After years of facing suspicion from US authorities, Huawei is now standing trial for fraud. Today, a bail hearing was held for Huawei’s chief financial officer, who was arrested in Canada on Saturday at the request of US law enforcement. The CFO, Meng Wanzhou, is facing extradition to the US for conspiring to defraud banking institutions, according to The Star Vancouver.
Many lined up to see Meng’s bail hearing today, after the extremely high-profile arrest that signified the first major break in a US probe that has mostly been kept from the public. Meng happens to be the daughter of Huawei’s founder and CEO Ren Zhengfei, a former People’s Liberation Army engineer whose connection to the Chinese Communist Party has contributed to the suspicions of US intelligence agencies. Meng also serves as deputy chair on Huawei’s board.
The US has an arrest warrant out for Meng that was issued by a New York court on August 22nd. It has 60 days from the time of Meng’s arrest on Saturday to provide Canadian courts with evidence and intent.
Meng was arrested in Vancouver during a flight transfer where she was flying from Hong Kong to Mexico. Canada’s prosecutor John Gibb-Carsley noted that Meng used to travel frequently to the US and has a son attending school in Boston but has made no trips since March 2017, implying that she began to avoid traveling to the US after Huawei started to be probed by the US Justice Department. Still, a number of Huawei executives continued to visit the US after the probe began, suggesting that Meng’s position differed from theirs.
Meng served on the board for a Hong Kong-based company called Skycom, which allegedly did business with Iran between 2009 and 2014. US banks worked with Huawei at this time, so Iran sanctions were violated indirectly, and Meng therefore committed fraud against these banks. Skycom reportedly had connections to Huawei and at the bail hearing today, Gibb-Carsley argued that Skycom was an unofficial subsidiary of Huawei’s, using the same company logo. “Huawei is SkyCom,” he said, “This is the crux, I say, of the alleged fraud.”
Huawei’s comment on the arrest to The Verge was: “The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng. The company believes the Canadian and US legal systems will ultimately reach a just conclusion. Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU.” It didn’t have a comment to share about the hearing.
In summary, as we break for lunch: This whole case rests on the content of a Power Point presentation #MengWanzhou made to a bank responding to concerns about #Huawei’s relationship with SkyCom and whether this is fraudulent misrepresentation. #Huaweiarrest
— Joanna Chiu 趙淇欣 (@joannachiu) December 7, 2018
In Huawei and Meng’s defense, her lawyer, David Martin, introduced a 2013 PowerPoint presentation that Meng had once given to explain to a bank in Hong Kong that Huawei had not violated any US sanctions.
The hearing today also examined whether Meng would be a flight risk if she was granted the $1 million bail, part of the argument Gibb-Carsley was pushing. Defense lawyer Martin responded by explaining the Chinese emphasis on saving face, and how Meng wouldn’t want her father and Huawei to look bad. Even more than that, “she would not embarrass China itself,” Martin said.