Seagate Technology Holdings has been fined $300 million for selling hard disk drives to the Chinese telecommunications conglomerate Huawei after that company had export restrictions on it by the Commerce Department. Seagate Technology Holdings plc is an American data storage company. It was incorporated in 1978 as Shugart Technology and commenced business in 1979. Since 2010, the company has been incorporated in Dublin, Ireland, with operational headquarters in Fremont, California, United States. The fine is the largest stand alone administrative penalty in the Bureau of industry and Security for this type of infraction. As part of the settlement, Seagate admitted its US and Singapore subsidiaries caused the export of more than 7.4 million hard disk drives to Huawei entities which has a value in excess of 1.1 billion according to BIS.
Two of Seagate’s competitors stopped doing business with Huawei when the restrictions were announced. Seagate went ahead and agreed to a three year strategic cooperation agreement with Huawei.
The charging documents https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2023/1497-e2836/file detail the involvement of Seagate with Huawei stating:
As described in greater detail below, between on or about August 17, 2020 and on
or about September 29, 2021, Seagate US and Seagate Singapore engaged in
conduct prohibited by the Regulations on 429 occasions when they ordered or
caused the reexport, export from abroad, or transfer (in-country) of approximately
7,420,496 hard disk drives (“HDDs”), items subject to the EAR and valued at
approximately $1,104,732,205, to Huawei Technologies Co., Ltd. (“Huawei”) or
other Huawei entities listed on the BIS Entity List and/or where listed Huawei
entities were a party to a transaction involving such items without a license or
other authorization from BIS.3
The company was allowed to pay the fine in $15 million in installments over the next five years. Additionally, it must complete three audits of its export controls compliance program.
Jeffrey Newman is a whistleblower lawyer representing whistleblowers who have information about securities violations that meet the requirements of the SEC and CFTC whistleblower programs. He also represents whistleblowers under the False Claims act. He can be reached at Jeff@Jeffnewman.com or at 617-823-3217. His website is www.JeffNewmanLaw.com
