Last week, Canadian authorities arrested Huawei’s global chief financial officer Meng Wanzhou, 46, also daughter of the company founder, on allegations of fraud levelled by the US. The move has led to China warning Canada and calling in the US Ambassador in Beijing to lodge its protest.
Meng may have participated in a scheme to trick financial institutions into making transactions that violated US sanctions against Iran, according to Canadian prosecuting attorney John Gibb-Carsley’s arguments in court, as quoted by The New York Times. Between 2009 and 2014, Huawei reportedly used a Hong Kong company, Skycom Tech, to do business with telecom companies in Iran. Banks in the US cleared transactions for Huawei, inadvertently doing business with Skycom, the NYT report quoted Gibb-Carsley as saying. The report cited articles by Reuters in 2013 that alleged Huawei used Skycom to do business in Iran, and had tried to import US-made computer equipment there. When financial institutions asked Huawei about the allegations, Meng reportedly met with an executive from one institution and said Huawei operated in Iran in compliance with US sanctions, and that it had sold its shares in Skycom. The Canadian prosecutor was quoted as saying that Huawei operated Skycom as an unofficial subsidiary, making efforts to keep the connection secret, and that Meng’s presentation to the financial institution constituted fraud. Meng’s attorney said the bank was HSBC, according to the NYT report, which quoted HSBC chief legal officer Stuart Levey as saying: “The US Department of Justice has confirmed that HSBC is not under investigation in this case.”
Coming the same day that US President Donald Trump and Chinese President Xi Jinping declared a 90-day “truce” in their trade war, the arrest poses a challenge to the already difficult relationship. An op-ed article in The NYT said that in Beijing, the move is seen as a political play to create leverage on trade or cripple Chinese technology companies. “If China concludes that the United States will pursue a barrage of punitive actions no matter what steps China takes to address American concerns, this will leave Beijing with little appetite to make meaningful concessions,” the article said, adding it is not clear what this arrest means for upcoming trade talks.
Meng faces possible extradition to the US, a process that can take time. The US Justice Department must now present evidence to the Canadian court that supports its request and has 60 days from the arrest to make a full request for extradition, the NYT report said.