Meng Wanzhou: all about Huawei CFO’s Arrest

10/12/2018

Huawei’s CFO, Meng Wanzhou, has been arrested in Canada and now risks 30 years in prison and extradition to the US. Accused of breaking American sanctions on Iran, the truce called by Washington and Beijing is now at stake

 

The first of December, in total silence, Meng Wanzhou was detained in Canada at the request of the US authorities while transferring between flights in Vancouver. The woman, also known by her Western name Sabrina, is Huawei Chief Financial Officer and deputy chairwoman, and also the daughter of the Chinese telecommunication company’s founder, Ren Zhengfei.

Meng’s arrest occurred during the Buenos Aires meeting that led to the three-month truce from the trade war. However, a US extradition request and the risk of a 30-years detention now hang over her head.

 

Huawei - Meng Wanzhou - cifnews

© Huawei. In 2017, Forbes ranked Meng at No. 8 in its list of Outstanding Businesswomen of China.

 

The first hearing in Canada was scheduled on Friday in order to assess if Huawei CFO will be released on $ 1 million bail without risk of escape, but she now waits for a second hearing today.

Previously, information about the legal affair was limited due to a press ban requested by Meng’s lawyers but since the first hearing, charges against the chairwoman and Huawei have been confirmed.

Meng Wanzhou is now officially accused of “conspiracy to defraud multiple financial institutions” including breaking American sanctions on Iran. In particular, the US Department of Justice alleges that the woman allowed the Hong Kong-based company SkyCom Tech to do business in Iran between 2009 and 2014. US banks worked with Huawei at that time, so Iran sanctions were violated indirectly, therefore committing fraud against these banks. Despite Huawei claims not to be connected with the technology firm, SkyCom is believed to be its unofficial subsidiary because Meng served on the board.

The Globe and Mail – the Canadian newspaper – specifies that Meng would have violated sanctions against Iran by selling American technology – contained in Huawei’s products – to the Middle Eastern country.

The Shenzhen firm has protested its innocence and respect of all the laws in the countries where it operates, including US trade regulations. In the company and Meng’s defense, lawyer David Martin introduced a 2013 PowerPoint presentation where the CFO explained to a Hong Kong’s bank that Huawei was not violating any US sanctions.

 

Huawei - Meng Wanzhou - hearing in Canada - cifnews

© Le Journal Canadien.com. The Attorney requested to keep Meng Wanzhou in custody, fearing she would fly home, away from Canadian or US jurisdiction. The defense lawyer, David Martin, responded explaining the Chinese concept of “saving face”, saying that Meng would never embarrass the company, her father or China itself by flying away.

 

China reacted immediately. When Beijing learned of the arrest, during a conference press, foreign Ministry spokesman Geng Shuang, explained that China has not received any official explanation, neither from Canada, where she was arrested, nor from the United States, which called for the extradition.

 

Chinese Foreign Ministry spokesman claims that the company “is not aware of any wrongdoing by Ms. Meng,” and adds that “to detain someone without giving a clear reason is an obvious violation of human rights.”

 

The police operation against the most important technology company in the People’s Republic quickly became an International diplomatic case. It occurred on the same day that Donald Trump and Xi Jinping signed a truce on the duty war during a meeting at the G20 in Argentina and it will inevitably exacerbate relations between the two countries.

This diplomatic incident is only the last chapter of an escalating tension that has been going on for some time. The case, in fact, also seems to arise from further investigations started by the Justice Department that have recently intensified for the suspicion that Huawei’s products could be used for industrial espionage against the United States. The company’s founder serving as an engineer to the People’s Liberation Army during his early years and the related connections to the Chinese Communist Party have contributed to these suspicions.

Last February, CIA, FBI, NSA and other American intelligence agencies openly accused Huawei of espionage through 5G networks. Therefore, Trump invited all the allied nations to ban their products even if US authorities have not provided any detailed evidence to confirm the allegations to this day.

The fact that the truce was reached the same day that Meng was arrested in Canada took the relationship between the two countries to a dramatic turn to the worse. The White House says the President did not know about the arrest before dinner. However, even if he was not aware of the arrest, Trump surely knew about the arrest warrant issued on August – as revealed during the hearing – and it is likely he signed for the extradition request.

This is not the only recent tension between the two leaders. Earlier this year, Trump banned China’s second largest telecommunication equipment maker ZTE from purchasing key components made in the United States. The authorities blamed the company to have violated US sanctions against Iran and North Korea.

 

Huawei - Meng Wanzhou - zte - cifnews

© Weibo. To avoid the ban, Washington offered a deal and ZTE agreed to pay $ 1 billion fine, replace its leadership and allow operations’ inspection.

 

For what concerns US ban results in Chinese International Relations, Australia, UK, New Zealand and recently Japan too, already decided to follow the White House’s suggestions. However, Europe is the real key battleground for Huawei as it represents its largest market outside Asia where 5G networks will be implemented next year. Here, the company not only is supported by the French Finance Minister, Bruno Le Maire, who said Huawei investments are welcome in France, and that it is an important investor in the country, but also the Vodafone Group is at the front defending the Chinese firm.

“Huawei is an open and innovative company. We have never found anything less than normal in their hardware or software. If there had been something, we would have noticed,” told the Vodafone Group CEO, Vittorio Colao, during the Mobile World Congress in Barcelona.

 

#HuaweiMeng has been shared millions of times on Chinese social networks. The most common comment is: “The Americans, defeated on the market by one of our companies, react by rascals.”

 

Russian Foreign Minister Sergey Lavrov lashes out against Washington in defense of China describing the arrest as unacceptable as it is “an arrogant, jingoist policy no one accepts and it already sparks rejection even amongst the US’ closest allies.” While the Chinese newspaper Global Times believes it is a “despicable rogue’s approach” in order to suppress China’s hi-tech enterprises.

In support of this theory, there is the fact that not only Huawei is the Dragon’s most promising hi-tech company but it also sells more smartphones than the American Apple while building telecommunications networks all around the world.

Technology is, in fact, at the heart of the trade war as the huge duties have been imposed in response to Trump’s fear that China could steal American technology or force companies to hand over trade secrets.

 

Many see this as an attempt to limit the rise of the Middle Kingdom, containing Chinese companies’ access to international markets.

 

Huawei is surely one of the world’s biggest smartphones and networking equipment company. Therefore, the trade war between the United States and China started as a tariffs fight and now moved into the technological field. The aim is the hi-tech supremacy while Meng Wanzhou represents the war prisoner, or a “hostage”, as Chinese people call her.

The arrest looks like a signal to Beijing: Washington wants commercial peace without being stolen from technological supremacy, which is a question of national interest.

The US Justice Department now has 60 days to request Meng’s extradition with evidence and intent. Meng Wanzhou is thus in the hands of the Canadian court.

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