Pennsylvania Firm’s Shipments to Huawei Trigger U.S. Export Controls Penalty

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By Samuel Rubenfeld

Tuesday, November 9, 2021

Shipments by a Pennsylvania firm in 2019 to Chinese networking equipment technology giant Huawei Technologies Co. Ltd. violated U.S. export controls, an office of the U.S. Department of Commerce said this week.

Due to errors in its export screening process, Warminster, Pennsylvania-based SP Industries Inc. sent four shipments between May and August 2019 to Huawei and two of its subsidiaries, the Commerce Department said. The first shipment occurred about two weeks after the U.S. imposed restrictions on exports to Huawei, according to an administrative order. 

“Huawei continues to present a threat to U.S. national security and foreign policy interests,” said Kevin J. Kurland, the acting assistant secretary for export enforcement at the Commerce Department’s Bureau of Industry and Security (BIS).

SP Industries self-reported the matter, agreeing to a USD 80,000 penalty and to conduct audits of its compliance program, the Commerce Department said. Earlier this week, Ontario, Canada-based ATS Automation Tooling Systems Inc. announced it would acquire SP Industries. Neither firm appeared to have a response to the U.S. export controls matter.

On May 28, 2019, SP Industries exported a precision temperature cycling system, which is used to rapidly change the temperature of a product under testing conditions, to Huawei Device Co. Ltd., according to the BIS administrative order. Two subsequent shipments went to HiSilicon Technologies Co. Ltd., and a fourth was sent to the parent company, according to the order.

Huawei and more than 70 of its affiliates were listed by BIS in May 2019, and the agency added dozens of others to the restriction in the time since. The U.S. has also ordered local telecom networks to rip out Huawei’s equipment, and has pursued an international campaign against the company. U.S. restrictions continue to take a toll, according to a recent earnings report. 

Huawei was criminally charged in the U.S. in January 2019, and a year later a superseding indictment said the company’s operations in sanctioned countries were “part of its international business model,” Kharon reported at the time

Meng Wanzhou, Huawei’s finance chief and daughter of company founder Ren Zhengfai, was also charged. In September, Meng entered into a deferred prosecution agreement, charging her with misleading a financial institution about Huawei’s activity in Iran. The company is fighting the charges, and prosecutors said at the time that they continue to prepare for a trial. 

Meng, meanwhile, flew home to a hero’s welcome in China after the U.S. dropped an extradition request; she had been held in Canada. After a 21-day pandemic quarantine, Meng was feted upon her return to work at Huawei headquarters in Shenzhen, according to media reports.

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