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Huawei Embroiled in Santa Clara Whistleblower Court Case

Ray Le Maistre

UPDATED: Here's a tale that will pour oil on the flames of the "Chinese tech companies are not to be trusted" bonfire.

A now former employee of FutureWei Technologies, a US subsidiary of Huawei Technologies Co. Ltd , is suing the company for US$105 million in the Santa Clara County Superior Court for "whistleblower retaliation" as well as harassment and discrimination after he was sacked. Jesse Hong, who was a principal architect at the Santa Clara-based business, alleges his contract was terminated after he complained about corporate espionage activities with which he disagreed, reports the East Bay Times.

In a nutshell, Hong declined to participate in "enterprise espionage," which involved registering for the Telecom Infra Project (TIP) annual meeting in 2017 under a false identity in an effort to infiltrate private meetings. This extract is from court papers cited by The Register, which has also reported on the case:

    On November 1, 2017, Facebook hosted the TIP Summit, at Facebook headquarters in Menlo Park, Calif. The Summit was attended by U.S. startups (mostly Huawei's competitors). Facebook denied Huawei and its U.S. subsidiaries’ (Corporate Defendants) request to attend Facebook’s closed-door private meetings with U.S. companies. In order to circumvent the exclusion of Huawei, the corporate defendants through Chen, instructed Plaintiff, Sam, and Ming to register using fake U.S. company names … Plaintiff believed such conduct was illegal and fraudulent and he refused to engage in such conduct.

Hong reported the incident to FutureWei's HR department. He also complained to FutureWei's HR department about intimidation and harassment by a manager identified as Sean Chen.

He alleges that no action of any consequence was taken as a result of his complaints and that, despite receiving praise for his work, he was laid off in March this year.

In a response to questions emailed to Light Reading, Huawei stated:

    Huawei is aware of the lawsuit in question. The allegations arose from a labor dispute, and are completely groundless. We will vigorously defend the company's interests. Compliance with local laws and regulations, as well as international conventions, is key to Huawei's operational compliance worldwide. Every employee is expected to adhere to applicable laws, regulations, and business ethics in the countries where we operate. These requirements are clearly set out in Huawei's Employee Business Conduct Guidelines as a condition of ongoing employment.

This court case could hardly come at a worse time for Huawei, which is trying to deflect all accusations related to security and spying and just as its Chinese rival ZTE claws its way back from near closure following a trade ban and as the US and China engage in a trade war. (See ZTE Nearly Back in Business After Inking US 'Escrow' Deal.)

Only days ago, Huawei's rotating chairman Ken Hu told French newspaper Le Journal du Dimanche that it wasn't expecting any US sanctions, Reuters reported.

But as we have seen in the past, companies can be very skilled at shooting themselves in the foot and Huawei has a history of amateurish industrial espionage efforts. (See The Trouble With Huawei....)

This court case could be the smoking gun that Huawei comes to regret, whichever way the judge rules.

— Ray Le Maistre, Editor-in-Chief, Light Reading

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User Rank: Blogger
7/13/2018 | 5:08:35 AM
Re: Why did Huawei have to crash a meeting?
When human beings are involved in anything, expect the unexpected and nonsensical.

This is why automation is so appealing.

Huawei has sent a statement that is now added to the article. It is possible, of course, that this former employee has fabricated this story (about the TIP meeting stuff) and it is all a pack of lies. Unfortunately for Huawei, it has 'previous' in this sort of activity and that is why this case will carry greater weight than normal right now, whether it is thrown out or not.

And lest we not forget, industrial espionage is something unertaken the world over by companies from all nations and markets. Some are better at it than others, though.
User Rank: Blogger
7/12/2018 | 6:17:23 PM
Why did Huawei have to crash a meeting?
Huawei is apparently not a TIP member. If they wanted to attend TIP project group meetings, the obvious thing to do would be to join. Why didn't they? Were they excluded? Were membership obligations unacceptable? Did they not want to spend the money? It seems strange that a company dealing with reputational problems would contemplate espionage if there was a less risky alternative.
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