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Huawei's CFO Arrested in Canada; Faces Extradition to U.S.; Stock Futures Tumble on News

Meng Wanzhou faces extradition to the United States on suspicion she violated U.S. sanctions against Iran.

CapitalWatch Staff
    Dec 05, 2018 3:18 PM  PT
Huawei's CFO Arrested in Canada; Faces Extradition to U.S.; Stock Futures Tumble on News

(Updated with additional details.)

Canada has arrested Huawei's global chief financial officer in Vancouver, where she is facing extradition to the United States on suspicion she violated U.S. sanctions against Iran, the Globe and Mail newspaper reported on Wednesday. 

Meng Wanzhou, who is one of the vice chairs on the Chinese technology company's board and the daughter of company founder Ren Zhengfei, was arrested on Dec. 1, the newspaper said. A court hearing has been set for Friday, a Canadian Justice Department spokesman told the newspaper. 

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Meng Wanzhou, Huawei's CFO and Deputy Chairwoman. (Source: Huawei)

A Huawei spokesperson said Meng was detained by Canadian Authorities on behalf of the United States when she was transferring flights in Canada, according to CNN, which added that Huawei said she faces unspecified charges in the Eastern District of New York. The Wall Street Journal reported in April that the US Justice Department was investigating whether Huawei violated US sanctions on Iran. Officials for the Canadian and U.S. Justice Departments did not immediately respond to a request for comment from Reuters. 

"The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng," the Huawei spokesperson said. "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."

According to the Globe and Mail report, a Canadian source said U.S. law enforcement authorities were alleging that Meng tried to evade the U.S. trade embargo against Iran. 

U.S. authorities have been probing Huawei since at least 2016 for allegedly shipping U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws, sources told Reuters in April. The company has also faced increased scrutiny in the U.S. and other countries regarding potential national security risks from using Huawei products.

The U.S. has been concerned the company could be providing information on Americans to the Chinese government, while New Zealand and Australia have stopped telecom operators using Huawei's equipment in new 5G networks. Britain's BT Group said on Wednesday it was removing Huawei Technologies' equipment from the core of its existing 3G and 4G mobile operations and would not use the Chinese company in central parts of the next network.

Meng, who joined Huawei in 1993 and has served as Director of the International Accounting Department, CFO of Huawei Hong Kong, and President of the Accounting Management Department, holds a master's degree from Huazhong University of Science and Technology, according to the company's website. In addition to serving as chief financial officer, she is also Deputy Chairwoman of the board of directors. 

The Huawei statement said Meng, who also has gone by the English names Cathy and Sabrina, was detained when she was transferring flights in Canada.

The handset and telecommunications equipment maker said it complies with all applicable export control and sanctions laws and U.S. and other regulations.

The arrest drew a quick reaction in Washington.

U.S. Senator Ben Sasse praised the action and said that it was "for breaking U.S. sanctions against Iran." He added: "Sometimes Chinese aggression is explicitly state-sponsored and sometimes it's laundered through many of Beijing's so-called 'private' sector entities."

U.S. stock futures tumbled, followed by Asian markets, as news of the arrest heightened the sense a major collision was brewing between the world's two largest economic powers, not just over tariffs but also over technological hegemony.

(Reuters contributed to this article.)

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