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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

 

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

In a feature article published April 10, 2021 in The Times of London, ‘headlined British Columbia has what it takes to rival Napa Valley,’ the valley is praised extensively for its natural beauty and wine. (File photo)
From the U.K. with love: Okanagan wine, scenery receives international praise

The Times of London newspaper recently featured the valley in a wine and travel piece

FILE — In this March 31, 2021 file photo, a nurse fills a syringe with a dose of the Johnson & Johnson’s one-dose COVID-19 vaccine at the Vaxmobile, at the Uniondale Hempstead Senior Center, in Uniondale, N.Y. The U.S. is recommending a “pause” in administration of the single-dose Johnson & Johnson COVID-19 vaccine to investigate reports of potentially dangerous blood clots. In a joint statement Tuesday, the Centers for Disease Control and Prevention and the Food and Drug Administration said it was investigating clots in six women in the days after vaccination, in combination with reduced platelet counts. (AP Photo/Mary Altaffer, File)
72 new COVID-19 cases in Interior Health

This brings the total number of cases in the region to 9,666 since the pandemic began

Fire rips through shop in small South Okanagan town

The building was destroyed despite community efforts to fight the fire

The Save Sickle Point Committee, a grassroots community group, has teamed up Penticton’s Tempest Theatre and Film Society to release short film on Sickle Point. (Contributed)
WATCH: Conservationists release short film on saving ‘precious’ Sickle Point

Sickle Point, the last intact wetland near Skaha Lake, is facing the prospect of development

The municipality of Summerland will develop a code of ethics for municipal staff. (John Arendt - Summerland Review)
Summerland to develop code of ethics for staff

One-page values document will serve to guide municipal staff

Restaurant patrons enjoy the weather on a patio in Vancouver, B.C., Monday, April 5, 2021. The province has restricted indoor dining at all restaurants in B.C. due to a spike in COVID-19 numbers. THE CANADIAN PRESS/Jonathan Hayward
B.C.’s COVID-19 indoor dining, drinking ban extending into May

Restaurant association says patio rules to be clarified

Marylou Jensen. (Contributed)
Kelowna RCMP searching for missing senior

Marylou Jensen left her Grenfell Road home on foot at 5 p.m.

A dumpster was on fire behind a residential complex in downtown Penticton Tuesday afternoon. (Brennan Phillips Western News)
Dumpster fire extinguished in downtown Penticton

There has been a string of dumpster fires lately

Skogie’s Express Tunnel Wash on Anderson Way in Vernon. (Submitted photo)
Lawsuit dismissed after vehicle damaged while inside Okanagan car wash

Civil Resolution Tribunal dismisses driver’s claim following a collision inside Skogie’s car wash in Vernon

The future of the Eagle Pass Lookout cabin is being discussed. (File photo)
Options presented for future of former Eagle Pass fire lookout in Shuswap

Stakeholders met in 2020 to discuss the restoration, or possible removal of the cabin

(Mayor Cindy Fortin - Peachland)
Peachland mayor declines early vaccination offer

Mayor Cindy Fortin said she wants seniors, immunocompromised individuals to get the shot first

B.C. Premier John Horgan speaks at the B.C. legislature. (B.C. government)
Tougher COVID-19 restrictions in B.C., including travel, still ‘on the table’: Horgan

John Horgan says travel restrictions will be discussed Wednesday by the provincial cabinet

Conservation officers caught three men over fishing bull trout in Kinbasket Lake. (Facebook)
B.C. men fined $1.7K for overfishing near Revelstoke, Golden

The seized fish were donated to the Golden Food Bank

NorKam secondary student Karis Wilson in the outfit that got her sent home from school on Feb. 23, 2021. (Kamloops This Week photo)
Clothing that ‘detracts from learning process’ removed from SD73 student dress code

Policy change underway after student in knee-length dress, long-sleeve turtleneck sent home

Most Read