US firms register as foreign agents of embattled Chinese telecom giant Huawei

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China’s Huawei has launched a multi-part strategy to reshape the embattled Chinese telecom giant’s image through litigation, lobbying and public relations efforts.

The company has signed contracts with two public relations firms, Racepoint Global and Burson Cohn and Wolfe (BCW), to head its U.S. foreign influence campaign, according to Foreign Agents Registration Act (FARA) filings identified by the Center for Responsive Politics’ Foreign Lobby Watch tool.

Huawei has spent upwards of seven figures on lobbying efforts reported under the domestic Lobbying Disclosure Act (LDA) in prior years but this is the first FARA disclosure by agents of the Chinese telecommunications giant.

According to a FARA filing, BCW will develop a campaign to improve Huawei’s reputation in the U.S. by working with business partners, advisory council members, media outlets, influencers and “key opinion leaders” with a budget of $160,000.

Racepoint similarly states it will visit with analysts, influencers and media members and “draft content generation for the purpose of educating policymakers and legislators on client positions” but will “have no direct contact with government officials.”

Huawei agreed to pay Racepoint $55,000 per month through September 2019. On top of that monthly retainer, Huawei agreed to pay “reasonable” expenses and billing rates for individual team members of up to $320 per hour for the three managing directors. Racepoint’s contract also anticipates the potential of “talent,” “key opinion leaders” and “celebrity” related costs.

Huawei does not appear to currently have any Facebook ads actively targeting users in the U.S., but the telecommunications giant does have ads targeting a plethora of other countries ranging from Australia to the United Arab Emirates. However, it’s digital power may pivot more on less traditional internet advertising given a proliferation of social media influencers’ paid posts promoting Huawei on Instagram. In January, Huawei enlisted two popular Emirati influencers for an ad for its new phone.

Huawei’s lobbying and public relations campaign has also reached Canada and the United Kingdom, according to lobbying records for those countries.

The public relations effort comes as the U.S. pushes its allies to ban Huawei from participating in the rollout of 5G, the next generation of cellular mobile communications. The U.S. argues that Huawei could use the platform to spy for the Chinese government.

The Department of Justice in January indicted Huawei and its CFO Meng Wanzhou on charges of attempting to steal trade secrets, obstructing justice, committing wire fraud and violating economic sanctions on Iran. At the heart of the U.S. case against Huawei’s CFO is the company’s alleged ties to two suspected shell companies.

The company’s contacts with media organizations suggest the foreign influence campaign is already well underway. On March 21, USA Today published an op-ed from Huawei in which the company pushes back on U.S. warnings that the company is under control of the Chinese government and therefore should not be involved in building the 5G network.

On March 7, Huawei announced it has formally sued the U.S. government for enacting restrictions on Huawei products, claiming they are unfounded and unlawful.

The lawsuit itself may end up shining more light on Huawei’s ownership structure and relationship with the Chinese government, Peking University professor He Weifang said in a “rare interview” with the South China Morning Post.

“If Huawei is proved innocent by US court, it will be a big thing for Huawei, which Huawei cannot buy through mass public activities,” he said.

Though Huawei says it is independent of the Chinese government and would not allow the government to use its technology for espionage, national security experts aren’t so sure.

Jerome Cohen, a New York University School of Law professor and expert in Chinese law, told CNBC that Huawei “would have to turn over all requested data and perform whatever other surveillance activities are required” by Beijing.

The new FARA disclosure stops short of insinuating Huawei is directed by the Chinese government and the firms’ decision to register under FARA rather than the LDA does not necessarily insinuate as such.

“It is our understanding that Huawei Technologies Co. Ltd. is a private, employee-owned company,” Racepoint’s registration records claim. Both firms say that they have requested but not yet received confirmation that Huawei is not supervised, owned, directed, controlled, financed or subsided by a foreign government.

In addition to the requirement that lobbying for foreign governments be disclosed under FARA instead of the LDA, the LDA exemption to FARA registration only applies to lobbyists actually engaging in lobbying activities that do not principally benefit a foreign government or political party.

In this case, it is not clear why the firms chose to register under FARA rather than the LDA. The FARA disclosures do not include definitive information as to whether the firm’s activities would be considered lobbying under the LDA’s definition or if they may be deemed to the principal benefit of a foreign government.

The requirement that lobbying activities not be to the principal benefit of a foreign government in order to fall under the LDA exemption provides DOJ “significant leeway as to whether it applies or not,” according to Joshua Rosenstein, an attorney with Sandler Reiff Lamb Rosenstein & Birkenstock.

Rosenstein explained that “absent an advisory opinion, it’s much safer to register under FARA” when it is not clear if the LDA exemption applies since the burden of proving the exemption applies falls on the agent if you’re in a “grey area.”

Racepoint and BCW did not respond to requests for comment prior to publication.

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