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Huawei CFO arrested in Canada on suspicion of violating US sanctions

Meng Wanzhou Photo: EPA

Canada has arrested the chief financial officer of China's Huawei Technologies, who is facing extradition to the United States on suspicion she violated US trade sanctions against Iran.

Wanzhou Meng, who is also the deputy chair of Huawei's board and the daughter of company founder Ren Zhengfei, was arrested in Vancouver at the request of American law enforcement authorities.

"Wanzhou Meng was arrested in Vancouver on December 1. She is sought for extradition by the United States, and a bail hearing has been set for Friday," Justice Department spokesman Ian McLeod said in a statement to The Globe and Mail on Wednesday. "As there is a publication ban in effect, we cannot provide any further detail at this time. The ban was sought by Ms. Meng."

A Canadian source with knowledge of the arrest said that the US is alleging Meng tried to evade the American embargo against Iran but provided no further details.

US prosecutors in New York have been investigating whether Huawei violated US sanctions in relation to Iran, which was first reported by the Wall Street Journal in April.

Huawei said in a statement to The Globe that Meng faces "unspecified charges in the Eastern District of New York" and was arrested when she was transferring flights in Canada.

"The company has been provided with very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng. The company believes the Canadian and US legal systems will ultimately reach a just conclusion," Huawei said, and added the company "complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws."

The Chinese company, which sells smartphones and telecommunications equipment around the world, has been facing increased scrutiny in the US and other countries, where officials have warned of potential national security risks from using Huawei products. The US is concerned that the Chinese government could be using Huawei's networking technology to spy on Americans.

Senator Ben Sasse, a Republican from Nebraska, said that Americans are "grateful" to Canadian authorities for arresting Meng. "Sometimes Chinese aggression is explicitly state-sponsored and sometimes it's laundered through many of Beijing's so-called 'private' sector entities that are in bed with Xi's communist party," he said.

Senator Chris Van Hollen — a Democrat from Maryland — said that Chinese telecommunications companies "represent a fundamental risk to American national security." "We need a comprehensive plan to hold the Chinese and their state-sponsored entities accountable for gross violations of the law and threats to our security," he said.

The Pentagon in May ordered stores on American military bases to stop selling smartphones made by Huawei and Chinese rival ZTE. And in February, top officials from the CIA, NSA, FBI and the Defense Intelligence Agency told a Senate committee that those firms' smartphones posed a security threat to American customers.

The Trump administration launched an extraordinary campaign, urging America's allies to stop using Huawei telecommunications equipment because the Chinese company poses a security threat, according to the Wall Street Journal. Over the past several weeks, New Zealand and Australia have prevented telecommunications companies from using Huawei equipment for their 5G mobile networks.

Huawei told CNN Business last month that its equipment is trusted by customers in 170 countries and by 46 of the world's 50 largest telecommunications companies. "If a government's behavior extends beyond its jurisdiction, such activity should not be encouraged," the company said. "Huawei firmly believes that our partners and customers will make the right choice based on their own judgment and experience of working with Huawei."

The Chinese embassy in Ottawa strongly protested the arrest of Meng, saying that she had not violated Canadian or American law and demanded her immediate release.

"The Chinese side firmly opposes to and strongly protests over such kind of actions which seriously harmed the human rights of the victim," the embassy said in a statement. "The Chinese side has lodged stern representations with the US and Canadian side, urged them to immediately correct the wrongdoing and restore the personal liberty of Ms. Meng Wanzhou. We will closely follow the development of the issue and take all measures to resolutely protect the legitimate rights and interests of Chinese citizen."

US authorities have been probing Huawei since at least 2016 for allegedly shipping US-origin products to Iran and other countries in violation of US export and sanctions laws, sources said in April.

Amid escalating technology tensions, Chinese Foreign Ministry spokeswoman Hua Chunying said at the time that China opposed any country imposing unilateral sanctions based on its own law.

"We hope the US will refrain from taking actions that could further undermine investor confidence in the US business environment and harm its domestic economy and normal, open, transparent and win-win international trade," Hua said in April.

That same month, Washington barred Huawei rival ZTE from exporting US technology in a separate case over exports to Iran and North Korea.

The decision by Canadian authorities to detain such a high profile Chinese citizen – and particularly one sought for extradition to the United States – is bound to hurt Canada-China relations.

The arrest could also drive a wedge between China and the US just days after President Donald Trump and President Xi Jinping held a meeting in Argentina where they agreed to steps to resolve a brewing trade war.

Both China and the United States have been asking allies and trading partners to take sides in a trade war and the Trudeau government has spoken enthusiastically of pursuing some sort of trade deal with Beijing now that it has renegotiated the North American free trade agreement with Washington and Mexico City.

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