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U.S. Prosecutors Said Government Used FISA to Surveil Huawei

U.S. Engaged in Secret Surveillance of Huawei, Prosecutors Say

(Bloomberg) -- U.S. prosecutors said the government secretly conducted electronic surveillance and gathered evidence in its criminal case against Huawei Technologies Co.

The U.S. charged Huawei and Meng Wanzhou, Huawei’s chief financial officer, alleging the company defrauded at least four banks by concealing business dealings in Iran in violation of U.S. sanctions. She was arrested in Canada in December at the request of the U.S. and remains in Vancouver fighting extradition.

Assistant U.S. Attorney Alex Solomon told U.S. District Judge Ann Donnelly in Brooklyn, New York, at a hearing Thursday that prosecutors wanted to put Huawei and its American lawyers on notice that the U.S. had collected such evidence, which he described in a filing as "electronic surveillance and physical search pursuant to the Foreign Intelligence Surveillance Act" that he said requires classified handling.

There wasn’t any indication or details about what the evidence might be and prosecutors didn’t elaborate further. Solomon declined to comment after the hearing as did Huawei’s lawyer James Cole.

Solomon said the government would be asking for a protective order over any evidence it shares with the defense and added "it will be extremely voluminous."

Donnelly set the next hearing for June 19.

Special Court

Surveillance using FISA requires approval by a special court and is used by federal law enforcement and intelligence agencies against foreign spies inside the U.S.

Mark Zaid, a Washington-based attorney who’s not involved in the case and has represented clients in national security cases, said American authorities could have been monitoring Huawei because of its close ties to the Chinese government or because they were reviewing the telecom’s business dealings with Iran.

"We in the U.S. are not in the business of using our intelligence services for economic or commercial purposes," Zaid said. "But, since many countries, especially China, use their commercial enterprises for intelligence operations, there will be overlap in our intelligence collection.”

Huawei, China’s biggest smart-phone maker, and a U.S. subsidiary, Huawei Device USA Inc., were charged in two separate cases in the U.S. in January.

American officials have long been concerned about the risk of using Huawei equipment. The U.S. has called the company a national security threat and cited concerns it could build undetectable back doors into 5G technology that would allow the Chinese government to spy on American communications.

Huawei has denied the accusations, saying it’s not a tool of Beijing.

In Brooklyn, prosecutors claim Huawei employees, including Meng, lied since 2007 about the company’s relationship with Skycom Tech Co., which operated in Iran. Huawei and Meng falsely claimed Skycom wasn’t an affiliate, according to the government.

In the second case, in Seattle, the U.S. claims Huawei violated confidentiality agreements with T-Mobile US Inc. in an effort to build a robot to test phones. A Huawei engineer secretly took photos of T-Mobile’s robot, called Tappy, took measurements and, in one instance, stole a piece of the robot, prosecutors said. Huawei then blamed “rogue actors” within the company when T-Mobile threatened to sue, the U.S. said.

To contact the reporter on this story: Patricia Hurtado in Federal Court in Manhattan at pathurtado@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider, Peter Jeffrey

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