Huawei claims 'shameful' US ban is based on 'innuendo, not evidence'

Huawei has launched a fresh legal battle against the US government, hitting back at claims that it poses a security threat after it was barred from a scheme that allows rural phone carriers to buy its equipment using subsidies.

Lawyers for the Chinese telecoms giant claimed "the designation is... a shameful prejudgment of the worst kind” based on "innuendo, not evidence".

Huawei has asked a US federal court to reverse a rule that prevents US phone carriers from using an $8.5bn government fund, known as the Universal Service Fund, to purchase its equipment.

Glen Nagar, Huawei’s lead counsel for the legal action, rebuked the US government's decision, saying: “The designation is based on a fundamental misunderstanding of Chinese law and on unsound, unreliable, and inadmissible accusations and innuendo, not evidence.

"The designation is simply shameful prejudgment of the worst kind,” he added, speaking at a press conference in Shenzhen.

Last month the US government's Federal Communications Commission (FCC) voted in favour of designating Huawei as a national security risk.

The lawsuit is the Chinese tech company's second legal challenge this year to the Trump administration, which has ramped up efforts to block Huawei's activity in the US after blacklisting the company and associated entities in May.

The sanctions, which limit Huawei's access to critical technology from US suppliers such as chipmaker Qualcomm,  have left the company scrambling to preserve its global sales of smartphones and network gear. In 2018, the company spent $11bn (£8.4bn) on US supplies.

Huawei, which says it is a privately held company with no ties to the communist regime, has denied all allegations that it is a security risk and might facilitate spying on behalf of the Chinese government, and warned that the FCC's ruling would hurt rural American carriers.

Huawei claims that a ban would incur billions of dollars of extra costs for its customers and delay the development of 5G networks in the US.

Over the past year, the company has been dragged into the centre of an ongoing US-China trade war, as Washington has looked to cripple Beijing's technology ambitions.

The US has raised concerns that Chinese authorities are working to steal trade secrets from foreign technology companies, which it alleges are pressured into handing over intellectual property. The fight has been focused on 5G equipment, which is steadily being rolled out globally by telecoms firms.

Huawei's lawsuit in a US federal court in New Orleans says the FCC acted improperly and exceeded its authority when it voted last month to bar rural carriers from using government subsidies to buy equipment from Huawei and its Chinese counterpart ZTE.

Dr Song Liuping, Huawei’s chief legal officer, claimed that the company stands to suffer "reputational losses" that will have a further impact on its business, while banning it "just because we started in China will not solve cyber security challenges".

"If the FCC is truly worried about the security of telecom supply chain, then they should understand this: equipment made in China by any vendor should also have the same risks, so not only Huawei and ZTE, but also Nokia and Ericsson," she said.

In a separate lawsuit filed in March, Huawei asked a federal court in Texas to strike down a ban that prevents the US government from using its equipment.

The legal tensions come as US prosecutors are attempting to extradite Meng Wanzhou, Huawei's chief financial officer, who was arrested in Canada last year amid allegations that she failed to disclose dealings with US-sanctioned Iran.

Huawei's US sales plunged after a congressional panel warned in 2012 the company and ZTE were security risks and told carriers to avoid them. However, its sales in Europe and developing markets in Asia and Africa have risen steadily.

Huawei earlier reported its global sales rose nearly a quarter in the first nine months of 2019 over a year earlier to 610.8 billion yuan (£66bn).

The Trump administration has announced a series of limited reprieves that allow companies to supply technology needed to support wireless networks in rural areas.

In November, Huawei started selling a folding smartphone, the Mate X, made without US-supplied processor chips or Google apps. The company also has unveiled a smartphone operating system it says can replace Google's Android if necessary.