US files charges against China's Huawei and CFO Meng Wanzhou

The great testing-robot-arm heist

To ensure the quality of smartphones it resold to customers, T-Mobile developed a robot called "Tappy." It had a mechanical "finger" that could simulate hours of real-world use. The robot was designed to catch flaws in new smartphones before they were sold to customers, helping T-Mobile to raise customer satisfaction levels and reduce returns. Smartphone vendors like Huawei were given access to a lab containing robots they could use to test their own smartphones.

According to the indictment, Huawei desperately wanted a testing robot of its own—both to help it pass T-Mobile's tests and to test phones they sold to other carriers around the world. T-Mobile had granted a handful of specific Huawei USA employees access to the testing lab under strict non-disclosure agreements. In mid-2012, people from Huawei China began to pressure these employees to gather more information about how T-Mobile's phones work.

At first, these efforts were limited to asking T-Mobile employees for more information about the robot. But by January 2013, T-Mobile had grown tired of Huawei employees badgering them for details about how Tappy worked.

"We CAN'T ask TMO any questions about the robot," one US Huawei employee wrote in an email back to headquarters. "TMO is VERY angry about the questions that we asked. Sorry we can't delivery any more information to you." By April, T-Mobile was threatening to ban Huawei employees from the lab if they didn't stop asking questions about the robot.

Rather than backing off, Huawei allegedly escalated its industrial-espionage efforts. Huawei allegedly flew an engineer from China to Seattle, where the testing laboratory was located, to personally inspect the T-Mobile robot. The T-Mobile-cleared employees helped the engineer sneak into T-Mobile's lab. A T-Mobile employee discovered that he was in the lab and told him to leave.

Undeterred, they returned to the lab the next day. Once again, the authorized Huawei employees allegedly used their badges to grant access to the Chinese engineer. The engineer "took numerous unauthorized photographs of Tappy and otherwise gathered technical information about the robot." Once again, a T-Mobile employee discovered what was going on and ordered the group to leave.

A furious T-Mobile banned most Huawei personnel from its lab, allowing a single employee to continue testing Huawei phones that were already slated for release by T-Mobile. A couple of weeks later, that employee stole the arm from one of the T-Mobile robots from the lab.

"As he was preparing to leave the laboratory," the employee "surreptitiously placed one of the Tappy robot arms into his laptop bag and secretly removed it from the laboratory," the indictment charges.

Overnight, according to prosecutors, the Chinese engineer performed a detailed technical analysis of the robot arm and took a lot of photographs. "Some of the photographs depicted the precise width of certain parts of the robot arm by showing a measuring device next to the parts," the indictment says.

The employee returned the robot arm the next morning, saying he had taken it home by accident. T-Mobile wasn't impressed and banned all Huawei personnel from its lab.

Huawei became worried that this incident could anger T-Mobile and ruin Huawei's hopes of breaking into the lucrative US market—T-Mobile had been the first major US carrier to start selling Huawei's phones. So the indictment charges that Huawei went to great lengths to mislead T-Mobile about what happened.

Huawei allegedly had a bonus program for stolen secrets

Huawei allegedly conducted a fraudulent "internal investigation" and then wrote a report claiming that the thefts of secrets had been carried out by "two individuals who acted on their own" and who "violated our company's policies and thus were both terminated for cause." In reality, prosecutors say, many people at Huawei knew about and supported the employees' actions.

Prosecutors say that one Huawei program illustrates just how deep Huawei's culture of stealing secrets went. In July 2013, "Huawei China launched a formal policy instituting a bonus program to reward employees who stole confidential information from competitors," the indictment states. "Under the policy, Huawei established a formal schedule for rewarding employees for stealing information from competitors based on the confidential value of the information obtained." The policy "emphasized that no employees would be punished for taking actions in accordance with the policy."

Obviously, the existence of this program could become awkward for Huawei's US subsidiary, which was trying to convince T-Mobile that the Seattle lab incident had been an isolated one. So a Huawei USA official sent out an email to all employees acknowledging that employees may have felt they were "being encouraged and could possibly earn a monetary award for collecting confidential information regarding our competitors."

The email acknowledged that "in some foreign countries and regions, such a directive and award program may be normal and within the usual course of business in that region." However, the official wrote, "here in the USA, we do not condone engage in such activities, and such behavior is expressly prohibited by company policies."

Federal prosecutors say that a wealth of internal emails shows that this was nonsense—that Huawei's US subsidiary actively participated in efforts to steal secrets about T-Mobile's testing robots.

"Freakinoldguy" said
And now we know why McCallum was shitcanned. Every one of these charges is also considered illegal in Canada making them extraditable offences.

So much for the talking heads telling us that she couldn't be extradited while not knowing the actual charges.

"Sunnyways" said
And now we know why McCallum was shitcanned. Every one of these charges is also considered illegal in Canada making them extraditable offences.

So much for the talking heads telling us that she couldn't be extradited while not knowing the actual charges.

"Freakinoldguy" said


I was under the impression that she was charged with fraud not industrial espionage like the Corporation.

As for the European exec's your probably right but, until the US requests extradition from Canada for them I doubt we'll see any movement on that front. The thing that's different with Meng is that she owns two houses and resides in Vancouver part time. Also, she was a permanent resident from 2001 till 2009.

But, I suppose if those European execs were changing planes in YVR and the gov't was asked to extradite them the same thing would happen.

"raydan" said
No matter what happens, we're going to be pissing someone off... the Chinese or the Americans. A few years ago, I'd say it would be better for us to piss off the Chinese, now I'm not so sure.

