U.S. launches formal charges against Huawei Technologies Co., Ltd & CFO Meng Wanzhou

The charges will test Beijing’s ability to compartmentalize the alleged violations of sanctions on Iran by Huawei from the ongoing trade negotiations.

In a development of far reaching implications for U.S.-China bilateral relations, the United States has charged Huawei Technologies Co Ltd with criminal conspiracy to violate U.S. sanctions on Iran.

The U.S. Justice Department has charged Huawei and its chief financial officer (CFO) Meng Wanzhou with conspiring to violate U.S. sanctions on Iran by routing business transactions through a subsidiary in its dealings with Tehran.

Further, in a separate charge, the U.S. Justice Department also charged Huawei with stealing robotic technology from carrier U.S. carrier T-Mobile US Inc to which Huawei responded by saying, the two companies have settled their disputes in 2017.

In December 2018, Meng, daughter of Huawei’s founder Ren Zhengfei, was arrested in Canada. She is fighting extradition to the United States. Her charges include bank and wire fraud.

Her arrest in Canada has enraged China; Beijing responded to it by arresting two Canadians on grounds of national security.

The filing of charges comes at a time when Washington and Beijing are engaging in high-level negotiations aimed at calming the troubled waters in the ongoing trade war.

U.S. Commerce Secretary Wilbur Ross has made it clear that, trade negotiations and the charges facing Huawei are “wholly separate” from each other.

U.S. authorities have accused Meng of playing a leading role in the scheme to route business transactions with Iran through a subsidiary, in violations of U.S. sanctions against Tehran.

Meng has, so far, stuck to her innocence.

Huawei did not respond to requests for comment on the charges.

CHARGES AGAINST HUAWEI

The latest charges against Meng and Huawei stem from 2012 and 2013 reports that the Chinese telecom giant had sought to sell goods to Iran in violation of U.S. laws.

The indictment noted that the denials from Huawei in the stories were relied upon by financial institutions “in determining whether to continue their banking relationships with Huawei and its subsidiaries.”

Further, as per the indictment, in July 2007, the FBI interviewed Huawei founder Ren; according to U.S. authorities, Ren lied when he said Huawei did not violate U.S. export laws.

In August 2013, Meng met with an executive from a bank which sources have identified as HSBC Holdings Plc. In 2012, HSBC paid $1.92 billion as fine for violating U.S. anti-money-laundering and sanctions laws.

In the August 2013 meeting, Meng used a PowerPoint presentation that misrepresented Huawei’s operations in Iran and ownership and control of Skycom, reads the indictment which goes to say, if the banks knew about Huawei’s violations of Iranian sanctions, they would have “reevaluated their banking relationships with Huawei,” which included U.S. dollar and Euro clearing.

Incidentally, in a statement last month, HSBC said, the Justice Department has confirmed that HSBC is not under investigation in this case.

REACTIONS FROM THE U.S.

“It has been clear for some time that Huawei poses a threat to our national security, and I applaud the Trump administration for taking steps to finally hold the company accountable,” said Senator Mark Warner, vice chairman of the Senate Select Committee on Intelligence.

According to FBI Director Christopher Wray, the Huawei cases, which were filed in New York and Washington state, “expose Huawei’s brazen and persistent actions to exploit American companies and financial institutions, and to threaten the free and fair global marketplace.”

He went on to add, he is concerned about Huawei devices in U.S. telecommunications networks.

“That kind of access could give a foreign government the capacity to maliciously modify or steal information, conduct undetected espionage, or exert pressure or control.” said Wray.

Acting Attorney General Matthew Whitaker said the alleged criminal activity at Huawei “goes back at least 10 years and goes all the way to the top of the company.”

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