Sources: US probe of Huawei includes bank fraud accusations

WASHINGTON: Chinese telecoms giant Huawei Technologies Co Ltd’s chief financial officer was arrested as part of a US investigation into an alleged scheme to use the global banking system to evade US sanctions against Iran, according to people familiar with the probe.

The United States has been looking since at least 2016 into whether Huawei shipped USorigin products to Iran and other countries in violation of US export and sanctions laws, Reuters reported in April.

More recently, the probe has included whether the company used HSBC Holdings Plc to conduct illegal transactions involving Iran, the people said.

Companies are barred from using the US financial system to funnel goods and services to sanctioned entities.

If the mobile phone and telecoms equipment maker conducted such transactions and then misled HSBC about their true nature, it could be guilty of bank fraud, experts say.

Huawei declined to comment, but said in a statement after the arrest that it complies with all applicable export control and sanctions laws and other regulations.

An HSBC spokesperson declined to comment. HSBC is not under investigation, according to a person familiar with the matter.

A spokesman for the US attorney’s office in Brooklyn, which Reuters has reported is the office investigating Huawei, also declined to comment.

In 2012, HSBC paid US$ 1.92 billion and entered a deferred prosecution agreement with the same US prosecutor’s office for violating US sanctions and moneylaundering laws.

As part of that deal, HSBC was required to be monitored for five years to review its efforts to prevent money laundering and sanctions violations.

HSBC’s US-listed shares fell as much as 6 per cent on Thursday after Reuters reported the bank’s link to the Huawei case. They ended down 3.6 per cent.

Huawei CFO Meng Wanzhou, daughter of Huawei’s founder, Ren Zhengfei, was arrested in Canada on Dec 1. She will appear in court and faces extradition to the United States.

The news broke on Wednesday, roiling global stock markets over fears the move could escalate the Sino-US trade dispute.

Huawei said it has been provided little information of the charges and that it was ‘not aware of any wrongdoing by Ms Meng.’

The probe of Huawei is similar to one that threatened the survival of China’s ZTE Corp , which pleaded guilty in 2017 to violating US laws that restrict the sale of Americanmade technology to Iran. ZTE paid a US$ 892 million penalty.

Earlier this year, the United States said ZTE made false statements about disciplining some executives responsible for the violations and banned US firms from selling parts and software to the company. — Reuters