Huawei goes on trial in Brooklyn over Iran sanctions and trade secrets

China’s largest telecom-gear maker Huawei Technologies had its criminal case open to jury selection yesterday before a Brooklyn federal jury, with charges of racketeering, bank fraud, and sanctions tied to its business in Iran. The legal tussle comes in the middle of the widening technology dispute between Washington and Beijing, weeks before Xi Jinping and Donald Trump are due to meet.

The trial is being overseen by U.S. District Judge Ann Donnelly and could last about three months, according to Reuters. Prosecutors have brought multiple charges in the indictment that go beyond a single sanctions violation, while Huawei has pleaded not guilty to all counts.

Prospective jurors were quizzed using 27-page questionnaires that asked, among other things, how they viewed both governments in Beijing and Tehran. Part of the proceedings could also overlap with a September 24 meeting between Xi and Trump in Washington.

Skycom and Huawei connection

The US government’s theory revolves around Skycom, a Hong Kong company that prosecutors believe Huawei used as a front. Through this company, the tech firm is alleged to have bought embargoed American goods and technology for its Iranian operations and moved money out of Iran via the global banking system. Court documents describe a 2010 offer where Skycom pitched at least 1.3 million euros of Hewlett-Packard equipment, a product covered by the embargo, to Iran’s biggest mobile carrier.

One institution, left unnamed in the indictment but identified as HSBC through documents reviewed by Reuters, cleared more than $100 million in dollar transactions linked to Skycom. The alleged conduct took place over more than two decades, from around 1999 through 2020.

Huawei is also accused of doing business in North Korea against U.S. sanctions, conspiring to steal trade secrets from five American technology firms, and supplying gear that Iranian authorities used to track protesters during the 2009 anti-government demonstrations in Tehran.

The Meng Wanzhou chapter

The prosecution grew from the 2018 arrest of Meng Wanzhou, Huawei’s chief financial officer and the daughter of its founder, detained in Vancouver on a U.S. request. Her case set off a diplomatic standoff between Washington, Beijing, and Ottawa.

Meng, who served on Skycom’s board from February 2008 to April 2009, was accused of misleading HSBC about Huawei’s control of the company.

The standoff ended in September 2021, with a prisoner swap allowing Meng to go home and freeing two Canadians whom China had been holding. As part of the deal, she conceded that her statements to the bank were false, and U.S. prosecutors dropped their extradition request and the fraud charges against her.

Beijing pushes back as chips raise the stakes

A company spokesperson for Huawei said on Saturday that “the government’s overarching narrative is demonstrably false,” and the firm has claimed the trade-secret allegations were a rehash of old commercial disputes meant to markedly reduce the company’s competitiveness.

Chinese officials have described the prosecution as “economic bullying” and accused Washington of using national security as a pretext for “oppressing Chinese companies.”

The case first became public in early 2019, during Trump’s first term, and has expanded since then. Since the company got restricted from U.S. carrier networks and blacklisted by U.S. allies including Canada and Britain, Huawei has since leaned into chipmaking and has positioned itself as a key cog in China’s AI processor development.