In this courtroom sketch, Meng Wanzhou, right, the chief financial officer of Huawei Technologies, sits beside a translator during a bail hearing at British Columbia Supreme Court in Vancouver, on Friday, Dec. 7, 2018. Meng faces extradition to the U.S. on charges of trying to evade U.S. sanctions on Iran. She appeared in a Vancouver court Friday to seek bail. (Jane Wolsak/The Canadian Press via AP)

In this courtroom sketch, Meng Wanzhou, right, the chief financial officer of Huawei Technologies, sits beside a translator during a bail hearing at British Columbia Supreme Court in Vancouver, on Friday, Dec. 7, 2018. Meng faces extradition to the U.S. on charges of trying to evade U.S. sanctions on Iran. She appeared in a Vancouver court Friday to seek bail. (Jane Wolsak/The Canadian Press via AP)

Chinese telecom executive accused of fraud over Iran sanctions in United States

Huawei said the company complies with all laws and regulations in the countries where it operates

A senior executive of Chinese tech giant Huawei is facing allegations of fraud by using a subsidiary to violate United States and European Union 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 on criminal allegations that Huawei used its subsidiary Skycom to do business with Iranian telecommunications companies between 2009 and 2014.

John Gibb-Carsley said Meng is alleged to have said Huawei and Skycom were separate companies in a meeting with an executive of a financial institution, misleading the executive and putting the institution at risk of financial harm and criminal liability.

“Skycom was Huawei. This is the crux of the alleged misrepresentation. This is the alleged fraud,” said Gibb-Carsley, representing the Attorney General of Canada.

None of the allegations have been proven in court.

Gibb-Carsley told the B.C. Supreme Court hearing that Reuters reported in 2013 that Huawei was operating Skycom and had attempted to import U.S.-manufactured computer equipment into Iran in violation of sanctions. The story caused concern among banks that did international business with Huawei, he said.

Executives, including Meng, then made a series of misrepresentations about the relationship between the two companies to the banks, inducing them to carry out transactions linked to Iran they otherwise would not have completed and which violated sanction laws, he told the court.

He said Meng met with an executive of a bank and delivered a PowerPoint presentation in which she said Huawei had sold its shares in Skycom in 2009 and she was no longer a member of its board. However, the entity to which Skycom was sold was also controlled by Huawei until at least 2014, Gibb-Carsley alleged.

Huawei operated Skycom as an “unofficial subsidiary,” he said, adding that Skycom employees had Huawei email addresses and badges and former employees have said there was no distinction between the two companies.

“Skycom employees, it’s alleged, were Huawei employees,” Gibb-Carsley said.

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

Martin said Meng’s 2013 presentation to the executive of the bank, which he identified as HSBC, was prepared by numerous employees at Huawei. The presentation did assert that Huawei operates in Iran in strict compliance with applicable laws and sanctions, he said.

It also said that Huawei’s engagement with Skycom is a normal business co-operation and it requires Skycom to make commitments on observing applicable laws.

“The suggestion that this 2013 PowerPoint induced the Hong Kong bank, the largest financial institution in the world, with vast compliance departments … to continue to provide financial services is preposterous,” said Martin.

Huawei sold its shares in Skycom before the sanctions became law in the United States under president Barack Obama in 2010, he added.

Martin also argued that the allegations detailed by Canada do not support the case.

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

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

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

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, apart from spending two to three weeks on vacation in Vancouver every summer.

He also alleged that there is evidence Meng has avoided the U.S. since she became aware of a criminal investigation into her activities.

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

“You can rely upon 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 Meng was previously a permanent resident of Vancouver and her children went to school in the city, so her ties are stronger than claimed by the Crown.

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.

Martin added that Meng was willing to surrender her two valid passports to the RCMP.

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

Her lawyer said she avoided the U.S. not because of any investigation but because the country has been unfriendly toward Huawei.

The U.S. sees Huawei and smaller Chinese tech suppliers as possible fronts for Chinese spying and as commercial competitors. The Trump administration says they benefit from improper subsidies and market barriers.

“One would have to be tone deaf to not understand that Huawei had become a hostile place to do business,” Martin said.

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.

Meng is a prominent member of Chinese society as deputy chairwoman of the Huawei board. The company is a privately held juggernaut with projected 2018 sales of more than US$102 billion that has already overtaken Apple in smartphone sales.

U.S. and Asian stock markets tumbled after news of Meng’s arrest as it was seen to cause another flare-up in tensions between Washington and Beijing.

Huawei has grown to more than 170,000 employees and does businesses in more than 170 countries since Ren founded the company in 1987.

Meng, who also goes by the first name Sabrina, is one of four deputy chairs listed on the Huawei website and one of three women to sit on the Huawei board.

Laura Kane, The Canadian Press

Like us on Facebook and follow us on Twitter.

