What you need to know

  • Huawei secretly worked with a Chinese state-owned firm to build North Korea's 3G wireless network.
  • The Chinese manufacturer furnished base stations and antennas, and provided software services as well.
  • Huawei is currently facing a trade ban for violating sanctions to Iran.

Huawei's troubles in the U.S. are nearly at an end, with the Commerce Department set to clear U.S. firms from doing business with the Chinese manufacturer when there is "no threat to national security." However, a bombshell report published by The Washington Post may change all that.

Leaked documents obtained by The Post reveal Huawei secretly worked with a Chinese state-owned firm called Panda International Information Technology Co. Ltd. in building North Korea's Koryolink 3G cellular network. Former employees talking to The Post on condition of anonymity shared details on how the Chinese manufacturer worked behind the scenes to build out the network. North Korea struggled to find companies to build the 3G network, but a visit to Huawei's headquarters in Shenzhen, China by Kim Jong Il paved the way for the Koryolink network.

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The documents show that Huawei worked closely with Panda International to furnish base stations, antennas and other equipment needed to build Koryolink, with Huawei and Panda employees working out of a hotel in Kim Il Sung Square in Pyongyang, North Korea for years. Huawei was also involved in network integration, network assurance, and software services, as well as an expansion project for Koryolink. A Huawei employee named Yin Chao provided details to The Post about an automated callback service that he worked on for the cellular network.

It was revealed that Panda transported the necessary network equipment to a town in northeastern China called Dandong, and then taken by rail into Pyongyang. Huawei even assigned codes to countries that had trade embargoes — like Iran and North Korea — so it wouldn't be immediately apparent that it was doing business with them. From a former Huawei executive talking to The Post:

You'd run a query on the projects and you'd see Germany, United States, Mexico. Then instead of a country name, you'd see A5, A7, A9, and you'd say, 'What's that?' I assume it's because they didn't want to say 'Iran' or 'Syria.'

The allegations paint a dire picture for Hauwei, which was initially put on the U.S. Commerce Department Entity List for violating sanctions to Iran. The Commerce Department enforced a similar ban on Panda back in 2014 for furnishing parts with U.S.-origin technology to the Chinese military. It also drafted regulations that state any entity selling telecom equipment to Panda containing at least 10% U.S.-origin technology would be in violation of the ban. With Huawei's involvement now surfacing, it is possible that the U.S. government will levy "export-control sanctions, civil penalties, forfeitures or criminal prosecution" if it finds that Huawei ran afoul of the regulations.

The current political climate between the U.S. and China is already charged, and Huawei's involvement in North Korea isn't going to make matters easier for the manufacturer.

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