Thursday, February 13, 2020

The Problem of Data Infrastructure in an Age of Post-Global Empire--The Criminal Litigation Against Huawei for Racketeering and Other Crimes

Ratcheting up its pressure campaign against Huawei and its affiliates, the Department of Justice and the FBI announced today that it has brought 16 charges against Huawei in a sprawling case with major geopolitical implications (you can read the full 56-page indictment here). (The US is charging Huawei with racketeering).
The superceding indictment was filed on 12 February in the Federal District Court of Brooklyn, New York. The reporting continues to spotlight the intensification of one of the latest skirmishes of the great war being waged between the two great emerging 21st century imperial powers as they seek to project their (abstracted) borders through the construction of tangible and intangible infrastructure around which they will extend and protect their global production chains. (On the work of the Coalition for Peace and Ethics theorizing the emerging new forms of Empire, see e.g., essays in Emancipating the Mind in the New Era: Bulletin of the Coalition for Peace & Ethics 14(1) and generally,  CPE EmpireSeries). The charges are nicely timed to align with Canadian action on  Meng Wanzhou, the CFO of Huawei who remains in Canada.And they are vital for the construction of two similar lines of narrative originating in the US and China, each seeking global consensus painting the other a rogue and lawless sovereign.   "The top two senators on the Senate Select Committee on Intelligence, Richard Burr (R-NC) and Mark Warner (D-VA) said in a joint statement that “The indictment paints a damning portrait of an illegitimate organization that lacks any regard for the law.”" (The US is charging Huawei with racketeering). It also closely follows the high profile announcement of indictments against certain individuals associated with the Chinese military in connection with the hacking of Equifax's data bases several years ago (Justice Department announces 4 Chinese military officers indicted in Equifax hack: Officials say some 150 million Americans were affected).

This front in the first of the great imperial wars of the 21st century also raises interesting issues  for the construction and operation of automated law. Chief among these are issues around data integrity, a subject recently considered:Automated Law: The Problem of Data Integrity Moves (if only for a Moment) to Center Stage).   Indeed, while our news sources continue to stoke the traditional fears of traditional bad acts (theft, defrauding financial institutions industrial espionage, threats to national security, vulnerability of state secrets and the like) the coverage leaves substantially undiscussed the way that these behaviors (or the effort to get the general population to embrace these narratives for purposes of managing popular perspective--always useful on both sides) may affect the construction and operation of automated regulatory systems. 

Data infrastructure is of course a vital link in the construction of data driven governance.  It serves the way a road or river serves conventional commerce.  And though, like a road or river, infrastructure has been monetized (and thus the popular focus on that aspect of this construction), it serves as a critical choke point for the operation of everything from markets in data to the mechanisms through which automated law can in fact become automated both in its input and output functions.  Protection fo the integrity of the infrastructure, like the protection of the seas against pirates or the roads against bandits becomes critical.  But where the road operator itself becomes the bandit--like the Rhine robber barons of the pre-modern age, then the integrity of the system itself can be easily destabilized.  

None of this is to take a position against or for Huawei in the litigation that will unfold going forward--that assessment I leave to others better informed.  But the litigation ought to serve as a warning to those fashioning the new post-global empires that leaving their data infrastructures (especially storage, transmission, application, surveillance infrastructures) unsupervised threatens the integrity of the whole architecture of regulatory management that itself will serve as the glue that holds our 21st century empires together.  The litigation, then, should provide the United States (or its allies) little comfort unless it is sure that it has its own infrastructure houses in order. For China. the litigation serves as confirmation of the start of a "New Era" in international relations with the US (unnoticed but apparent since 2016) within which empire enhancing infrastructure has been unmasked as inherently political and an essential element not just of economic policy and politics. but of the structures of "new era" regulatory initiatives as well.

The Justice Department Press Release follows below.

Chinese Telecommunications Conglomerate Huawei and Subsidiaries Charged in Racketeering Conspiracy and Conspiracy to Steal Trade Secrets

Charges also Reveal Huawei’s Business in North Korea and Assistance to the Government of Iran in Performing Domestic Surveillance

A superseding indictment was returned yesterday in federal court in Brooklyn, New York, charging Huawei Technologies Co. Ltd. (Huawei), the world’s largest telecommunications equipment manufacturer, and two U.S. subsidiaries with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO).

Brian A. Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division; John C. Demers, Assistant Attorney General of the Justice Department’s National Security Division; Richard P. Donoghue, U.S. Attorney for the Eastern District of New York and Christopher A. Wray, Director, FBI, announced the charges.

The 16-count superseding indictment also adds a charge of conspiracy to steal trade secrets stemming from the China-based company’s alleged long-running practice of using fraud and deception to misappropriate sophisticated technology from U.S. counterparts.