"raydan" said
A few years ago, I'd say it would be better for us to piss off the Chinese, now I'm not so sure.

"CDN_PATRIOT" said
A few years ago, I'd say it would be better for us to piss off the Chinese, now I'm not so sure.

1. This is a political ‘witch hunt’

In a Dec. 13 op-ed penned for the Globe and Mail, Lu Shaye, China’s ambassador to Canada, wrote that the United States bullied Canada into arresting Meng.

The arrest, he said, was “a premeditated political action in which the United States wields its regime power to witch-hunt a Chinese high-tech company out of political consideration.”

The Canadian government has repeatedly said that Meng’s arrest was a straightforward judicial case where Canada was bound by a long-standing extradition treaty with the U.S. It therefore had to detain Meng at the U.S.’s request when she set foot on Canadian soil.

READ MORE: Who lost China? And how was Canada supposed to win it?

Tiberghien notes that China didn’t see any of this coming. “The arrest of Ms Meng was a huge shock to China in many ways and clearly a huge loss of face for Xi Jinping personally. Hence the massive reaction. Huawei is a huge fish, the company is seen as a model by many young Chinese entrepreneurs trying to be successful. A bit like Facebook or Microsoft.”

As for the “witch hunt” remarks, that’s undue, says Tiberghien. But it is hard to ignore that Meng’s arrest has taken on a political tone. In a December interview with Reuters about Meng’s case, U.S. President Donald Trump said, “If I think it’s good for the country, if I think it’s good for what will be certainly the largest trade deal ever made—which is a very important thing—what’s good for national security—I would certainly intervene if I thought it was necessary.”

2. Canada ‘illegally’ arrested Meng ‘in a miscarriage of justice’

That’s what Lu says. But legal experts who have weighed in on the case say this is clear: if the U.S. provided proper grounds to arrest Meng, Canada was legally bound to do so under the extradition treaty. It would have been highly inappropriate and contrary to the rule of law for Canada to ignore such a request from the U.S. Department of Justice.

Before Meng can be extradited to stand trial in the U.S. she will get a fair hearing that will examine the evidence and determine whether she committed a crime under Canadian law as well. That could take months.

Still, notes Tiberghein, the U.S. goes further than any other country in the extraterritorial pursuit of foreign companies that break its sanctions laws, something that deeply irritates many countries. But normally the Americans confine themselves to levying large fines against American and foreign companies that break sanctions. Canada’s arrest of a high-level foreign executive on behalf of another country for an alleged violation is rare.

3. Canadian complaints are rooted in ‘white supremacy’

Shortly after Meng’s arrest, China imprisoned two Canadians—diplomat Michael Kovrig and businessman Michael Spavor—for allegedly engaging in activities that endanger China’s national security. Canada calls the detentions acts of “arbitrary” retaliation for Meng’s arrest.

In another blistering op-ed, this one in the Hill Times, Lu Shaye wrote, “It seems that, to some people, only Canadian citizens should be treated in a humanitarian manner and their freedom deemed valuable, while Chinese people do not deserve that. The reason why some people are used to arrogantly adopting double standards is due to Western egotism and white supremacy.”

Even for a country whose leaders often deploy harsh, flamboyant language against foes, this remark took Tiberghien aback. “The white supremacy comment was a mistake…. It’s a bit more like a school yard than professional diplomacy on both sides.”

4. Travelling to Canada is dangerous for Chinese nationals

On Jan. 15, Canada issued a travel advisory against China. This came after what Canada termed the “arbitrary” arrests of Kovrig and Spavor and when Canadian Robert Lloyd Schellenberg appealed his 15-year sentence for trying to smuggle drugs out of the country and a Chinese court increased his sentence to the death penalty.

Trudeau accused China of arbitrarily applying the death penalty to Schellenberg as payback for Meng’s arrest. Hours after Canada issued its travel advisory, China, citing Meng’s detention at the request of a third-party country, countered with its own advisory. It warned its citizens to “fully evaluate risks” of traveling to Canada.

Both sides, argues Tiberghien, issued the advisories, “not because they really believe” there are valid fears, but because they’re engaging in hyperbolic rhetoric out of anger.

China’s citizens, he says, especially its more informed middle-class, know Canada is safe to travel to. But any official package group tours or official Chinese delegations must take their cues and guidelines from their authoritarian government. “So it’s not what they think about Canada. It’s what they are told.”

Meanwhile, Tiberghien believes Canadians have little to fear when traveling to China. “I have no problem going. UBC in general has assessed the current risk of going to China. We have people going all the time….So far we have seen nothing on our radar to make us nervous.”

Though others wonder if some Canadians are being naïve. “I wouldn’t go to China unless I had a really, really good reason to go,” said David Mulroney, Canada’s former ambassador to China.

5. Canada has no friends

“Actually, you can count by the fingers of your hand the few allies of Canada that chose to side with it on this issue,” a Chinese foreign ministry spokeswoman told the media.

That one is just plain wrong. As Chrystia Freeland, Canada’s foreign minister, said, “I would just point to the fact that the EU alone, which has issued a statement, is a union of 28 countries.” Also on Canada’s side: the U.S., Britain and Australia.

China’s state-run Global Times responded to the news with a blistering op-ed on Sunday, in which the unnamed author compared Ottawa to a “frightened bird,” and used a vulgar folk saying to describe Canada’s allegedly immoral actions.

“You cannot live the life of a whore and expect a monument to your chastity,” the unnamed author of the op-ed wrote.