ibusinesslines.com December 09, 2018

Dow slides 450 points after Huawei executive’s arrest renews trade fears

06 December 2018, 10:48 | Kelvin Horton

CFO of Chinese tech giant Huawei arrested in Vancouver, sought by U.S. for extradition

Huawei's global chief financial officer arrested in Vancouver

Similar allegations of breaching US export restrictions led to rival Chinese telecoms equipment maker ZTE Corp being hit with a devastating ban and heavy fines this year.

One report in the New York Times said the U.S. commerce and treasury departments had subpoenaed the firm over suspected violation of sanctions against both Iran and North Korea.

Like many top Chinese executives, Meng Wanzhou is a mysterious figure even in her home country, but the 46-year-old chief financial officer of Huawei Technologies had been widely tipped to one day take the helm of the tech giant her father founded. The Justice Department also believes Huawei is violating US sanctions against Iran because of the American components inside its products.

Hu Xijin, editor-in-chief of the Global Times (one of China's most hawkish state-run newspapers), commented on his Twitter account that "The U.S. can't beat Huawei in the market".

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

"The company believes the Canadian and USA legal systems will ultimately reach a just conclusion".

The U.S.is seeking the extradition of Wanzhou Meng, chief financial officer of Huawei Technologies Co., after convincing Canada to arrest her on December 1, likely in connection with violating sanctions against Iran. Is the timing of the arrest deliberate?

Canadian authorities said Wednesday that they have arrested Meng for possible extradition to the United States. But if the transcript the SCMP obtained is genuine, the dialogue helps explain the background of Meng's arrest in Canada.

The South China Morning Post said that Ms Meng has spoken to Huawei staff in a recent internal briefing on regulatory compliance.

The statement went on to say how Huawei complies with all applicable laws and regulations where it operates, "including applicable export control and sanction laws and regulations of the United Nations, USA and European Union". The Globe and Mail newspaper cited law enforcement sources as saying she is suspected of trying to evade USA curbs on trade with Iran. ZTE was almost driven out of business this year when Washington barred it from buying USA technology over exports to North Korea and Iran. President Trump has agreed to postpone planned tariff hikes on Chinese goods, while China has pledged to purchase a "very substantial" amount of American produce and curb the export of deadly opioid Fentanyl to the USA in exchange.

Huawei is one of the world's largest telecommunications equipment and services providers.

Both Huawei and ZTE Corp. have faced trouble with the US and other governments over dealings with Iran and fears the Chinese companies' equipment might be used for spying.

"Recall that over 100 Chinese companies traded limit down (last month) when news broke the USA urged allies to blacklist Huawei?".

Huawei is regarded as far stronger commercially than ZTE. On Wednesday, China's embassy in Canada said it resolutely opposed the arrest and called for her immediate release.

In exchange, ZTE agreed to pay a hefty $1 billion fine and put an additional $400 million in escrow in case of future violations.

Huawei is not the first Chinese telecoms equipment firm to face the ire of USA authorities.

Meng's arrest also threatened to inflame disagreements over Iran and Trump's decision to break with other governments and re-impose sanctions over the country's nuclear development. "China is already asking for her release, as can be expected, but if the charges are serious, don't expect the U.S. to blink".

Huawei, along with many other Chinese phone manufacturers and telecom equipment makers, is viewed with significant suspicion by the "Five Eyes" intelligence alliance, comprised of Australia, Canada, New Zealand, the United Kingdom, and the United States.

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