Huawei CFO faces fraud accusations from United States in Canadian bail hearing

Geraldine Edwards
December 8, 2018

Meng allegedly used a fake English name and served on the board of a Huawei subsidiary company called Skycom (though the relationship between the two firms has not been proven).

Chinese telecom giant Huawei's chief financial officer, arrested in Canada, faces USA fraud charges for allegedly lying to banks about the use of a covert subsidiary to sell to Iran in breach of sanctions, a bail hearing heard Friday.

Unlike a new round of tariffs or more tough rhetoric from USA officials, the detention of Meng, the company's chief financial officer, appears to have driven home the intensifying rivalry between the United States and China in a visceral way for the Chinese establishment - and may force Xi to adopt a tougher stance against Washington, analysts said.

Another director of Skycom, Ms Hu Mei, appeared to have a Huawei e-mail address and was listed in that company's employee directory, Reuters reported.

None of the allegations have been proven in court.

A Canadian prosecutor urged a Vancouver court to deny bail to a Chinese executive at the heart of a case that is shaking up U.S. Her hearing was adjourned until Monday.

US National Security Adviser John Bolton also chimed in on the case, claiming that his country has had "enormous concerns for years" about "the practice... of Chinese firms to use stolen American intellectual property".

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Canada is one of more than 100 countries that have an extradition treaty with the United States, requiring it to cooperate with US Department of Justice requests to hand over suspects.

Gibb-Carsley said the banks were "victim institutions" of fraud by Meng.

That doesn't mean that China is likely to forget about Meng Wanzhou's December 1 arrest when they next come face-to-face with Canadian officials, he added.

Meng's lawyer, David Martin, said her prominence made it unlikely she would breach any court orders.

He said his client would not flee because going against a court order would humiliate and embarrass her father, Huawei founder Ren Zhengfei.

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

Meng Wanzhou, the chief financial officer of Huawei Technologies Co.

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Meng was arrested in Vancouver on Saturday en route to Mexico from Hong Kong.

Skycom Tech Co, a little known Hong Kong telecom equipment seller, was thrust into the global limelight on Friday (Dec 7) when Canadian prosecutors said it played a central role in helping Huawei Technologies Co evade United States sanctions against Iran.

He argued the financial institutions that did business with Huawei were the "victims" of those misrepresentations.

"So, there was a choice that was made, obviously, and [they] know what the consequences are".

USA officials are seeking her extradition so she can be prosecuted in the US on fraud charges, the prosecutor said.

A Huawei spokesman declined to comment on Thursday and said that Wednesday's statement still stands.

The world's largest telecom supplier and other Chinese technology companies have been on the defensive because of allegations about a backdoor in their equipment that facilitates industrial espionage. The United States has pressured European countries and other allies to limit the use of its technology. The Trump administration says they benefit from improper subsidies and market barriers. 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. A Canadian official authorized her arrest in November. Many were quick to voice concern that the move could derail trade talks, and it came as both sides were hailing last weekend's meeting between U.S. President Donald Trump and China's Xi Jinping as a "big success".

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