<![CDATA[Chinese telecoms giant Huawei was under secret US surveillance, US fraud hearing told]>
US prosecutors used a special warrant to secretly gather information about China's Huawei Technologies Co Limited for evidence of fraud and espionage charges against the world's largest telecommunications equipment maker, a US court was told on Thursday.
Assistant US Attorney Alex Solomon said at the hearing in federal court in Brooklyn, New York, that the evidence, obtained under the US Foreign Intelligence Surveillance Act (FISA), would require classified handling.
The government notified Huawei in a court filing on Thursday of its intent to use the information, saying it was "obtained or derived from electronic surveillance and physical search", but gave no details.
When the hearing resumes on June 19, Federal District Judge Ann Donnelly will decide how the case is to proceed, based on the gathered evidence.
The US government has been pressuring other countries to drop Huawei from their cellular networks, worried its equipment could be used by Beijing for spying. Photo: AP
The US government has been pressuring other countries to drop Huawei from their cellular networks, worried that its equipment could be used by Beijing for spying. The company says the concerns are unfounded.
At the US legal team's request, Judge Donnelly gave federal prosecutors more time to gather evidence " involving the review of a large number of documents. James Cole, a US-based lawyer for Huawei and Huawei Device USA Inc, the company's American subsidiary, consented to the request.
Donnelly designated the case "complex" " providing the lawyers with up to 150 days to conduct their discovery, 30 more than they would have had under the standard period.
Huawei, based in Shenzhen in southeastern China's Guangdong province, and its US unit stand accused of defrauding banking and financial services company HSBC and other banks by misrepresenting Huawei's relationship with a suspected front company, Skycom Tech Co Limited, in Iran.
A lawsuit gained public attention in December when Canadian authorities arrested Huawei financial chief Meng Wanzhou in Vancouver in response to a US extradition request. Photo: Reuters
The Chinese telecoms giant has been charged in two sets of indictments with nearly two dozen counts of stealing trade secrets, violating economic sanctions and concealing its Iran business dealings via an unofficial subsidiary.
Cole, who talked over most of the procedural decisions with the government's lawyers, expressed concern about the slow progress of the case.
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"The case started in August (last year), but the discovery hasn't begun yet," he said at the hearing. "I think they should begin soon."
The lawsuit gained public attention in December when Canadian authorities arrested Huawei financial chief Meng Wanzhou, a daughter of Huawei founder Ren Zhengfei, in Vancouver in response to a US request for Meng's extradition.
Western governments, corporations and academic institutions are increasingly wary of Huawei as the Trump administration portrays large Chinese telecoms companies as security threats. Photo: Reuters
Multiple charges were announced against Huawei, Meng and affiliated companies. A federal grand jury in Brooklyn charged Huawei and Meng with money laundering, bank fraud, wire fraud and conspiracy. Huawei was also charged with conspiracy to obstruct justice.
A separate indictment from Washington state accused Huawei, Skycom and Meng of stealing trade secrets from the telecommunications company T-Mobile.
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Those charges stemmed from a civil lawsuit filed by T-Mobile USA in 2014 over a robot nicknamed Tappy that was used in testing smartphones.
If the Huawei case becomes a long, drawn-out affair, it has the potential to increase feelings of uncertainty among Western governments, corporations and academic institutions about Huawei and other large Chinese telecoms companies that the Trump administration has portrayed as security threats.
Princeton University, Stanford University, Ohio State University and the University of California at Berkeley have all said they would cut or loosen ties with the company.
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On Wednesday, the Massachusetts Institute of Technology, another top-ranking American university, said it was breaking its funding ties with Huawei and ZTE, another big Chinese smartphone maker, citing the risks of continuing relations while the two companies were under US federal investigation.
"At this time, based on this enhanced review, MIT is not accepting new engagements or renewing existing ones with Huawei and ZTE or their respective subsidiaries due to federal investigations regarding violations of sanction restrictions," Richard Lester, MIT's associate provost, and Maria Zuber, the school's vice-president for research, said in a letter to staff.
A protester's placard calls for Beijing to release Michael Spavor and Michael Kovrig, who were among the Canadians in China arrested after Meng's detention. Photo: Reuters
The tensions between Washington and Beijing over the months-long trade war have made the Huawei case a focus of the Trump administration's hardline stance on China's allegedly improper trade and business practices.
Meng's arrest has also weighed heavily on the relationship between China and Canada: a number of Canadians in China have been arrested on various charges since her detention.
Last month, the Canadian government decided to move forward with proceedings to extradite Meng to the US, although she has said she is innocent and is fighting her extradition. She also is suing Canada and two federal agencies for detaining and interrogating her before declaring her under arrest.
Huawei has pleaded not guilty to 13 counts of bank and wire fraud contained in one of the two indictments.
Assistant US Attorney David Kessler said at the arraignment in Brooklyn that prosecutors were serving Skycom with the charges, but had not yet scheduled an arraignment for the company.
This article originally appeared on the South China Morning Post (SCMP).
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