Huawei ex­ec­u­tive ac­cused of fraud over Iran sanc­tions

Ar­rest tied to se­cu­rity con­cerns about Chi­nese tech gi­ant

Waterloo Region Record - - Canada & World - LAURA KANE

VAN­COU­VER — A se­nior ex­ec­u­tive of Chi­nese tech gi­ant Huawei is fac­ing al­le­ga­tions of fraud by us­ing a sub­sidiary to vi­o­late U.S. trade sanc­tions against Iran in a case that shook world stock mar­kets this week.

A fed­eral prose­cu­tor told a bail hear­ing for Meng Wanzhou in Van­cou­ver on Fri­day that the chief fi­nan­cial of­fi­cer of Huawei Tech­nolo­gies is wanted in the United States to face crim­i­nal pro­ceed­ings, al­leg­ing Huawei used sub­sidiary Sky­com to do busi­ness with Iran.

John Gibb-Cars­ley said Meng is al­leged to have said Huawei and Sky­com were sep­a­rate com­pa­nies in a meet­ing with an un­named fi­nan­cial in­sti­tu­tion, mis­lead­ing an ex­ec­u­tive with that in­sti­tu­tion and putting it at risk.

“Sky­com was Huawei. This is the al­leged fraud,” said Gib­bCars­ley, rep­re­sent­ing the At­tor­ney Gen­eral of Canada. “Sky­com em­ploy­ees were Huawei em­ploy­ees.”

None of the al­le­ga­tions have been proven in court.

The com­pany has said it is not aware of any wrong­do­ing by Meng and her lawyer, David Martin, told the B.C. Supreme Court no charge or in­dict­ment has been filed against his client, just a war­rant.

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.

Martin also ar­gued that the out­line pro­vided by Canada does not sup­port the case.

“The al­le­ga­tions con­tained in this doc­u­ment do not sup­port a prima fa­cie case of fraud against Ms. Meng” or Huawei, he added.

The case was ad­journed un­til Mon­day by Jus­tice Wil­liam Ehrcke to al­low the de­fence more time to com­plete their sub­mis­sions.

Gibb-Cars­ley said the At­tor­ney Gen­eral op­poses Meng’s re­lease on bail.

But Martin told the judge Meng is prom­i­nent and she would not vi­o­late a court or­der if she were re­leased.

“You can rely on her per­sonal dig­nity,” he said, adding that to breach a court or­der “would be to hu­mil­i­ate and em­bar­rass her fa­ther, who she loves.”

Huawei is the most pres­ti­gious tech com­pany in China and was founded by Meng’s fa­ther, Ren Zhengfei.

Martin said two prop­er­ties in Van­cou­ver worth a to­tal of $14 mil­lion could be put up for bail, and elec­tronic mon­i­tor­ing and sur­veil­lance-based se­cu­rity could be used, although he said nei­ther would be nec­es­sary.

Meng was ar­rested Satur­day while in tran­sit at Van­cou­ver’s air­port. The court heard she was en route from Hong Kong to Mex­ico.

Gibb-Cars­ley told the hear­ing that Reuters re­ported in 2013 that Huawei was op­er­at­ing Sky­com, trig­ger­ing Huawei ex­ec­u­tives in­clud­ing Meng to al­legedly make a se­ries of mis­rep­re­sen­ta­tions.

He ar­gued the fi­nan­cial in­sti­tu­tions that did busi­ness with Huawei were the “vic­tims” of those mis­rep­re­sen­ta­tions. It’s al­leged that they did not know that they were in ef­fect do­ing busi­ness with Iran, Gibb-Cars­ley said.

He said there is in­cen­tive for Meng to leave Canada, telling the court her fa­ther’s net worth is $3.2 bil­lion and she has no mean­ing­ful con­nec­tion to Canada.

In a state­ment ear­lier this week, Huawei said the com­pany com­plies with all laws and reg­u­la­tions in the coun­tries where it op­er­ates, in­clud­ing ap­pli­ca­ble ex­port con­trol, sanc­tion laws and reg­u­la­tions of the United Na­tions, the United States and the Euro­pean Union.

Huawei is the big­gest global sup­plier of net­work gear used by phone and in­ter­net com­pa­nies, and has been the tar­get of deep­en­ing U.S. se­cu­rity con­cerns. The United States has pres­sured Euro­pean coun­tries and other al­lies to limit the use of its tech­nol­ogy.

The U.S. sees Huawei and Chi­nese tech sup­pli­ers as pos­si­ble fronts for Chi­nese spy­ing and as com­mer­cial com­peti­tors.


The United States is seek­ing the ex­tra­di­tion of Meng Wanzhou.

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