By: Tracy Beanz
January 29, 2019
Justice Department gets Tough on China
Yesterday, the Justice Department, led by acting director Matthew Whitaker, announced a series of charges against Chinese Telecom company Huawei, and the daughter of it’s owner, Meng Wanzhou.
The indictments come amid a tense trade relationship between the US and China, with Canada also feeling some of the heat. Meng was arrested in Canada and is awaiting extradition to the United States. The Chinese government has Canadian Robert Lloyd Schellenberg in custody, and has just sentenced him to death on charges of drug smuggling. They have also arrested businessman Michael Spavor, and Michael Kovrig.
However, the story of Huawei does not begin or end with these recent charges. In fact, it stretches back a decade and incorporates espionage, the brazen theft of IP, and what amounted to a silent war between the US intelligence community, the Chinese company, and by extension, the Chinese government. What makes this story worse, are the tidbits of information gleaned from various legacy media reports. From them, it is apparent that members of our own government were not only complicit in allowing this to occur, but in some cases were participants.
Interwoven in the US
The connections between China and the coffers of our politicians and the entertainment industry are well-known. In the past several years, the Chinese have made major investments into Hollywood, scooping up Legendary Entertainment of Jurassic World fame, AMC Entertainment, and even Dick Clark Productions. China Media Capital has made investments as well, partnering with Warner Brothers, Dream Works, and Imax to name a few.
On the political side the story is a bit more complicated, with shell companies and investment firms often burying the ties deep within their books. However, there are a few more well-known stories at hand. Most recently, we learned that 5 years ago Senator Dianne Feinstein’s office was cleared of an alleged Chinese spy who had been her liaison to the Chinese community, office manager, and driver for almost 20 years. This story was barely touched by the legacy media, and only gained widespread traction due to President Donald Trump tweeting about it. And even more concerning than that, are the connections between former governor Terry McAuliffe, the DNC, the Clinton’s themselves, and Hillary Clinton’s brother Anthony Rodham.
In the mid 1990’s there was a massive scandal affectionately named Chinagate, that embroiled the Clinton presidential campaign, as well as the campaign of Senator Dianne Feinstein. This alleged “collusion” between the Democrats and the Chinese resulted in calls for a special counsel investigation and what appeared to be a major cover up within the investigations that were ongoing. McAuliffe was responsible for much of the fundraising, and was later promoted to DNC chairman.
McAuliffe steps up
McAuliffe didn’t stop there. In 2013 he came under fire for what was alleged to be a “Visa for Sale” program, run in tandem with a “green” automotive startup he created called GreenTech Automotive, Inc. The business set up shop with significant tax breaks in Mississippi, after being denied the same in Virginia. Virginia officials cited the lack of automotive experience and the fact that the company was a start-up as their reasons for denying any tax breaks in VA. Once in Mississippi, the company failed to created the over 1,000 jobs it had promised, ending up employing only around 75 people. Shortly after GreenTech was formed, it partnered with Anthony Rodhams company Gulf Coast Funds Management which utilizes the EB5 Visa program. EB5 enables foreigners to obtain green cards if they invest $1m into an US company. As of 2013, 31 Chinese citizens had received Green Cards through this arrangement. Also implicated was Alejandro Mayorkas, former Obama administration head of US Citizenship and Immigration Services, for his alleged role in providing the Visas to those paying Rodham and McAuliffe’s firm.
Huawei enters the picture
Among those who received the green cards? Huawei Vice Chairman Zhang Zhenjun. At the time, Senator Chuck Grassley took serious issue with the fact that there appeared to be a quid pro quo between the Clintons, the Clinton Foundation, and high-ranking executives at Chinese companies who had long been suspected of espionage against the US. This author is not surprised.
The links between the powerful democrats and the Chinese span much more deeply than these few examples, but Huawei has been in litigation with US companies for years, with suits brought by CISCO Systems, Motorola, and T-Mobile to name just a few. Allegations the telecom company was compromising equipment, and stealing code have been leveled at the company for years, even as the leadership denies any wrongdoing.
T-Mobile a target
The latest indictment in the T-Mobile case spells out just how nefarious the theft of our IP can be, with Huawei embedding employees inside of the T-Mobile plant to take photos and steal the proprietary software that powered their robot Tappy; a robot with extremely sensitive software and hardware that gave T-Mobile a distinct advantage over it’s competitors. Despite numerous strict and specific confidentiality agreements, Huawei workers both physically and electronically stole this proprietary software and hardware as they attempted to engineer their own testing robot.
One employee, unnamed in the indictment, obtained a Visa to enter the country and spy on the T-Mobile robotics workspace, being snuck in and out of the facility by a credentialed employee. Later, the arm from the robot was stolen and recovered from a Huawei employees bag, but not before sensitive information was taken and trasmitted back to Huawei in China. This sort of intellectual theft costs the United States and its businesses copious amounts of money each year.
In a separate indictment, Meng Wanzhou, and daughter of the founder of the company, was arrested and charged with two counts of Conspiracy to commit Bank Fraud, one count of Conspiracy to commit Wire Fraud, two counts of Bank Fraud, one count of Wire Fraud, one count of Conspiracy to Defraud the United States, two counts of Conspiracy to Violate IEEPA, two counts of violating the IEEPA, and one count of Money Laundering Conspiracy. It is alleged that Meng concealed the ownership of Iran based company Skycom, and skirted US sanctions on Iran by both attempting to sell HP computers to the Iranian government, and cleaning money through US banks while concealing the fact that Huawei owned Skycom. You can read the complicated indictment here.
With tensions with Iran high, it doesn’t appear that the US government is taking kindly to international organizations doing business within the United States skirting restrictions in this way. However, that isn’t all. Huawei seems to be under great scrutiny elsewhere. Business Insider reported that on January 11, 2019 in Poland, the ISA arrested and charged an executive of Huawei on suspicion of spying for China. Huawei promptly fired the executive, claiming the activity had nothing to do with the company.
The layoffs don’t stop there. In 2014, amidst the controversy with the McAuliffe and the Clintons, a Huawei executive utilized his personal email to reach out to John Podesta and ask for a meeting. He wanted Podestas assistance in dealing with some retaliation by the NSA. Also anticipated to be in attendance was US Huawei executive Bill Plummer. He has held the VP for External Affairs position since 2012. For his part, Podesta referred Dennis Amari to Lisa Monaco. Bill Plummer? Huawei fired him this past April.
It is clear from these recent indictments that the US Government is no longer taking a passive stance on the theft of our IP, or espionage in general. President Trump has placed a strong focus on the protection of the United States interests in business, and trade. It seems that the US is partnering with other nations to stop the influence of brazen rule breakers like China. We will continue to follow developments in this case.
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