The indicted defendants include Huawei and four official and unofficial subsidiaries — Huawei Device Co. Ltd. (Huawei Device), Huawei Device USA Inc. (Huawei USA), Futurewei Technologies Inc. (Futurewei) and Skycom Tech Co. Ltd. (Skycom) — as well as Huawei’s Chief Financial Officer (CFO) Wanzhou Meng (Meng).  The new superseding indictment also contains the charges from the prior superseding indictment, which was unsealed in January 2019.

As revealed by the government’s independent investigation and review of court filings, the new charges in this case relate to the alleged decades-long efforts by Huawei, and several of its subsidiaries, both in the U.S. and in the People’s Republic of China, to misappropriate intellectual property, including from six U.S. technology companies, in an effort to grow and operate Huawei’s business.  The misappropriated intellectual property included trade secret information and copyrighted works, such as source code and user manuals for internet routers, antenna technology and robot testing technology.  Huawei, Huawei USA and Futurewei agreed to reinvest the proceeds of this alleged racketeering activity in Huawei’s worldwide business, including in the United States.

The means and methods of the alleged misappropriation included entering into confidentiality agreements with the owners of the intellectual property and then violating the terms of the agreements by misappropriating the intellectual property for the defendants’ own commercial use, recruiting employees of other companies and directing them to misappropriate their former employers’ intellectual property, and using proxies such as professors working at research institutions to obtain and provide the technology to the defendants.  As part of the scheme, Huawei allegedly launched a policy instituting a bonus program to reward employees who obtained confidential information from competitors.  The policy made clear that employees who provided valuable information were to be financially rewarded.

Huawei’s efforts to steal trade secrets and other sophisticated U.S. technology were successful.  Through the methods of deception described above, the defendants obtained nonpublic intellectual property relating to internet router source code, cellular antenna technology and robotics.  As a consequence of its campaign to steal this technology and intellectual property, Huawei was able to drastically cut its research and development costs and associated delays, giving the company a significant and unfair competitive advantage.

When confronted with evidence of wrongdoing, the defendants allegedly made repeated misstatements to U.S. officials, including FBI agents and representatives from the U.S. House Permanent Select Committee on Intelligence, regarding their efforts to misappropriate trade secrets.  Similarly, the defendants engaged in obstructive conduct to minimize litigation risk and the potential for criminal investigations, including the very investigation that led to this prosecution.

The superseding indictment also includes new allegations about Huawei and its subsidiaries’ involvement in business and technology projects in countries subject to U.S., E.U. and/or U.N. sanctions, such as Iran and North Korea – as well as the company’s efforts to conceal the full scope of that involvement.  The defendants’ activities, which included arranging for shipment of Huawei goods and services to end users in sanctioned countries, were typically conducted through local affiliates in the sanctioned countries.  Reflecting the inherent sensitivity of conducting business in jurisdictions subject to sanctions, internal Huawei documents allegedly referred to such jurisdictions with code names.  For example, the code “A2” referred to Iran, and “A9” referred to North Korea.

Huawei employees also allegedly lied about Huawei’s relationship to Skycom, falsely asserting it was not a subsidiary of Huawei.  The company further claimed that Huawei had only limited operations in Iran and that Huawei did not violate U.S. or other laws or regulations related to Iran.  In fact, the indictment alleges Skycom was Huawei’s unofficial subsidiary that, among other services, assisted the Government of Iran in performing domestic surveillance, including during the demonstrations in Tehran in 2009.

The charges in the superseding indictment are allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The government’s investigation is ongoing.  Individuals with knowledge of misconduct by Huawei, its subsidiaries, employees or agents should contact the FBI’s New York Field Office at 1-800-CALL-FBI.

The FBI’s New York Field Office, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (HSI) New York Field Office, U.S. Department of Commerce Office of Export Enforcement’s (OEE) New York Field Office and the Defense Criminal Investigative Service’s (DCIS) Southwest and Northeast Field Offices are jointly conducting the investigation.  Agents from the FBI, HSI and OEE offices in Dallas provided significant support and assistance.  The government’s case is being handled by the U.S. Attorney’s Office for the Eastern District of New York, the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and the National Security Division’s Counterintelligence and Export Control Section (CES).

Assistant U.S. Attorneys Alexander A. Solomon, Julia Nestor, David K. Kessler and Sarah Evans, MLARS Trial Attorneys Laura Billings and Christian Nauvel and CES Trial Attorneys Thea D. R. Kendler and David Lim are in charge of the prosecution, with assistance provided by Assistant U.S. Attorney Brendan G. King of the Civil Division of the U.S. Attorney’s Office for the Eastern District of New York and Trial Attorneys Margaret O’Malley and John Riesenberg of the Criminal Division’s Office of International Affairs.  Additional Criminal Division and National Security Division Trial Attorneys and Assistant U.S. Attorneys within U.S. Attorney’s Offices for the Northern District of Texas, the Northern District of Illinois, the Eastern District of Texas, the Western District of Washington and the Northern District of California have provided valuable assistance with various aspects of this investigation.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at

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