Huawei Chief Financial Officer Meng Wanzhou was arrested more than two years ago at the Vancouver airport by Canadian police and faces extradition to the U.S. where she has been charged with bank and wire fraud.
Meng, 48, is under house arrest in Vancouver and claims she’s innocent of the fraud charges for allegedly misleading HSBC about Hauwei’s business dealings in Iran.
The arrest on Dec. 1, 2018, came at the outset of a set of strong trade policies lodged by the Trump Administration against Chinese companies, including Huawei. Huawei, one of China’s largest companies and the world’s largest telecoms equipment maker, has been placed on an Entity List by the U.S. Department of Commerce, which prevents U.S. companies from selling chips and components to Huawei unless they receive a special permit to do so.
Supporters of Huawei and Meng, also known as Sabrina Meng, believe she is the victim of politics and said the charges against her do not follow normal U.S. Department of Justice procedures. “She would not have been charged but for the geopolitical situation,” said one person familiar with her case who spoke to Fierce Electronics on the condition of remaining anonymous. “She’s hopeful for a settlement” under the heading of a deferred prosecution agreement that would allow her to return to China.
Meng is the daughter of Ren Zhengfei, 76, the engineer who founded Huawei in 1987 and serves as its CEO. The arrest of his daughter “has been a gigantic distraction on the larger issues and an emotional lightning rod for the leaders of Huawei,” that person said. “People forget that the company leadership is offended by the charges that the Huawei does bad things at the behest of China.”
Ren and other Huawei leaders have repeatedly denied connections to the Chinese government and have argued they wouldn’t do anything to sacrifice the trust of their customers. Meanwhile, the U.S. has succeeded in getting Huawei gear banned from use by multiple 5G carriers in the U.S., Europe and elsewhere, arguing that the Chinese can gain access to data on Huawei servers run by operators in a threat to national security.
Another person who has seen Meng periodically over the past two years in Vancouver called her “a strong person, very resilient, who still has a job to do and spends the bulk of her day doing that job” as the company’s global CFO.
Meng also follows her case closely, that person said, attending several days of hearings each month regarding the extradition case. She attends those hearings with a translator, but also has some English speaking ability. Shortly after she was detained, her grown children had to return to China from school in North America.
“She’s coping as well as she can, but this is obviously taxing and emotional,” this person said, also asking not to be identified. “Going after a guy’s daughter is more emotional than going after somebody’s stock options.”
Huawei officials are worried that Meng’s case could drag on for several years longer, the two people said, based on communications with parties in the case. “Everyone needs to find a way out of this,” one of them said. “With serious national security concerns about Huawei, does the U.S. really have an interest in Meng? She’s not a spy. She’s the CFO and daughter of the founder. Most people would say it’s not worth the hassle to prosecute her and that the sides have to find off ramps.”
A 2013 PowerPoint in the middle of the case
According to court documents, one central piece of evidence supporting the U.S. fraud charges is that Meng met HSBC in Hong Kong in 2013 where she presented a fraudulent PowerPoint during the meeting. The U.S. claims that the PowerPoint failed to disclose that Huawei had a controlling interest in Skycom Tech, a company that sold telecom equipment to Iran in potential violation of U.S. economic sanctions against doing business with Iran.
However, a Fierce Electronics review of the 16-page PowerPoint presentation on record with the Supreme Court of British Columbia discloses on page 6 that Skycom “works with Huawei in sales and services in Iran.” It also acknowledges that Meng was once a member of Skycom’s board of directors to “better manage our partner. Board supervision was the only way to ensure trade compliance.” Subsequently, she quit her board position and Huawei sold all its shares in Skycom.
Meng’s lawyers have also argued that her alleged fraud action had no connection to the U.S., since she met with HSBC in Hong Kong and the corporations involved were non-US entities that used non-US banks. “None of her alleged conduct occurred in whole or in part in the US, not did it have any effect there,” her attorneys have said.
In court documents before the Supreme Court of British Columbia, John Bellinger, an attorney and former State Department official under former President George W. Bush presented a 13-page sworn affidavit objecting to the Meng arrest and charges based on her 2013 presentation to HSBC. While working at State and Justice and the White House, he worked on international extradition matters and issues related to Iran sanctions.
“Ms. Meng’s presentation clearly indicated to HSBC that Skycom was Huawei’s business partner in Iran and that both companies operated together in Iran,” Bellinger wrote in the affidavit. “At all times, HSBC knew all it needed to know to limit exposure to [Iran Sanctions] liability, and Ms. Meng’s statements did not diminish this knowledge.” He argued that prosecutors “selectively quoted” from her presentation to support charges that omitted what she told HSBC.
Meng’s attorneys also have argued that when she was put under arrest in Vancouver in 2018, her cell phone was confiscated and she was asked the password. She gave them the password but it was searched without a warrant, her attorneys have said. Canadian border authorities had the authority to seize her phone, but later passed it onto Canadian police which was not authorized, although border authorities later apologized for doing so. Later, Canadian police passed the phone onto the FBI.
Meng has also claims her rights have been abused by President Trump and State Department Secretary Mike Pompeo because they have politicized her case to gain advantage while conducting a trade deal with China.
Soon after Meng was arrested in 2018, China detained two Canadians, former diplomat Michael Kovrig and businessman Michael Spavor. Both were charged with espionage in June after a Canadian judge ruled to continue the extradition case against Meng.
Ultimately, Meng supporters are hopeful President-elect Biden will drop the Meng case after he assumes office on Jan. 20, which could in turn lead to the release of the Canadians held by China.
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