The United States (U.S.) court case against Chief Financial Officer (CFO) Meng Wanzhou of China’s Huawei Technologies, who was arrested in Canada last month, centers on the company’s suspected ties to two obscure companies. One is a telecom equipment seller that operated in Tehran, and the other is that firm’s owner, a holding company registered in Mauritius. U.S. authorities allege Ms. Wanzhou deceived international banks into clearing transactions with Iran by claiming the two companies were independent of Huawei, when in fact Huawei controlled them. Huawei has maintained the two are independent: equipment seller Skycom Tech Co Ltd and shell company Canicula Holdings Ltd.
Corporate filings and other documents found by Reuters in Iran and Syria show that Huawei, the world’s largest supplier of telecommunications network equipment, is more closely linked to both firms than previously known. The documents reveal that a high-level Huawei executive appears to have been appointed Skycom’s Iran manager, and show that at least three Chinese-named individuals had signing rights for both Huawei and Skycom bank accounts in Iran. A Middle Eastern lawyer said Huawei conducted operations in Syria through Canicula.
The previously unreported ties undermines Huawei’s claims that Skycom was merely an arms-length business partner. Huawei, U.S. authorities assert, retained control of Skycom, using it to sell telecom equipment to Iran and move money out via the international banking system. As a result of the deception, U.S. authorities say, banks unwittingly cleared hundreds of millions of dollars of transactions that potentially violated economic sanctions Washington had in place at the time against doing business with Iran.
Meng was released on CAD $10 million bail on December 11, 2018 and remains in Vancouver while Washington tries to extradite her. In the U.S., Meng would face charges in connection with an alleged conspiracy to defraud multiple financial institutions, with a maximum sentence of 30 years for each charge. The exact charges have not been made public.
Meng’s arrest on a U.S. warrant has caused an uproar in China. It comes at a time of growing trade and military tensions between Washington and Beijing, and amid worries by U.S. intelligence that Huawei’s telecommunications equipment could contain “backdoors” for Chinese espionage. The firm has repeatedly denied such claims. Nevertheless, Australia and New Zealand recently banned Huawei from building their next generation of mobile phone networks, and British authorities have also expressed concerns.