Huawei exec granted bail, faces extradition to U.S.

Huawei Technologies Chief Financial Officer Meng Wanzhou was granted bail by a Canadian court, allowing the executive to stay in her Vancouver home as she awaits a possible extradition to the United States on fraud charges.

Meanwhile, China detained a former Canadian diplomat in Beijing in apparent retaliation for Meng’s arrest at the request of the United States, escalating a legal and diplomatic wrangle among the three countries.

Relations were shaken by Canada’s arrest of Meng, the daughter of Huawei’s founder. Canadian authorities detained her Dec. 1 during a layover at the Vancouver airport. The U.S. accuses Huawei of violating American economic sanctions against Iran.

The Huawei case has threatened to complicate U.S.-China efforts to resolve a bitter trade dispute — though the two countries signaled Tuesday they are preparing to resume talks.

Heightening tension between China and Canada, Canadian Public Safety Minister Ralph Goodale confirmed Tuesday that a former Canadian diplomat had been detained in Beijing. The detention came after China warned Canada of consequences for Meng’s arrest.

“We’re deeply concerned,” Goodale said. “A Canadian is obviously in difficulty in China . ... We are sparing no effort to do everything we possibly can to look after his safety.”

Michael Kovrig, who previously worked as a diplomat in Beijing, Hong Kong and the United Nations, was taken into custody Monday night during one of his regular visits to Beijing, according to a spokesman for International Crisis Group, where Kovrig now works as North East Asia adviser in Hong Kong.

Canada had been bracing for retaliation for Meng’ arrest. The province of British Columbia canceled a trade mission to China amid fears China could detain Canadians to put pressure on Ottawa over Meng’s detention.

“In China there is no coincidence,” Guy Saint-Jacques, a former Canadian ambassador to China, said of Kovrig’s detention. “Unfortunately, Canada is caught in the middle of this dispute between the U.S and China. Because China cannot kick the U.S., they turn to the next target.”

A judge granted Meng’s release Tuesday on $7.5 million bail.

Meng’s lawyer, David Martin, said his team had worked through the night to satisfy concerns about the Chinese executive’s potential release.

Martin said they contacted four people willing to put up money to guarantee that Meng won’t flee. One is a real estate agent who met Meng in 2009 and sold two properties to her and her husband. The man has pledged his home, valued at $1.3 million.

Another said he got to know Meng while working at Huawei in China in the mid-1990s. He said he vouches for her character to comply with any conditions imposed by the court and has pledged $373,000 from the equity on his home in Vancouver, which is valued at $1 million.

Meng has denied the U.S. allegations through her lawyer, promising to fight them if she is extradited to face charges in the United States.

China vowed to “spare no effort” to protect against “any bullying that infringes the legitimate rights and interests of Chinese citizens.”

Chinese Foreign Minister Wang Yi didn’t mention Meng by name. But ministry spokesman Lu Kang said Wang was referring to cases of all Chinese abroad, including Meng’s.

Washington accuses Huawei of using a Hong Kong shell company to sell equipment to Iran in violation of U.S. sanctions. It says Meng and Huawei misled banks about dealings in Iran.

State Department spokesman Robert Palladino said Tuesday that “the charges against Meng pertain to alleged lies to United States financial institutions.”

“It is clear from the filings that were unsealed in Canada, Meng and others are alleged to have put financial institutions at risk of criminal and civil liability in the United States by deceiving those institutions as to the nature and extent of Huawei’s business in Iran,” Palladino said.

Huawei is the biggest global supplier of network gear for phone and internet companies. Washington has pressured other countries to limit use of its technology, warning they could be opening themselves up to surveillance and theft of information. Bloomberg News contributed to this report.