This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 6, 2018).
By Kate O'Keeffe and Stu Woo
Canadian authorities in Vancouver have arrested Huawei
Technologies Co.'s chief financial officer at the request of the
U.S. for alleged violations of Iran sanctions, the latest move by
Washington against the Chinese cellular-technology giant.
A spokesman for Canada's justice department said Meng Wanzhou
was arrested in Vancouver on Dec. 1 and is sought for extradition
by the U.S. A bail hearing has been tentatively scheduled for
Friday, according to the spokesman. Ms. Meng, the daughter of
Huawei's founder, Ren Zhengfei, also serves as the company's deputy
chairwoman.
The arrest comes at a critical juncture in U.S.-Chinese
relations. President Trump and Chinese President Xi Jinping last
weekend agreed to a temporary truce in a trade spat to negotiate a
settlement. The U.S. has raised other concerns with China, ranging
from spying to intellectual-property theft to Beijing's military
posture in the South China Sea. China has said its actions are
appropriate.
The U.S. has undertaken a campaign against Huawei, which is
viewed as a national-security threat because of its alleged ties to
the Chinese government. In the past year, Washington has taken a
series of steps to restrict Huawei's business on American soil and,
more recently, launched an extraordinary international outreach
campaign to persuade allied countries to enact similar curbs.
China strongly protests the arrest and has urged both U.S. and
Canadian officials to free Ms. Meng, according to a statement
released by the Chinese Embassy in Canada.
The U.S. is seeking Ms. Meng's extradition so as to have her
appear in federal court in the Eastern District of New York,
according to people familiar with the matter.
A Huawei spokesman said Wednesday that Ms. Meng was arrested at
an airport during a layover. "The company has been provided very
little information regarding the charges and is not aware of any
wrongdoing by Ms. Meng," he said. "The company believes the
Canadian and U.S. legal systems will ultimately reach a just
conclusion."
The spokesman said that Huawei complies with laws and
regulations everywhere it operates.
The Wall Street Journal reported in April that the Justice
Department had launched a criminal probe into Huawei's dealings in
Iran, following administrative subpoenas on sanctions-related
issues from both the Commerce Department and the Treasury
Department's Office of Foreign Assets Control.
In 2007, Ms. Meng served as a board secretary for a Huawei
holding company that owned Skycom Tech, a Hong Kong company with
business in Iran and employees who said they worked for
"Huawei-Skycom," according to a person familiar with the
matter.
U.S. authorities have suspected Huawei's alleged involvement in
Iranian sanctions violations since at least 2016, when the U.S.
investigated ZTE Corp., Huawei's smaller Chinese rival, over
similar allegations. The Commerce Department released internal ZTE
documents that showed the company studied how a rival, identified
only as "F7," had conducted similar business.
A ZTE representative didn't immediately respond to a request for
comment. The Commerce Department this year penalized ZTE for
breaking the terms of a sanctions-busting settlement -- nearly
shutting down the company after banning U.S. firms from selling it
supplies -- but then gave it a reprieve after ZTE agreed to pay a
fine, change its management and fund a team of U.S. corporate
monitors.
A document dated August 2011 said F7's proposal to acquire U.S.
company 3Leaf was opposed by Washington. That strongly indicated F7
was Huawei, which tried to acquire 3Leaf in 2010, only to back away
after a U.S. national-security panel recommended against the
deal.
Ms. Meng is a Chinese citizen who went by the English name of
Cathy Meng before changing it to Sabrina Meng a few years ago. The
company says she joined Huawei in 1993 and has held a variety of
positions in accounting divisions.
"China will see this as an escalation against Huawei and as an
extraterritorial rendition," said James Mulvenon, general manager
at defense contractor SOS International. "There will be tremendous
domestic pressure in China to get her back."
Huawei is the world's biggest maker of equipment for cellular
towers, internet networks and related telecommunications
infrastructure. It is also the world's No. 2 smartphone brand.
For years, Washington has alleged the Chinese government could
compel Huawei to tap into the hardware it sells around the world to
spy or to disrupt communications. U.S. officials say they are
intensifying efforts to curb Huawei because wireless carriers
world-wide are about to upgrade to 5G, a new wireless technology
that will connect many more items -- factory parts, self-driving
cars and everyday objects like wearable health monitors -- to the
internet. U.S. officials say they don't want to give Beijing the
potential to interfere with an ever-growing universe of connected
devices.
Huawei has long said it is an employee-owned company that has
never conducted espionage or sabotage on behalf of any government,
and that doing so would jeopardize its business. The company said
it poses no greater risks than its rivals do, given they share a
common supply chain.
Some of America's closest allies, including most of the
countries in the "Five Eyes" intelligence-sharing pact among
English-speaking countries, have followed the nation's lead.
Australia in August banned Huawei from its 5G networks, while New
Zealand last week blocked one of its major wireless carriers from
using Huawei. In Britain, BT Group PLC said Wednesday that it was
removing Huawei equipment from its network, two days after a
British intelligence chief questioned whether the country should be
using the Chinese gear.
Aruna Viswanatha, Nicole Hong and Paul Vieira contributed to
this article.
Write to Kate O'Keeffe at kathryn.okeeffe@wsj.com and Stu Woo at
Stu.Woo@wsj.com
(END) Dow Jones Newswires
December 06, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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