Tue. Dec 11th, 2018

Huawei Executive Wanted By U.S. Faces Fraud Charges Related To Iran Sanctions, Could Face 30 Years In Prison

Meng Wanzhou

A senior Chinese tech executive faces fraud charges in the United States related to business dealings with Iran, a Canadian prosecutor said Friday, offering the first details of a case that has pummeled financial markets and raised questions about a current trade truce between Beijing and Washington.

Before a packed courtroom in Vancouver, prosecutor John Gibb-Carsley argued that Meng Wanzhou committed fraud in 2013 by telling financial institutions that China’s Huawei had no connection to a Hong Kong-based company, Skycom, which was reportedly selling U.S. goods to Iran in violation of U.S. sanctions. Meng’s lawyer denied the charge.

News this week of her arrest roiled markets already shaken by months of conflict between the world’s two largest economies. The fear is that the arrest of a top Chinese executive could impact a trade war truce struck last week by President Trump and Chinese President Xi Jinping.

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

But the warrant was issued long before that. The allegations were detailed in an Aug. 22 arrest warrant granted in the Eastern District of New York. A Canadian justice then issued a warrant when authorities became aware of Meng’s travel plans, the court heard.

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

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

“Skycom was Huawei,” he said.

The hearing closed without a decision on bail. The court will reconvene Monday.

A previous case against ZTE, which is accused of violating U.S. export sanctions on Iran, brought it to the brink of bankruptcy last year. ZTE was initially blacklisted in the United States, but after Trump’s intervention that was downgraded to an $890 million fine.

Although the United States has not detailed its evidence, the cases appear similar.

For China, the sight of Meng watching the proceedings from a glass defendant’s box, interpreter at her side, will feel personal.

To some, Huawei is a symbol of China’s great economic transformation and the country’s reemergence on the world stage.

The company was founded in 1987 and has grown to become the biggest maker of telecommunications equipment in the world, as well as a leading maker of cellphones.

The founder, Ren, is a prominent business figure in China, and his family is seen as corporate royalty.

Canadian Prime Minister Justin Trudeau said Thursday that his country had no political involvement in Meng’s arrest.

“The appropriate authorities took the decisions in this case,” he said. “We were advised by them with a few days’ notice that this was in the works, but of course there was not engagement or involvement in the political level in this decision.”