Huawei’s founder faces fight for company and family

Beijing, China | AFP | Huawei founder Ren Zhengfei survived food shortages during China’s Cultural Revolution, but now the reclusive billionaire identified as “Individual-1” in a US indictment faces an existential fight for his family and company.

Ren, 74, founded Huawei in 1987 with just 21,000 yuan ($5,600) and watched it grow into a global behemoth with 180,000 employees operating in 170 countries, sales of 206 million smartphones last year, and revenue topping $100 billion.

But broad criminal charges unveiled in the United States this week are now threatening to wreck his empire and put his daughter, Huawei’s chief financial officer Meng Wanzhou, behind bars.

The accusations dealt a blow to Huawei’s image just as the famously secretive company had mounted a media blitz to salvage its reputation, with Ren leading the charge to dispute espionage concerns.

Huawei’s PR department “says we’re at a stage of crisis transition, I need to make our customers understand us,” Ren told Chinese media this month.

“I’ve been forced” to speak out, he said.

Meng, who was arrested in Canada and faces a US extradition hearing in March, was charged with bank fraud and other crimes related to violations of Iran sanctions.

The company was also accused of stealing technology secrets from telecom operator T-Mobile USA.

While Meng’s father was not charged, the former Chinese army engineer also made an appearance in the indictment.

Identified as “Individual-1”, he “falsely stated” to FBI agents during an interview in July 2007 that Huawei did not conduct any activity in violation of US export laws or dealt directly with any Iranian company, according to the documents.

The US Justice Department says the indictment charges other individuals but they have not been apprehended and their names will remain concealed for now.

“The criminal activity alleged in this indictment goes back at least 10 years and goes all the way to the top of the company,” acting US Attorney General Matthew Whitaker said on Monday.

Ren — who is worth $3.4 billion, accordint to Forbes — was heading to Argentina at the same time as his daughter when she was detained in transit in Vancouver in December, but he took a different route.

“I left two days after her, and transferred in a different place,” he told Chinese media.

Avoiding countries with a US extradition treaty could be a problem for company executives just as Huawei battles to sell its telecom gear for the next generation 5G cellular networks.

Washington has mounted a fierce lobbying campaign to push allies to reconsider using the telecom giant’s equipment over security concerns.

– Cultural Revolution –

Distrust of Huawei stems in part from Ren’s background as a People’s Liberation Army engineer.

Ren joined the military during the Cultural Revolution years, when “complete chaos” reigned, he told international journalists at a roundtable this month.

His squad revamped a clothing factory in the northeastern city of Liaoyang, where they slept outside on the grass as temperatures dipped to minus 20 degrees Celcius, Ren said.

“There was no supply of fresh vegetables at all, so we had to pickle some vegetables like cabbages and radishes we got in autumn in large concrete pots, and rely on pickled foods for six months at a time,” he said.

His engineering talent in the military earned him praise and publicity and in 1978 a spot in the Communist Party. He was then selected to be a representative of the 12th National Congress of the Communist Party of China in 1982.

“As Meng Wanzhou’s father, I miss her very much,” Ren said. “Throughout her childhood, I was in the military, which means that each year I was away for 11 months, spending one month with my family.”

– Connections? –

Ren’s prestigious political chops has engendered questions about his connection to the Chinese state.

“The National Congress is the once-in-a-decade forum through which the next leaders of the Chinese state are chosen,” a US Congress panel wrote in 2012 investigative report on Huawei.

“Mr. Ren proudly admits that he was invited to that Congress, but he will not describe his duties.”

Ren has denied any close connection to Beijing, saying he was just a veteran without a military rank.

Huawei has long rejected such Western accusations, saying there was “no evidence” it poses a threat to the national security of any country.

But this month Poland arrested a Huawei employee suspected of spying for China. The firm swiftly sacked the employee and denied any connection to his actions.

Despite Washington’s campaign to blacklist the company, Ren has said he still hopes for “collaboration” with the US.

It will be difficult for Huawei to win back the trust of the United States after the indictment accused the company of stealing T-Mobile technology and running a programme to reward employees for stealing information from competitors.

Ren had insisted in his recent media interviews that his company needs to respect the intellectual property of others, “and get their permission, and pay for it.”