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Huawei investigated for violating Iran sanctions by US Department of Justice

The US Justice Department is investigating China's Huawei Technologies for violating US sanctions in relation to Iran, the Wall Street Journal reported on Thursday, amid growing concern in Washington about Chinese technology companies.

The US Justice Department probe would come on the back of subpoenas issued to the company by the US Commerce Department and the US Treasury Department over sanctions-related issues, according to the Wall Street Journal.

Huawei had previously been subpoenaed by the US Commerce Department and the US Treasury Department's Office of Foreign Assets Control. In 2016, the US Commerce Department issued an administrative subpoena aimed at Huawei, seeking information about whether it was sending US technology to rogue nations including Syria, Iran and North Korea.

The US Justice Department's criminal inquiry suggests more serious misconduct - and consequently more serious repercussions. While the US Commerce and Treasury Departments can levy sanctions and fines, the US Justice Department can go further, imposing a corporate monitor or criminal penalties, even charging individuals within the company.

Details about the probe, including what allegations have been levelled, are not available, the Wall Street Journal said.

"Huawei complies with all applicable laws and regulations where it operates, including the applicable export control and sanction laws and regulations of the UN, US and EU," Huawei's spokesman Charles Zinkowski said in a statement.

Huawei, which is one of the world's largest telecommunications equipment and services providers, has been under tough scrutiny in the United States, where government national security officials say that its alleged close links to the Chinese government make it a security risk.

Its US business has been tightly constrained by worries it could undermine US competitors and that its cellphones and networking equipment, used widely in other countries, could provide Beijing with avenues for espionage.

Huawei has faced several setbacks in the United States this year. AT&T and Verizon Communications, the biggest US carriers, dropped plans to sell Huawei's latest smartphones. Then, consumer electronics retailer Best Buy stopped selling Huawei phones, laptops and smartwatches.

Huawei maintains research and development facilities in Texas, New Jersey, California and four other US states, all of which provide technology for Huawei's global operations.

Despite the setbacks, Huawei said last month that 2017 net income rose 28 percent and that growth in markets from the Middle East to Africa have it targeting record sales of $102.2 billion this year. Earlier Wednesday, the company dropped a planned dollar-denominated bond sale and delayed pricing a European offering.

The probe of Huawei is similar to one that China's ZTE Corp says is now threatening its survival. The United States last week banned American firms from selling parts and software to ZTE for seven years. Washington accused ZTE of violating an agreement on punishing employees after the company illegally shipped US goods to Iran.

ZTE's sales of "hundreds of millions of [US] dollars" worth of routers, microprocessors and servers to Iranian entities violated the US' Export Administration Act of 1979, according to an order by the US Department of Commerce.

"ZTE made false statements to the US Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation," US Secretary of Commerce Wilbur Ross was quoted as saying in an announcement by the department.

The US Justice Department would not be the only US government body citing threats Huawei poses to the country's national security grounds.

A congressional report last week branded Huawei and ZTE as being among "nefarious actors" in China infiltrating American intelligence bodies and critical infrastructure systems through information technology systems and components.

Huawei was named frequently in a report issued by a unit of the US Defense Department last year about methods – legal and otherwise – China is using to extract advanced technology from US sources.

The report, called "China's Technology Transfer Strategy: How Chinese Investments in Emerging Technology Enable a Strategic Competitor to Access the Crown Jewels of US Innovation", has prompted US lawmakers to tighten scrutiny of investments by Chinese companies in the US to thwart Beijing's attempts to create "national champions" that would compete with US companies globally.

"Because the Chinese Communist Party is much more involved in planning economic activity and supporting companies (not only through state-owned-enterprises but also in favoring national champions it supports globally like Huawei), there is a great deal more coordination of investment along with other vehicles of technology transfer to accomplish the larger economic goals specified in China's documented plans," the report said.

Signaling the rising unease in the United States towards Huawei and fellow Chinese telecoms group ZTE, last month the Federal Communications Commission proposed a new rule that would restrict small telecoms carriers from purchasing "equipment or services from companies that pose a national security threat."


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