence officials about the risks of using the company’s equipment, said Rep. Dutch Ruppersberger of Maryland, then the committee’s ranking Democrat. The Australians were especially wary.

“They didn’t want any part of Huawei,” Mr. Ruppersberger said in an interview. “They didn’t want to expose their country and take that risk.”

Updated 1-14-2019

Chinese Huawei Executive Is Charged With Espionage in Poland

Detention follows a U.S. push to dissuade allies around the world from using Huawei gear.

Polish authorities arrested a sales director of Huawei Technologies Co. and charged him with conducting espionage on behalf of China, raising the stakes over Western allegations the global company is a spying tool for Beijing.

The Chinese national’s detention follows the December arrest of Huawei’s chief financial officer in Canada, at the U.S.’s request, on allegations the company violated U.S. sanctions on Iran. Unlike that case, the Polish charges relate directly to suspicions by Washington and other Western governments that China could use Huawei equipment, or its employees, to help it spy on foreign governments and companies.

Polish officials said Huawei itself wasn’t charged with any wrongdoing. They didn’t detail the charges or say whether any sensitive information was compromised. Officials also arrested a Polish national on the same charge.

For years, Washington has labeled Huawei a national security threat, saying Beijing could force it to tap into or disable foreign communications networks. Huawei has denied that forcefully, pointing out that it hasn’t been implicated in any overseas spying allegations. The Polish charges could change that.

The arrest comes amid other diplomatic, military and economic tensions between the U.S. and China. The Trump administration has ratcheted up scrutiny of Huawei as it pursues a broader strategy of changing Chinese practices on trade and industrial development. Washington and Beijing have been engaged in a tit-for-tat tariff fight that has rattled global markets.

Poland’s arrest also comes in an especially sensitive region for the U.S. Poland is an important military ally and key North Atlantic Treaty Organization member. President Trump has forged close links with the nationalist Polish government, which has proposed paying Washington to set up a military base there. The U.S. also has several thousand troops in Poland, part of the West’s response to Russia’s 2014 annexation of Crimea and intervention in Ukraine.

Any spying in Poland can be especially delicate for the U.S. and its allies because of NATO intelligence sharing. There is no indication so far, however, that Polish officials believe any such information has been compromised

Huawei has come to play a big role in Poland’s telecom infrastructure and smartphone market as the company grew quickly from a mostly Chinese-focused supplier to the world’s biggest maker of telecom equipment and second biggest smartphone maker, behind Samsung Electronics Co.

Counterintelligence agencies elsewhere in the region have issued unusually public warnings against Huawei for years. That has been part of broader international scrutiny of cyber vulnerabilities in NATO’s eastern flank, a front line for cyberattacks against U.S. allies. As far back as 2013, the Czech Security Information Service, a domestic security agency, suggested excluding Huawei from public tenders and said the company might be installing backdoors on its equipment to allow outsiders to log into government computers from elsewhere.

Huawei said it complies with laws and regulations in the countries where it operates, and requires employees to do the same. A spokesman said the company was looking into the Polish arrest. A Chinese Foreign Ministry statement said Beijing “is highly concerned” about the arrest.

Officers of Poland’s counterintelligence agency this week searched the local Huawei office, confiscating documents and electronic data, as well as the home of the arrested Chinese national, said Stanislaw Zaryn, a spokesman for Poland’s security coordination office. The man wasn’t named, but people familiar with the matter identified him as Weijing Wang. He is known in Poland as Stanislaw Wang, according to these people and a public LinkedIn page that matches his biographical details.

People who know Mr. Wang described him as a well-known figure in local business circles, often spotted at events sponsored by Huawei in Poland. “He spoke great Polish,” said a Polish businessman who organizes frequent commercial delegations to China.

Before taking over as a Huawei sales director in Poland, Mr. Wang was a Huawei public-relations director in the country, according to this person and the LinkedIn page. He worked at the Chinese consulate in Gdansk, Poland, according to a friend and the LinkedIn page, which says he was an attaché there for more than four years before joining Huawei in 2011.

