|
The Morning Risk Report: Huawei Charged With Racketeering
|
|
|
|
|
|
|
China’s Huawei Technologies faces new federal charges in New York. PHOTO: GEERT VANDEN WIJNGAERT/BLOOMBERG NEWS
|
|
|
Good morning. Huawei Technologies and two of its U.S. subsidiaries were charged with racketeering conspiracy to steal trade secrets in a new federal indictment unsealed Thursday, opening another front in the Trump administration’s battle with the Chinese telecommunications firm.
The new charges amp up pressure on Huawei from the U.S., where Trump administration officials say the company poses a national security risk as it competes fiercely with American rivals around the world. The new indictment, filed in federal court in Brooklyn, N.Y., builds on allegations the U.S. leveled against Huawei in January 2019 accusing Huawei of financial fraud.
[Continued below...]
|
|
|
Thursday’s indictment makes new allegations about Huawei’s involvement in countries subject to stiff U.S. economic sanctions such as Iran and North Korea. Prosecutors said the defendants shipped Huawei goods and services to sanctioned countries, often using local affiliates. Internal Huawei documents used code names for such places, including “A2” for Iran and “A9” for North Korea, according to prosecutors.
Huawei unofficially operated a company called Skycom Tech Co. to obtain goods and technology from the U.S. for use in Iran in violation of American sanctions, according to the indictment. The company could then claim it didn’t know about any illegal acts committed by Skycom on its behalf, the indictment says.
|
|
|
|
Holiday Schedule for The Morning Risk Report
|
|
The Morning Risk Report won’t be published Monday in observance of Presidents Day in the U.S. We’ll be back Tuesday.
|
|
|
From Risk & Compliance Journal
|
|
|
|
Raytheon Co. logo appears on exhibition hall ahead of the 53rd International Paris Air Show on June 16, 2019. PHOTO: JASPER JUINEN/BLOOMBERG NEWS
|
|
|
The U.S. Securities and Exchange Commission has opened an inquiry into whether defense contractor Raytheon or its partners made improper payments in the Middle East.
Raytheon received a subpoena from regulators as part of an investigation into the company and a joint venture with France’s Thales SA, Raytheon said in a securities filing Wednesday.
Raytheon didn’t say when it had received the subpoena. A company spokesman said Raytheon was cooperating with the SEC’s inquiry.
|
|
|
-
International Flavors & Fragrances Inc. said it confirmed senior managers in an Israeli subsidiary knew about improper payments in Ukraine and Russia. The New York-based chemical company disclosed in August it spotted potential bribery in the two countries following its acquisition of Frutarom Industries Ltd. International Flavors bought the Israeli flavor company in October 2018.
|
|
|
|
Lobbyist Kenneth Glueck, shown arriving at President-elect Trump’s tech roundtable in December 2016 with Oracle CEO Safra Catz, tends to wield power from behind the scenes. PHOTO ILLUSTRATION: WSJ; PHOTO: GETTY IMAGES
|
|
|
Not long ago, Washington lobbying featured pitched battles between business and labor unions or consumer groups. Now, some of the biggest fights pit company against company. Few have mastered the game like Oracle. Co-founded more than four decades ago by iconoclastic entrepreneur Larry Ellison, the corporate-database pioneer has long since been eclipsed in size by consumer-facing giants such as Google parent Alphabet, Amazon and Facebook. When it comes to sway in Washington, Oracle punches above its weight.
Kenneth Glueck, Oracle’s top Washington lobbyist, is a major force behind the increased government scrutiny of leading technology companies. He has prodded federal antitrust regulators to investigate whether Google is violating competition laws. He lobbied Congress to curb the sweeping legal protections tech firms enjoy for the information flowing over their networks. He unearthed conflict-of-interest allegations that hindered Amazon’s efforts to win a huge cloud-computing contract from the Defense Department.
|
|
|
-
Tesla is facing fresh regulatory scrutiny over its finances as it looks to raise more than $2 billion from a stock sale to help bolster its balance sheet. The Securities and Exchange Commission issued Tesla Inc. a subpoena in early December seeking information regarding certain financial data and contracts, which include its regular financing arrangements, the electric-car maker said Thursday.
-
A federal judge on Thursday ordered the Pentagon to halt work on the massive JEDI cloud-computing contract awarded to rival Microsoft Judge Patricia Campbell-Smith of the U.S. Court of Federal Claims issued a preliminary injunction to block the Pentagon from proceeding in response to a lawsuit from Amazon contending improper influence from President Trump.
-
PG&E proposes to pay half of its $13.5 billion settlement with California wildfire victims in company shares, a move that would make victims the utility’s largest shareholders—and jeopardize payments if PG&E sparks future fires.
-
Authorities in Pakistan approved sweeping new regulations restricting social media, rules that would dramatically change the way companies such as Facebook and Twitter operate in the country and critics say would threaten freedom of expression.
|
|
|
|
Cristiano Amon, Qualcomm president, speaking at CES 2020 in Las Vegas last month. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
|
|
|
A federal appeals court appeared receptive to Qualcomm’s appeal of a ruling that found it was illegally maintaining a monopoly in cellphone chips and extracting unreasonably high royalty rates for patents that are essential to the industry.
A three-judge panel of the Ninth U.S. Circuit Court of Appeals repeatedly questioned arguments by the Federal Trade Commission, which sued Qualcomm in 2017 for alleged antitrust violations.
