Huawei To Sue The U.S. Over Spending Bill As CFO Faces Extradition & Prison

Huawei US government 2019 AH NS 03

Huawei is planning to sue the United States government over a 2018 spending bill that saw it outlaw the company's equipment in the context of federal use, citing national security concerns. The Chinese conglomerate is understood to be close to filing for litigation, which it intends to do in the Eastern District of Texas, the home of its American headquarters which took a lot of hits in recent times, insiders claim. The move could be announced as early as this week. as per today's reporting.

While the Shenzen-based firm has little hope of winning the lawsuit in the foreseeable future, the planned litigation may be framed as part of a wider effort at combating the U.S. government's growing opposition to its international expansion. Despite what experts from every part of the world bar China see as valid concerns, many of which were raised by the U.S. intelligence community in recent times, there's little evidence of Huawei ever getting involved in a spying operation, particularly one aimed at any one of its foreign customers.

That's precisely the notion the company will want to see publicized, which is what a public trial would basically guarantee. Attorney General Ken Paxton could push for the trial to be enshrouded in some degree of privacy but that isn't a battle the government is likely to win. The actual contents of the lawsuit remain unclear, though the bulk of it reportedly lies on a provision Congress attached to last year's spending bill, dealing an unprecedented blow to the Chinese company and another wireless player from the Far Eastern country – ZTE.


Even if Huawei has a case against Washington, ZTE is extremely unlikely to join it in its efforts to combat the U.S. opposition in the court of law – its ownership structure isn't nearly as opaque and the telecom giant isn't secretive about the fact it's state-owned, i.e. majority-controlled by a state firm. Huawei, on the other hand, remains adamant it's fully in the hands of its own employees but the reality is much more complicated than that; the provisional shares issued to some of its workers are only valid for the duration of their employment and cannot be traded, with their value hence being highly speculative. Likewise, it's unclear how that quasi-stock acts in terms of voting rights but many members of the Western intelligence community previously dismissed the possibility of Huawei operating under democratic principles, arguing such a voting structure would naturally lead to more transparency, not less.

Huawei's long history of issues took yet another turn for the worse in December after its Chief Financial Officer Meng Wanzhou was arrested in Canada on the request of the U.S. Department of Justice. Washington suspects her of bank fraud and a conspiracy to violate trade sanctions imposed on Iran, according to a recently unsealed indictment naming several Huawei subsidiaries and officials.

A competent Canadian authority on Friday said Ms. Meng — a 46-year-old daughter of Huawei founder Rei Zhengfei — can be extradited but left the final decision to a Vancouver court which will hold its first hearing over the matter next week. The industry veteran is facing up to 30 years in federal prison if she ends up in the stateside judicial system. She and Huawei both denied any alleged wrongdoing on numerous occasions in recent months.

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