In Poland, Mr. Wang worked in Huawei’s enterprise division, handling sales of information-technology and communications equipment to government customers, said people familiar with the matter. That business area sometimes involves a higher level of scrutiny than others, one of these people said.

As part of the same investigation, Poland’s Internal Security Agency, or ABW, also detained one of its own former senior officials, a Polish citizen who was deputy head of the agency’s IT security department. The crime they are charged with, espionage, carries up to 10 years’ imprisonment. Both pleaded not guilty.

Former senior Polish officials familiar with the case identified the former senior IT official as Piotr Durbajlo, who held a series of sensitive jobs in the Polish government and its intelligence services.

Mr. Durbajlo, according to his LinkedIn page, served in 2009-2013 as deputy director of the ICT security department at ABW. After that, he held until 2016 senior jobs at Poland’s Office of Electronic Communications, an agency that among other tasks oversees classified government communications. He also served as an adviser in Poland’s prime minister’s office in 2016, according his LinkedIn page.

In recent years, Mr. Durbajlo also taught at the Cardinal Stefan Wyszinski University in Warsaw. His official bio on the university’s website says he set up the Polish government’s special communications network during its presidency of the European Union and received numerous government awards. A 2011 Polish news article quoted Mr. Durbajlo describing the brand-new system that his agency had designed for secure cellphones used by Poland’s topmost government officials.

“He had access to the most sensitive information,” said one former senior official who worked with Mr. Durbajlo. “He is quite a smart guy, but he was no James Bond. More like a typical IT director.”

Polish counterintelligence officers also searched the offices of French telecommunications carrier Orange SA, where Mr. Durbajlo had previously worked, according to Polish state-owned television. Orange’s local unit said it had handed over belongings of one of its employees. “We have no knowledge if there is any relation of these actions to his professional duties,” it said. Orange said it was cooperating with the probe.

Last month, Canadian authorities, at the behest of U.S. officials, arrested Huawei CFO Meng Wanzhou on charges she lied to banks about the company’s business in Iran. Ms. Meng denies the charges. Days later, Beijing arrested a former Canadian diplomat in what friends and former colleagues said was retaliation.

In 2012, a U.S. congressional report labeled Huawei a national security threat, a finding the company said was politically motivated. A number of countries, including Australia, the U.K., Germany, New Zealand and Japan have all agreed to review their telecom-gear supply chain, or have specifically restricted the sale of Chinese gear. Huawei has long denied it spies, saying that it is owned by its employees and operates independently of Beijing.

Washington more recently has pressed allies aggressively to avoid using Huawei gear. The push comes as many carriers around the world start rolling out 5G, the latest generation of mobile-telecom technology that promises faster connections and is envisioned to help enable internet connections for everything from factories to toothbrushes.

Poland has been Huawei’s top market in Central and Eastern Europe. Last year, the government named the company an official partner of its 5G strategy. In September, Huawei and Orange’s local unit began installing the first test antennas of a 5G network the two companies hoped to launch together. In November, the prime minister’s office said Huawei would build a science-and-technology center in the capital. It already runs a research-and-development center there.

“Poland is Huawei’s base camp in the region,” said Mo Jia, an analyst at Canalys.

Polish Ex-Security Official Charged With Spying For China During Government Service

Piotr Durbajlo and Huawei employee Wang Weijing were arrested last week by Polish authorities.

A former senior Polish intelligence official, arrested here with a Huawei Technologies Co. employee last week, has been charged with spying for China while he worked in government with top-level access to Polish and allied intelligence, according to an official familiar with the matter.

Last week, Polish authorities arrested the ex-official, currently employed by French telecommunications carrier Orange SA, along with the Huawei executive. They have both been charged with espionage. Polish officials didn’t provide further details about the case, making it unclear until now whether they thought the former official, Piotr Durbajlo had been spying before leaving government service.

Between 2000 and 2017, Mr. Durbajlo worked in a series of posts with high security clearances, giving him access to sensitive communication and databases including information shared between allies like the U.S. and the North Atlantic Treaty Organization.