Judge Consuelo Callahan suggested Qualcomm’s practices had been “overly capitalistic but not necessarily anticompetitive.” She also voiced skepticism of FTC arguments that Qualcomm’s tactics had unlawfully raised costs incurred by its chip rivals.
|
|
|
-
Top Justice Department antitrust officials went to the heart of Silicon Valley to ask whether industry dominance by a few large tech companies is hurting venture-capital investment in startup firms that could be tomorrow’s competitors. “Antitrust enforcers and venture capitalists both depend on making sure that these types of bets—in good ideas and in great entrepreneurs—are encouraged and rewarded,” the Justice Department’s antitrust chief, Makan Delrahim, said at an event the department hosted Wednesday with Stanford University.
|
|
|
|
President Trump’s budget proposal recommends consolidating the Public Company Accounting Oversight Board under the Securities and Exchange Commission. PHOTO: ANDREW HARNIK/ASSOCIATED PRESS
|
|
|
A White House proposal for the U.S. Securities and Exchange Commission to absorb an independent audit watchdog faces long odds, but it could reduce resources dedicated to regulating public-company audits if signed into law, former regulators say.
President Trump’s proposed $4.8 trillion budget, released Monday, includes a provision to consolidate the responsibilities of the Public Company Accounting Oversight Board under the SEC starting in 2022, essentially making the PCAOB a department of the SEC.
The proposal faces a big hurdle: Democrats control the House, and spending bills in the GOP-led Senate need bipartisan support. As a result, few expect the proposal to pass. But its inclusion in this year’s budget request could foreshadow potential changes if Mr. Trump wins re-election in November, and if Republicans win control of Congress.
|
|
|
|
A sign outside a dormitory at the Washington State Patrol Fire Training Academy near North Bend, Wash. The academy has been designated a quarantine site for travelers from China’s Hubei Province. PHOTO: JASON REDMOND/AGENCE FRANCE-PRESSE/GETTY IMAGES
|
|
|
Alibaba Group said the coronavirus outbreak that has locked down residents across China is hampering the online-retail giant and may result in slowed growth as employees stay home from work and packages go undelivered.
China’s most valuable tech company is facing one of its biggest challenges in its 20-year history, and it falls to its new generation of leaders to tackle it after founder Jack Ma stepped away as Alibaba’s executive chairman last year. Company executives said they expected challenges in the short run, but said Alibaba could benefit in the future as the lockdowns trapping people inside their homes encourage consumers to shift more purchases online.
New cases of the coronavirus rose sharply after Chinese authorities changed the criteria for diagnosing the illness, raising questions about how soon the outbreak will peak. On Thursday, health officials in Hubei province, the epicenter of the infections, announced the largest one-day jump in cases—14,840 on Wednesday, about nine times the number of new cases a day earlier.
|
|
|
|
After a proposed merger of China’s Ant Financial Services Group with U.S money transfer firm MoneyGram International drew Cfius scrutiny, the companies gave up on trying to win approval. PHOTO: MAURITZ ANTIN/EPA/SHUTTERSTOCK
|
|
|
New rules will give national security officials a clearer window into whether business acquisitions by foreign entities could compromise sensitive personal data of U.S. citizens.
The rules will require some investors with substantial ties to foreign governments to disclose deals or acquisitions with a U.S. business if the business has access to data on more than one million people, including certain genetic and biometric data, financial data and health data. The rules also apply to investments in U.S. businesses that track users’ locations or target U.S. military or national security personnel.
Disclosures about those proposed investments, along with investments in critical infrastructure and technology, must be submitted for approval to the Committee on Foreign Investment in the U.S., or Cfius. It didn’t require disclosures prior to a 2018 overhaul of its rules.
|
|
|
-
After a series of delays in part due to privacy concerns, Facebook handed over internal data about how content gets shared on its platform to a select group of academics. The handoff on Thursday marks a milestone that researchers said could lead to better understanding of patterns in fake news and the quality of information shared on Facebook. It is also a cautionary tale of the obstacles for outside researchers looking to collaborate with tech companies on projects using data that the companies control.
|
|
|
|
Marin Baumer walks outside the Miami Lighthouse for the Blind, where she is learning about computers to improve her employment skills. PHOTO: SCOTT MCINTYRE FOR THE WALL STREET JOURNAL
|
|
|
The Trump administration, citing demographic and labor-market shifts, has proposed tightening eligibility criteria for federal disability benefits. Current rules, created in 1978, favor workers over 50 with limited education and experience because they are considered less likely to adapt to new work.
The changes under consideration would no longer assume age seriously affects ability to adapt to simple, entry-level jobs, according to a draft from the Social Security Administration, which administers the program.
|
|
|
-
Royal Dutch Shell is expanding an online program that teaches its employees artificial-intelligence skills, part of an effort to cut costs, improve business processes and generate revenue.
-
Airbus is ramping up production of its bestselling single-aisle jet, moving to fill a hole in the market created by the prolonged grounding of rival Boeing’s 737 MAX. The increase comes as airlines are planning for a second summer travel season without their MAX jets. Southwest Airlines Co., the world’s largest MAX operator, said Thursday that it has cut the plane from its schedule through Aug. 10, two months longer than planned.
-
McClatchy, the second-largest U.S. newspaper group by circulation, filed for bankruptcy protection, a move that comes as the nation’s newspaper industry is struggling to cope with a sharp decline in print advertising and the challenges of building a robust digital business.
|
|
|
|
|
|