To Washington DC, Huawei and ZTE have been suspicious entities for years. Since early this decade, the two Chinese telecommunications companies have been under investigation for one reason or another, be it bribery, copyright infringement or consumer data siphoning — this has resulted in the Obama administration redirecting funds and stopping projects to break any contracts with those companies, which it has considered national security threats.
Just two weeks ago, ZTE came under the hammer of the Department of Commerce for violating terms of its settlement after it breached trade sanctions — it is now on the hook for $1.19 billion in fines and is banned from procuring parts from the United States for 7 years.
Now, the Department of Justice has opened a criminal investigation into Huawei. Sources to The Wall Street Journal say that it’s looking into trade sanction violations by doing business in Iran. The status of the investigation is unknown.
As with the ZTE action, any potential criminal action against Huawei will have ripple effects going forward such as increased scrutiny from foreign governments on the company’s involvement in its wireless grid as well as further civil penalties and tightening regulations, less to say that business partnerships may become negatively affected. Unlike ZTE, though, Huawei will have more business to lose as it is not only the largest provider of network equipment in many regions, but is the third-largest producer of smartphones in the world.
A spokesperson for the company declined to comment.