U.S. case against exec un­folds

Huawei Tech­nolo­gies of­fi­cial lied to evade sanc­tions on Iran, prose­cu­tor says.

Los Angeles Times - - BUSINESS BEAT - By Emily Rauhala and Anna Fifield Rauhala and Fifield write for the Wash­ing­ton Post.

Nearly a week af­ter her ar­rest at a Cana­dian air­port, the U.S. charges against Chi­nese tech ex­ec­u­tive Meng Wanzhou took shape Fri­day as a prose­cu­tor out­lined al­leged ef­forts to con­ceal the own­er­ship of a com­pany sus­pected of try­ing to skirt U.S. sanc­tions on Iran.

The fraud case dis­closed in a court in Van­cou­ver, Canada, has rel­a­tively nar­row lines. At its heart are U.S. claims that the heir ap­par­ent to Huawei Tech­nolo­gies — one of China’s big­gest tech em­pires — mis­led banks about Huawei’s sus­pected fi­nan­cial links to a Hong Kong-based com­pany called Sky­com. Meng could face up to 30 years in prison if con­victed.

But the fall­out from Meng’s ar­rest and pos­si­ble ex­tra­di­tion spills far be­yond the charges at hand.

The case has in­creased un­cer­tainty in global fi­nan­cial mar­kets, bring­ing an­other day of sharp losses from Asia to Wall Street. There also are wor­ries about pos­si­ble Chi­nese re­tal­i­a­tion for tar­get­ing Meng, the daugh­ter of Huawei’s founder and a ris­ing star among China’s busi­ness elite.

For the mo­ment, China in­sists the pros­e­cu­tion will not de­rail ef­forts to end the tar­iff-sling­ing trade bat­tles with the Trump ad­min­is­tra­tion.

But much has yet to play out.

Meng lis­tened in court Fri­day as Crown Prose­cu­tor John Gibb-Cars­ley ar­gued that she poses a flight risk and should be de­nied bail as the ex­tra­di­tion process be­gins.

That will give her at­tor­neys an­other chance to fight her trans­fer to the United States.

Meng was ar­rested at Van­cou­ver’s air­port as she trav­eled from Hong Kong to Mex­ico on Dec. 1, the same day Pres­i­dent Trump met Chi­nese Pres­i­dent Xi Jin­ping on the side­lines of the Group of 20 sum­mit in Ar­gentina.

There had been spec­u­la­tion that the charges were linked to al­leged vi­o­la­tions of sanc­tions on Iran. Then, in a packed Van­cou­ver court­room, a prose­cu­tor for Canada’s Jus­tice Depart­ment of­fered the first de­tails of the U.S. charges.

Meng is ac­cused of com­mit­ting fraud in 2013 by telling U.S. fi­nan­cial in­sti­tu­tions that Huawei had no con­nec­tion to Sky­com, which re­port­edly was sell­ing goods man­u­fac­tured in the United States to Iran in vi­o­la­tion of Amer­i­can sanc­tions on Tehran. Meng has con­tended Huawei sold Sky­com in 2009.

The United States said Huawei uses Sky­com to do busi­ness in Iran to work around U.S. sanc­tions.

“Ms. Meng per­son­ally rep­re­sented to those banks that Sky­com and Huawei were sep­a­rate, when in fact they were not sep­a­rate,” Gibb-Cars­ley told the court. “Sky­com was Huawei.”

The U.S. Jus­tice Depart­ment had no com­ment on Fri­day’s court pro­ceed­ings.

Among the ques­tions is how long U.S. au­thor­i­ties had been track­ing Meng’s move­ments.

The Cana­dian prose­cu­tor said the U.S. war­rant was is­sued Aug. 22 in the East­ern Dis­trict of New York. A Cana­dian jus­tice then is­sued a war­rant when au­thor­i­ties be­came aware of Meng’s travel plans.

Fri­day’s hear­ing sug­gested that U.S. au­thor­i­ties will al­lege that Meng played a di­rect role in fraud by telling banks that there was no link be­tween Huawei and Sky­com.

These banks then cleared fi­nan­cial trans­ac­tions for Huawei, Gib­bCars­ley said, in­ad­ver­tently do­ing busi­ness with Sky­com and be­com­ing “vic­tim in­sti­tu­tions” of fraud.

Meng’s at­tor­neys de­nied the fraud al­le­ga­tion, telling the court that Huawei had di­vested of Sky­com and left its board.

The case marks just the lat­est high-pro­file tan­gle with Huawei — and, by ex­ten­sion, with Bei­jing.

Huawei is part of the Al­ist in China’s am­bi­tions to ex­pand its global tech­nol­ogy reach, in­clud­ing chal­leng­ing U.S. and South Korean smart­phone mak­ers for dom­i­nance in next-gen­er­a­tion 5G mo­bile phones. Huawei’s brag­ging rights al­ready in­clude de­thron­ing Ap­ple as the world’s No. 2 smart­phone brand, be­hind Sam­sung.

But the United States, the Euro­pean Union and al­lies fear that phones made by Huawei and Chi­nese com­peti­tor ZTE Corp. could be em­bed­ded with spy­ware that could be tapped by China.

Chi­nese For­eign Min­istry spokesman Geng Shuang said Fri­day that China would not try to pro­voke the U.S. “China al­ways pro­tects the le­git­i­mate rights and in­ter­ests of for­eign­ers in China in ac­cor­dance with the law, but I be­lieve cer­tainly they should also abide by Chi­nese laws and reg­u­la­tions,” Geng said.

The ar­rest of Meng feeds into a broader feel­ing in China that the trade war is not just about im­ports and ex­ports but is also about the Trump ad­min­is­tra­tion’s ef­forts to stop China’s rise.

“The U.S. is try­ing to do what­ever it can to con­tain Huawei’s ex­pan­sion in the world sim­ply be­cause the com­pany is the point man for China’s com­pet­i­tive tech­nol­ogy com­pa­nies,” the state-run China Daily said in an edi­to­rial Fri­day. For the sake of the global and Amer­i­can economies, the United States should “change its men­tal­ity to­ward China,” the pa­per said.

Jane Wolsak Cana­dian Press

MENG WANZHOU, CFO of Huawei Tech­nolo­gies, shown at right in a court­room sketch, sits next to a trans­la­tor dur­ing a bail hear­ing in Van­cou­ver, Canada.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.