 

In this undated photo released by Huawei, Huawei’s chief financial officer Meng Wanzhou is seen in a portrait photo. China on Thursday, Dec. 6, 2018, demanded Canada release the Huawei Technologies executive who was arrested in a case that adds to technology tensions with Washington and threatens to complicate trade talks. (Huawei via AP)

In this undated photo released by Huawei, Huawei’s chief financial officer Meng Wanzhou is seen in a portrait photo. China on Thursday, Dec. 6, 2018, demanded Canada release the Huawei Technologies executive who was arrested in a case that adds to technology tensions with Washington and threatens to complicate trade talks. (Huawei via AP)

Just Posted

A tent housing a mobile vaccination clinic. (Interior Health/Contributed)
Over 5K jabbed at Interior Health mobile COVID-19 vaccine clinics

The clinics have made stops in more than 40 communities since launching last week

Kimberley residents were treated to the first Farmers' Market of the season, and the feeling of a return to normalcy. Paul Rodgers photos.
WATCH: Kimberley’s first Farmers’ Market of the season

Kimberley residents enjoyed the first Farmers’ Market of the year on Thursday,… Continue reading

Provincial Health Officer Dr. Bonnie Henry talks about B.C.’s plan to restart the province during a press conference at Legislature in Victoria, Tuesday, May 25, 2021. THE CANADIAN PRESS/Chad Hipolito
Interior Health COVID-19 cases falling slower than the rest of B.C.

More than a third of provincial cases announced Thursday came from the Interior

Students at Creston Valley Secondary School put together an art installation of a replica residential school room. (Photo by Kelsey Yates)
Creston students create art installation of residential school room

The replica was decorated with a small bed, school uniform, and notes written with pleas for help

Marco Mendicino, Minister of Immigration, Refugees and Citizenship during a press conference in Ottawa on Thursday, May 13, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada to welcome 45,000 refugees this year, says immigration minister

Canada plans to increase persons admitted from 23,500 to 45,000 and expedite permanent residency applications

FILE – Most lanes remain closed at the Peace Arch border crossing into the U.S. from Canada, where the shared border has been closed for nonessential travel in an effort to prevent the spread of the coronavirus, Thursday, May 7, 2020, in Blaine, Wash. The restrictions at the border took effect March 21, while allowing trade and other travel deemed essential to continue. (AP Photo/Elaine Thompson)
Feds to issue update on border measures for fully vaccinated Canadians, permanent residents

Border with U.S. to remain closed to most until at least July 21

A portion of the George Road wildfire burns near Lytton, B.C. in this Friday, June 18, 2021 handout photo. THE CANADIAN PRESS/HO, BC Wildfire Service *MANDATORY CREDIT*
Blaze near Lytton spread across steep terrain, says BC Wildfire Service

Fire began Wednesday and is suspected to be human-caused, but remains under investigation

Blair Lebsack, owner of RGE RD restaurant, poses for a portrait in the dining room, in Edmonton, Friday, June 18, 2021. Canadian restaurants are having to find ways to deal with the rising cost of food. THE CANADIAN PRESS/Jason Franson
Canadian restaurateurs grapple with rising food costs, menu prices expected to rise

Restaurants are a low margin industry, so there’s not a lot of room to work in additional costs

RCMP crest. (Black Press Media files)
Fort St. John man arrested after allegedly inviting sexual touching from children

Two children reported the incident to a trusted adult right away

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Barbara Violo, pharmacist and owner of The Junction Chemist Pharmacy, draws up a dose behind vials of both Pfizer-BioNTech and Oxford-AstraZeneca COVID-19 vaccines on the counter, in Toronto, Friday, June 18, 2021. An independent vaccine tracker website founded by a University of Saskatchewan student says just over 20 per cent of eligible Canadians — those 12 years old and above — are now fully vaccinated. THE CANADIAN PRESS/Nathan Denette
At least 20% of eligible Canadians fully vaccinated, 75% with one dose: data

Earlier projections for reopening at this milestone didn’t include Delta variant

This undated file photo provided by Ernie Carswell & Partners shows the home featured in the opening and closing scenes of The Brady Bunch in Los Angeles. Do you know the occupation of Mike Brady, the father in this show about a blended family? (Anthony Barcelo/Ernie Carswell & Partners via AP, File)
QUIZ: A celebration of dad on Father’s Day

How much do you know about famous fathers?

Emily Steele holds up a collage of her son, 16-year-old Elijah-Iain Beauregard who was stabbed and killed in June 2019, outside of Kelowna Law Courts on June 18. (Aaron Hemens/Capital News)
Kelowna woman who fatally stabbed teen facing up to 1.5 years of jail time

Her jail sentence would be followed by an additional one to 1.5 years of supervision

Most Read