Arrested Huawei Exec Accused Of Sanctions Fraud

Huawei sanctions fraud

After a week of waiting, the arrest of a Huawei executive was brought into sharp focus in a Canadian courtroom.

On Friday (Dec. 7), Canadian prosecutors officially accused Huawei Chief Financial Officer Meng Wanzhou of sanctions fraud. Officials claim that Ms. Meng, who is also the daughter of Huawei’s founder, Ren Zhengfei, had “direct involvement” in a plot to trick U.S. banks into violating sanctions currently in place against Iran.

Ms. Meng was arrested on Dec. 1 in Vancouver by Canadian officials at the request of the United States. The arrest adds complications to an already tense situation between the two nations, who are locked in an ongoing trade war.

The New York Times reported that Ms. Meng used a Hong Kong company known as Skycom Tech to do business with telecom companies based in Iran from 2009 to 2014. U.S. banks cleared the financial transactions initiated by Huawei, which caused them to unknowingly engage with Skycom and violate the Iran sanctions. The company allegedly used Skycom as recently as 2013 as an “unofficial subsidiary” to import U.S.-made computer equipment into Iran, which violates the sanctions.

Ms. Meng met with an executive from one of the U.S. financial institutions and delivered a PowerPoint presentation in Chinese. The presentation appeared to claim that Huawei operated in Iran in compliance with the sanctions. However, it was never revealed that Huawei maintained control over Skycom.

Canadian prosecutor John Gibb-Carsley described the banks as “victim institutions” and that Ms. Meng’s presentation was an act of fraud.

Another Chinese firm has been accused of similar practices to bypass international sanctions. In 2016, U.S. officials accused ZTE of establishing “cutoff companies” that would transact with countries like Iran, North Korea and others that were sanctioned by the U.S.

U.S. Department of Justice officials have 60 days from the date of Ms. Meng’s arrest to argue before Canadian courts to grant an extradition. The process can take weeks or even months to fulfill.