Attorneys for both men weren’t available to comment.

Huawei fired the arrested employee, Wang Weijing, over the weekend and said his alleged actions had nothing to do with his employment at the company.

The Chinese telecom-equipment maker is in the middle of a global firestorm over accusations by the U.S. and some of its allies that its gear poses a security risk because the company may be compelled by Beijing to help it spy overseas. Huawei has denied it spies for any government.

The arrest in Poland was the latest high-profile setback amid Huawei’s efforts to defend itself. Last month, Canadian officials arrested Huawei Chief Financial Officer Meng Wanzhou, at the U.S.’s behest, on allegations she lied about Huawei’s business ties in Iran. Ms. Meng has denied the charges.

Updated: 1-17-2019

Federal Prosecutors Pursuing Criminal Case Against Huawei For Alleged Theft of Trade Secrets

Probe involves allegations that Huawei stole robot phone-testing technology from T-Mobile.

Federal prosecutors are pursuing a criminal investigation of China’s Huawei Technologies Co. for allegedly stealing trade secrets from U.S. business partners, including the technology behind a robotic device that T-Mobile US Inc. used to test smartphones, according to people familiar with the matter.

The investigation grew in part out of civil lawsuits against Huawei, including one in which a Seattle jury found Huawei liable for misappropriating robotic technology from T-Mobile’s Bellevue, Wash., lab, the people familiar with the matter said. The probe is at an advanced stage and could lead to an indictment soon, they said.

A Justice Department spokesman declined to comment.

A Huawei spokesman declined to comment. The company contested the T-Mobile case, but conceded that two employees acted improperly.

The federal investigation puts added pressure on the Chinese technology giant, the world’s largest maker of telecommunications equipment and the No. 2 maker of smartphones world-wide. It comes amid a broader push by the Trump administration to aggressively pursue claims of intellectual property theft and technology transfer by Chinese companies.

Huawei has long been under scrutiny by the U.S., which has effectively blocked the Chinese telecom company from installing its equipment in major U.S. networks because of concerns that its gear could be used to spy on Americans.

Huawei has forcefully denied that it is a security threat, says it is owned by its employees and operates independently of the Beijing government.

U.S. pressure on Huawei has been building. Last month, Canadian authorities arrested Huawei Chief Financial Officer Meng Wanzhou at the request of U.S. authorities. Ms. Meng, the daughter of company founder Ren Zhengfei, is accused of misleading banks about the nature of Huawei’s business in Iran, leading to violations of U.S. sanctions on the country.

Ms. Meng has denied the charges, and Huawei says it follows the law in all countries where it operates.

In another development, Polish authorities last week arrested Huawei executive Wang Weijing and charged him with conducting espionage on behalf of the Chinese government. Huawei wasn’t accused of wrongdoing, and the company on Saturday terminated Mr. Wang’s employment.

On Tuesday, Huawei’s founder made a rare appearance before international media at the company’s headquarters in the southern Chinese city of Shenzhen, seeking to directly confront the concerns. Mr. Ren said Huawei hasn’t—and would never—spy on behalf of the Chinese government.

The new federal investigation against Huawei involves, in part, allegations leveled in the civil suit by T-Mobile in 2014, according to the people familiar with the matter.

At the time, T-Mobile had hired Huawei to supply cellphones for the U.S. wireless network operator, according to the lawsuit. T-Mobile had developed a testing robot it nicknamed “Tappy” to perform quality-control tests on phones that it sold.

During the course of the business relationship, Huawei employees asked detailed questions about the robot and repeatedly sought information about proprietary technology, the T-Mobile lawsuit claimed.

In one alleged instance, two Huawei employees slipped a third one into the testing lab to take unauthorized photos of the robot. One employee also tried to hide the fingerlike tip of “Tappy” behind a computer monitor so that it would be out of view of a security camera, and then tried to sneak it out of the lab in his laptop-computer bag, according to the lawsuit.

