Chief financial officer of China's Huawei arrested in Canada

Andrew Cummings
December 6, 2018

Huawei Technologies Co.'s chief financial officer was arrested in Canada over potential violations of USA sanctions on Iran, provoking outrage from China and complicating thorny trade negotiations just as they enter a critical juncture.

According to Huawei's website, Meng joined the company in 1993, obtained a master's degree from Huazhong University of Science and Technology in 1998, and rose up the ranks over the years, mostly holding financial roles.

The Globe and Mail newspaper, citing law enforcement sources, said she is suspected of trying to evade USA curbs on trade with Iran.

Huawei overtook Apple earlier this year to move into the No. 2 spot, according to Business Insider.

Best Buy, one of the largest electronics retailers in the USA, also recently stopped selling Huawei products. The Trump administration says they benefit from improper subsidies and market barriers.

The arrest, while notable, did not come out of the blue. Shares had rallied Monday following President Donald Trump's agreement with his Chinese counterpart Xi Jinping over the weekend to hold off on further retaliatory moves in a festering trade war.

On broader markets Hong Kong was down more than two percent while Shanghai lost more than one percent and Tokyo shed 1.8 percent by the break.

Chinese foreign ministry spokesman Geng Shuang on Thursday called Meng's arrest a violation of human rights and demanded the "immediate release" of the 46-year-old executive, who also goes by the name Sabrina. The arrest has been made by Canadian law enforcement at the request of the United States over violating the Iran sanctions.

Trump has threatened to raise tariffs on Chinese goods in response to complaints that Beijing improperly pressures foreign companies to hand over technology.

"We'll see more cases like this over the next three months, sanctioning China's state-owned enterprises and individuals, to boost momentum on the U.S. side", Liu said. "The incident could turn out to be a breaking point", Zhu said. The Pentagon has alleged the Chinese government could use the phones to spy. It's shooting for the lead in fifth-generation wireless networks and preparing to take on some of America's biggest chipmakers. Meng was detained in Vancouver but is facing potential extradition to the US, which had earlier opened an investigation into whether Huawei sold equipment to Iran despite sanctions on exporting there. The Chinese government appealed to Washington to avoid any steps that might damage business confidence.

Earlier this year, the USA imposed a seven-year ban on the sale of crucial United States components to Chinese smartphone maker ZTE after finding it had failed to take action against staff who were responsible for violating trade sanctions against Iran and North Korea. Three months later, the company eventually reached a deal with United States authorities by paying $1.4 billion in fines, as well as agreeing to overhaul its senior management.

Huawei is regarded as far stronger commercially than ZTE.

She has held the positions of director of the global accounting department, CFO of Huawei Hong Kong, and president of the accounting management department, according to the website.

Huawei issued a statement saying Meng, also the company's deputy chairman and the daughter of company founder Ren Zhengfei, was detained while changing flights in Canada, in order to face "unspecified charges" in NY.

"The Chinese side has lodged stern representations with the U.S. and Canadian side, and urged them to immediately correct the wrongdoing and restore the personal freedom of Ms Meng Wanzhou".

Press representatives for the Justice Department and the USA attorney's office in the Eastern District of NY declined to comment. The Shenzhen-based company said it complies with all applicable laws and regulations where it operates "including applicable export control and sanction laws and regulations of the UN, US and European Union".

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