Wanzhou Meng, Huawei CFO and daughter of the founder, was arrested at Vancouver International Airport on Dec. 1 at the request of DoJ. She was charged with fraud for lying about ties that Huawei, a giant telecom company based in China, had with Skycom, a company doing business in Iran in violation of our sanctions. The US plans to extradite her. Today, DoJ amplified and added to the charges. She is charged with bank fraud, wire fraud, and conspiracy to commit bank and wire fraud. Huawei and Skycom were indicted with multiple serious felonies including evading sanctions and money laundering.
But wait, there’s more. Huawei telecom equipment is being banned
If that wasn’t enough, telecom companies and intelligence services across the planet are considering banning or have already banned Huawei equipment. They fear the equipment could be used for spying and surveillance. Australia has already banned Huawei equipment. Canada, Germany, and the US are considering doing so.
American officials say the old process of looking for “back doors” in equipment and software made by Chinese companies is the wrong approach, as is searching for ties between specific executives and the Chinese government. The bigger issue, they argue, is the increasingly authoritarian nature of the Chinese government, the fading line between independent business and the state and new laws that will give Beijing the power to look into, or maybe even take over, networks that companies like Huawei have helped build and maintain.
Huawei indictment. 13 counts
“These charges lay bare Huawei’s blatant disregard for the laws of our country and standard global business practices,” stated FBI Director Wray. “Companies like Huawei pose a dual threat to both our economic and national security, and the magnitude of these charges make clear just how seriously the FBI takes this threat. Today should serve as a warning that we will not tolerate businesses that violate our laws, obstruct justice, or jeopardize national and economic well-being.”
Most significantly, after news publications in late 2012 and 2013 disclosed that Huawei operated Skycom as an unofficial subsidiary in Iran and that Meng had served on the board of directors of Skycom, Huawei employees, and in particular Meng, continued to lie to Huawei’s banking partners about Huawei’s relationship with Skycom, falsely claiming that Huawei had sold its interest in Skycom to an unrelated third party in 2007 and also that Skycom was merely Huawei’s local business partner in Iran. In reality, Skycom was Huawei’s longstanding Iranian subsidiary, and Huawei orchestrated the 2007 sale to appear as an arm’s length transaction between two unrelated parties although Huawei actually controlled the company that purchased Skycom.
As part of this scheme to defraud, Meng personally made a presentation in August 2013 to an executive of one of Huawei’s major banking partners in which she repeatedly lied about the relationship between Huawei and Skycom.
This is a seriously big deal case. From what I can tell from perusing knowledgeable people on Twitter, Huawei has been a bad actor for a long time. Now Wanzhou Meng, who is under house arrest in Canada and has surrendered her passports will almost certainly face trial here on very serious charges.