That employee later admitted that he took the component because Huawei’s research and development office believed the information would improve its own robot, the lawsuit said.

“Due to Huawei’s material breaches of its contracts with T-Mobile, and its unlawful theft of trade secrets, T-Mobile was forced to stop its ongoing handset supply relationship with Huawei at substantial cost,” the lawsuit said. “Huawei has used the robot technology it misappropriated from T-Mobile to unjustly gain a commercial advantage worth hundreds of millions of dollars.”

In a filing responding to T-Mobile’s allegations, Huawei said it didn’t steal trade secrets because Tappy wasn’t a secret at all. Video of the device could be easily found on YouTube, and details of its design and specifications were published in numerous patents, Huawei said.

The case eventually went to trial, and a jury in 2017 awarded T-Mobile $4.8 million after it found Huawei breached its contract with the network operator.

“With the jury finding misappropriation of trade secrets and breach of contract, we won the first trial that we believe revealed their wrongdoing and began to unravel the Huawei story,” T-Mobile’s lawyer on the trial, John Hueston, said Wednesday.

The Justice Department in recent months has stepped up its efforts to prosecute allegations of Chinese technology theft, including by bringing criminal cases involving conduct previously outlined in civil lawsuits.

In November, it unsealed charges against a Chinese state-owned business and its Taiwan partner for allegedly stealing trade secrets from the U.S.’s largest memory-chip maker, Micron Technology Inc. That came after Micron sued the companies over similar allegations.

Updated 1-24-2019

U.S. Believes It Doesn’t Need to Show ‘Proof’ Huawei Is a Spy Threat

Chairman of Chinese telecom firm contends Huawei is being unfairly targeted.

The chairman of embattled telecom giant Huawei Technologies Co. is pushing back against claims his company conducts espionage for the Chinese government, contending that Huawei is being unfairly targeted without any proof. “If they believe there’s a backdoor, they should offer evidence to prove it,” Liang Hua told reporters on the sidelines of the World Economic Forum in Davos this week.

But the U.S. says that Huawei’s very structure, with its close ties to the Chinese government and role as a supplier of key hardware in telecommunications, makes the company a potential tool for espionage and thus a security threat, according to current and former U.S. security officials.

As a Chinese company, Huawei has no choice but to comply with demands of the Chinese government and its ruling Communist Party, these people say. What’s more, Huawei’s potential to conduct surveillance has increased exponentially over the past year as wireless providers near upgrades to 5G technology, which will make it easier to connect cars, factory parts and other machinery and devices to the internet. “It’s about where Huawei equipment is and how strong their market position is, and how both of those things can be leveraged by the Chinese government,” a Department of Homeland Security cybersecurity official said.

China says it has no rule that forces its tech companies to install backdoors or other security flaws in their products, and Chinese and Western legal experts say Chinese government data-sharing requirements, though broad, apply only to networks inside China. Most U.S. officials are skeptical, noting that Chinese firms have no choice but to comply with Communist Party directives.

Chinese tech giants such as Huawei are especially beholden to the Communist Party, which shields them from foreign competition with restrictive trade policies and exercises ultimate control over their ability to operate. While for years it took a hands-off approach, the party under Chinese leader Xi Jinping has increasingly sought a greater role in dictating the operations of domestic tech companies.

In response to queries, Huawei said data-sharing demands contained in China’s recently implemented cybersecurity and counter-terror laws apply to network operators, not telecom-equipment providers like Huawei. The company cited a legal opinion from Zhong Lun Law Firm, one of China’s largest law firms, whose specialties include telecommunications.

The company didn’t directly address data requests submitted outside legal channels by Communist Party leaders or through the company’s internal party committee. Asked for comment, China’s embassy in Washington pointed to remarks made by the Chinese Foreign Ministry in December that China’s laws and regulations don’t mandate companies to build back doors allowing government access to data.

