HOTLINE TO TEHRAN?
Exec accused of fraud
VANCOUVER • Meng Wanzhou, the chief financial officer of Huawei Technologies and the daughter of the Chinese tech giant’s founder, was arrested at the Vancouver airport on Dec. 1 at the request of the United States. Until Friday, the reason was shrouded in mystery.
With Meng, 46, dressed in green sweatpants and sitting inside a glass box at B.C. Supreme Court, federal Crown prosecutor John Gibb-Carsley told her bail hearing on Friday that she is alleged to have committed multiple acts of fraud by participating in a scheme to trick financial institutions into making transactions that violated U.S. sanctions against Iran.
Gibb-Carsley urged Justice William Ehrcke to deny bail to Meng. who has no meaningful connections to Canada and has vast resources and is a serious flight risk. News of her arrest shook world stock markets.
“At the starting point, there is an incentive to flee. Ms. Meng is charged with conspiracy to defraud multiple international financial institutions. It is a serious offence, with each offence carrying a maximum of 30 years in prison.”
Gibb-Carsley said Meng has “significant” financial resources that would enable her to leave the country if she is granted bail and noted that her father, the founder of the company, is worth about $3.2 billion.
“She has the means to flee and to remain outside Canada. Her ordinary home is in a country without an extradition treaty with U.S.,” the prosecutor said in courtroom packed with international media and members of the Chinese-Canadian community. Outside the courtroom six TV screens had been set up to accommodate the overflow crowd.
Meng was arrested Dec. 1 at Vancouver International Airport after arriving from Hong Kong on her way to Mexico.
Canadian officials, based on a provisional arrest warrant that was issued by a New York state judge in August, took her into custody.
Gibb-Carsley said that at the heart of the allegations against Huawei and Meng is that between 2009 and 2014, the company used a subsidiary named Skycom to do business in Iran with an Iranian telecommunications company, in violation of U.S. sanctions against trade with Iran.
When a Reuters wire agency story was published in 2013 describing how Huawei controlled Skycom and that Skycom had attempted to send U.S.-manufactured computer equipment into Iran in violation of the sanctions, several banks involved in the case asked Huawei whether the allegations were true.
Meng then made misrepresentations to the banks in a form of “damage control” to the news agency’s article, Gibb-Carsley alleged.
The actions of Meng put the banks involved at serious financial risk, he said.
“Skycom was Huawei. This is the alleged fraud,” said Gibb-Carsley. “Skycom employees were Huawei employees.”
None of the allegations have been proven in court.
Gibb-Carsley told the judge that while Meng vacations in Vancouver and has two “very expensive” homes in Vancouver, there’s no real connection with Canada.
David Martin, a lawyer for Meng, told the judge that the fact that a person has worked hard and has resources should not be grounds to deny bail.
He noted that both Vancouver properties — worth a total of $14 million — would be available to put up for bail.
Meng would not breach bail because to do so would humiliate her father whom she loves, said Martin.
Her father, Ren Zhengfei, is a former Chinese army intelligence officer. His company, Huawei, is the most prestigious tech company in China.
“You can trust her,” said Martin.
As for the allegations against Meng, Martin said no evidence of fraud could be made out against his client, calling the Crown’s case a “skeletal” description of liability. He called the U.S. allegations “preposterous.”
He said one of the glaring deficiencies in the allegations is that the summary of the case doesn’t differentiate between time periods. Martin said at the meeting Meng had with a bank that was referred to in a story by Reuters, she explained Huawei owned Skycom for a period of time but it sold the company in 2009. Martin told the court the PowerPoint presentation his client delivered to the bank is supposed to be evidence of fraud, but that claim is “preposterous.”
Huawei sold Skycom before the sanctions became law in the United States under president Barack Obama in 2010, he said.
The defence lawyer emphasized that the company’s mission was to comply with applicable export laws and regulations.
Huawei is the biggest global supplier of network gear used by phone and internet companies.
Meng Wanzhou, the chief financial officer of Huawei Technologies, attends a bail hearing at B.C. Supreme Court in Vancouver on Friday.