Though concerns about Huawei are longstanding, the company is facing escalating international wrath. An employee was detained in Poland this month and is being held on suspicion of spying for the Chinese government, and the daughter of company founder Ren Zhengfei was arrested in Canada last month at the request of U.S. authorities, who are expected to soon formally request her extradition on bank fraud charges.

Several European countries are weighing steps that would close out Huawei from their 5G next-gen wireless networks. In another development, The Journal reported last week that federal prosecutors are pursuing a criminal investigation of the company for allegedly stealing trade secrets from its U.S. business partners.

Former senior U.S. intelligence officials said Western fears over Huawei echo concerns raised in recent years about Kaspersky Lab, a Moscow-based cybersecurity firm that stood accused of being vulnerable, either wittingly or unwittingly, to Russian intelligence.

In both cases, the ability of authoritarian regimes in Russia and China to demand information from companies without transparent legal processes fueled suspicions, two former senior U.S. officials said.

But in the Kaspersky case, disclosures from unnamed U.S. officials first published in the Journal found the antivirus firm had been secretly scanning computers for classified U.S. documents, including a case in 2015 where Russian hackers targeted a National Security Agency employee’s home computer to steal secrets about U.S. digital espionage. No similar case has emerged publicly about Huawei.

“You can’t really imagine a situation in China where it was with Apple and the U.S. government a few years ago,” said one of the former U.S. officials, referring to the 2016 standoff between the iPhone maker and the FBI over an encrypted phone used by a gunman involved in a mass shooting in San Bernardino, Calif. “That just wouldn’t happen in China.”

Mr. Ren, the Huawei founder, was asked about the Apple example at a rare meeting with foreign journalists at the company’s Shenzhen headquarters this month. He said the company had never been asked by any government to provide improper information and would refuse if presented with such a request. “We will learn from Apple,” he said. “We would rather shut Huawei down than do anything that would damage the interests of our customers in order to seek our own gains.”

The DHS cybersecurity official acknowledged that Huawei might be able to push back against Beijing’s demands, but only to a point. “Huawei has a profit incentive to act in good faith,” the official said. “But the party will get what they want.”

The U.S. government also sometimes demands information from technology firms in secret.

Confronted with U.S. accusations of cyber espionage, Chinese companies and government officials often accuse Washington of hypocrisy, pointing to allegations in 2013 by former NSA contractor Edward Snowden that the U.S. had been hacking into key Chinese networks for years.

Western officials say systems of checks and balances in their countries allow for companies to challenge those demands, unlike in China.

To further highlight that difference, U.S. officials have repeatedly pressed Chinese companies to demonstrate to them one example of a time they resisted a request for data from the Chinese government, but they have never done so, according to a person familiar with those conversations.

U.S. intelligence officials have suggested at times that their views on Huawei are informed by definitive examples of malfeasance, though they have so far refused to share such evidence publicly. When the House Intelligence Committee in 2012 published an unclassified report naming Huawei as a security risk, it spoke generally about a lack of trust lawmakers placed in China but steered clear of providing concrete examples of the company being caught engaging in nefarious activity.

Asked about the risks posed by Huawei and whether more intelligence should be declassified to convince allies and companies to drop the telecommunications giant, Adm. Mike Rogers, who until May of last year served as director of the National Security Agency, said ample evidence was already public about the risks to cybersecurity supply chains posed by Chinese firms.

“Sometimes I ask myself, so how much more data do you need to convince you of this?” Mr. Rogers said while speaking at a recent forum held in Washington by Atlantic Council, a think tank. “This is not so much a lack of insider data and much more about, what does it really mean?”

Major Mobile Carrier Halts Huawei Purchases Amid Security Concerns

Vodafone to suspend purchasing Huawei gear for use in core of new 5G networks.

The world’s biggest mobile carrier outside China said it is temporarily halting purchases of some components made by Huawei Technologies Co., posing a threat to the Chinese company’s growth and dealing another blow to its reputation amid increasing government scrutiny around the globe.

Vodafone Group VOD -3.48% PLC said Friday that it would pause the purchase of Huawei gear for use in the core of new 5G networks it is rolling out across Europe. It cited uncertainty in that market particularly over whether some governments in the region will restrict Huawei sales because of national-security concerns.

Wireless carriers around the world are preparing to spend billions on hardware for 5G, the coming generation of superfast wireless technology, to replace current 4G networks.

The London-based carrier said the suspension of Huawei purchases would only affect its European networks. Vodafone hasn’t ruled out Huawei from its other big markets, which include Turkey, India and several African countries, said Chief Executive Nick Read. Governments there haven’t raised the same worries about Huawei gear.

The equipment affected is limited to gear that goes into the so-called core of a network, essentially the equipment that directs calls and internet traffic. It wouldn’t affect noncore components of new networks, such as cellular antennas and the electronics that sit beneath them.

A Huawei spokesman said core equipment represents a small proportion of its communications infrastructure business and that it would continue to work with Vodafone. “We are grateful to Vodafone for its support of Huawei, and we will endeavor to live up to the trust placed in us,” the spokesman said.

In recent months, Huawei founder Ren Zhengfeihas told employees in internal memos and discussions to expect slower growth because of the global scrutiny, and that the company would focus on markets that did accept them, according to a person familiar with the matter.

Vodafone is the world’s second-largest carrier, behind China Mobile Ltd. , with 516 million subscribers world-wide. That compares with about 117 million wireless connections for Verizon Communications Inc., America’s biggest carrier. Vodafone is particularly strong in Europe, with operations in Britain, Germany and Spain among other countries. Europe has become a key region for Huawei, growing from almost nothing a decade ago to its biggest market outside of China.

One of Huawei’s major rivals, Sweden’s Ericsson AB said separately Friday that the security concerns swirling in Western markets over Chinese gear have caused planning uncertainty for mobile carriers, many of which have favored Huawei for its competitive prices and customer service. Ericsson’s chief executive said, however, it was still too early to tell whether his company would benefit.

Another major British carrier, BT Group PLC, said late last year it was replacing Huawei gear with competitors’ in its network cores. It said that was a part of a long-running upgrade after an acquisition of a rival carrier using older Huawei gear.

Both carriers disclosed their moves at a time of intense government scrutiny of Huawei and other Chinese telecom gear makers. The U.S. has long labeled Huawei a national-security threat. Officials say they worry Beijing could compel the company or its employees to use its gear and know-how to spy or disable foreign systems.

Huawei has said it is employee-owned and not beholden to Beijing.

Amid a U.S. government-led push last year to further limit Huawei’s small business in the U.S. and its much larger business among allies, governments including Australia, Britain, Canada, Germany and Japan have all said they were looking closely at their telecom equipment supply chain. Australia and New Zealand have restricted Huawei’s involvement in new 5G projects with those countries’ carriers.

Huawei is the world’s biggest maker of cellular-tower equipment, internet routers and other hardware that wireless and cable providers need to provide communication services. Huawei led the global telecom-equipment market in the first three quarters of 2018, accounting for 28% of revenue, according to research firm Dell’Oro Group. Finland’s Nokia Corp. followed with 17%, while Ericsson had 13.4%.

Amid the backlash, investors have been watching Western rivals for signs of any benefit. Ericsson, which has endured huge losses and layoffs for the past few years, said Friday that a turnaround plan was working. It narrowed its fourth-quarter losses, and its 2018 revenue grew 3%, the first year-over-year sales increase since 2015. Ericsson Chief Executive Borje Ekholm said the company got a boost from increased demand in North America, where Huawei has been largely banned for years.

Mr. Ekholm said it would be speculative to say how security concerns concerning Chinese manufacturers could help Ericsson. “Where this is going to take us, we don’t know,” he said.

An executive at one of Huawei’s smaller rivals said that the security concerns have already helped business. “We probably won some contracts that we wouldn’t have otherwise,” the executive said.

Related Article:

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U.S. Readies Charges Against Chinese Hackers (#GotBitcoin?)

Your questions and comments are greatly appreciated.

Monty H. & Carolyn A.

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