Huawei founder's daughter arrested on U.S. request, clouding China trade truce

[webfact]

Huawei founder's daughter arrested on U.S. request, clouding China trade truce

By Julie Gordon and Karen Freifeld

 

FILE PHOTO: People walk past a sign board of Huawei at CES (Consumer Electronics Show) Asia 2018 in Shanghai, China June 14, 2018. REUTERS/Aly Song/File Photo

 

VANCOUVER/WASHINGTON (Reuters) - The daughter of Chinese tech giant Huawei's founder has been arrested in Canada and is facing extradition to the United States, dealing a blow to hopes of an easing of Sino-U.S. trade tensions and rocking global stock markets.

 

The shock arrest of Meng Wanzhou, who is also Huawei Technologies Co Ltd's [HWT.UL] chief financial officer, raises fresh doubts over a 90-day truce on trade struck between Presidents Donald Trump and Xi Jinping on Saturday - the day she was detained.

 

The arrest is related to violations of U.S. sanctions, a person familiar with the matter said. Reuters was unable to determine the precise nature of the violations.

 

The arrest and any potential sanctions on the world's second biggest smartphone maker could have major repercussions on the global technology supply chain. Shares in Asian suppliers to Huawei, which also counts Qualcomm Inc <QCOM.O> and Intel <INTC.O> among its major suppliers, tumbled on Thursday.

 

Meng, one of the vice chairs on the company's board and the daughter of company founder Ren Zhengfei, was arrested on Dec. 1 at the request of U.S. authorities and a court hearing has been set for Friday, a Canadian Justice Department spokesman said. Trump and Xi had dined in Argentina on Dec. 1 at the G20 summit.

 

Sources told Reuters in April that U.S. authorities have been probing Huawei, the world's largest telecoms equipment maker, since at least 2016 for allegedly shipping U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws.

 

Huawei confirmed the arrest in a statement and said that it has been provided little information of the charges, adding that it was "not aware of any wrongdoing by Ms. Meng".

 

She was detained when she was transferring flights in Canada, it added.

 

China's embassy in Canada said it resolutely opposed the arrest and called for Meng's immediate release.

 

In April, the sources told Reuters the U.S. Justice Department probe was being handled by the U.S. attorney's office in Brooklyn.

 

The U.S. Justice Department on Wednesday declined to comment. A spokesman for the U.S. attorney's office in Brooklyn also declined to comment.

 

CHINESE MEDIA BACKLASH

The arrest drew a sharp response on Chinese social media.

 

A user of China's Twitter-like Weibo platform said Chinese should boycott products made by U.S. tech giant Apple Inc <AAPL.O> and instead buy Huawei products to show support for one of China's national champions.

 

Jia Wenshan, a professor at Chapman University in California, said the arrest was part of a broader geo-political strategy from the Trump administration to counter China and it "runs a huge risk of derailing the U.S.-China trade talks".

 

Mei Xinyu, a researcher at a think tank run by the Ministry of Commerce, wrote in an article on the official People's Daily Overseas Edition's WeChat account that the arrest was a warning that the Trump administration might abandon its deal with China.

 

"We can be sure that in the near future a bumpy road of fights followed by talks will be the norm of China-U.S. relations," Mei wrote.

 

"China must become accustomed to this new environment of struggle and treat all of the U.S. government’s promises with caution."

 

While Meng's arrest comes at a delicate time in U.S.-China relations, it was not clear if the timing was coincidental.

 

Arthur Kroeber, founder of Gavekal Dragonomics, said it was unlikely that Beijing would retaliate in kind against the local U.S. business community, whose interests have partly overlapped with China’s in the trade war and been a source of leverage for Beijing.

 

"You can play hardball with a small country but you can't do it with the U.S.," he said. "Actually it hurts them to make life difficult" for U.S. companies.

 

The probe of Huawei is similar to one that threatened the survival of China's ZTE Corp <0763.HK> <000063.SZ>, which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran.

 

Earlier this year, the United States banned American firms from selling parts and software to ZTE, which then paid $1 billion this summer as part of a deal to get the ban lifted.

 

It was not immediately clear how Huawei's business operations might be affected by the arrest.

 

HONG KONG CONNECTION

In January 2013, Reuters reported that Hong Kong-based Skycom Tech Co Ltd, which attempted to sell embargoed Hewlett-Packard computer equipment to Iran's largest mobile-phone operator, had much closer ties to Huawei than previously known.

 

Meng, who also has gone by the English names Cathy and Sabrina, served on the board of Skycom between February 2008 and April 2009, according to Skycom records filed with Hong Kong's Companies Registry.

 

Several other past and present Skycom directors appear to have connections to Huawei.

 

The news about the arrest comes the same day Britain's BT Group <BT.L> said it was removing Huawei's equipment from the core of its existing 3G and 4G mobile operations and would not use the Chinese company in central parts of the next network.

 

Huawei has said it complies with all applicable export control and sanctions laws and U.S. and other regulations.

 

Meng's arrest drew a quick reaction in Washington.

 

U.S. Senator Ben Sasse praised the move and said that it was "for breaking U.S. sanctions against Iran." He added: "Sometimes Chinese aggression is explicitly state-sponsored and sometimes it's laundered through many of Beijing's so-called 'private' sector entities."

 

U.S. stock futures and Asian shares tumbled as news of the arrest heightened the sense a major collision was brewing between the world's two largest economic powers, not just over tariffs but also over technological hegemony.

 

Shares of Huawei suppliers slumped on Thursday as investors fretted over the arrest. Samsung Electronics <005930.KS> fell 2.3 percent, while Chinasoft International Ltd <0354.HK> sank as much as 13 percent.

 

(Reporting by Makini Brice; Additional reporting by Julie Gordon in Vancouver, David Ljunggren in Ottawa, Diane Bartz in Washington, Tony Munroe and Christian Shepherd in Beijing, Josh Horwitz and John Ruwitch in Shanghai and Jessie Pang in Hong Kong; Writing by Chris Sanders and Anne Marie Roantree; Editing by Sonya Hepinstall and Muralikumar Anantharaman)

 

-- © Copyright Reuters 2018-12-06

[zydeco]

3 minutes ago, webfact said:

U.S. stock futures and Asian shares tumbled as news of the arrest heightened the sense a major collision was brewing

When one tweet, one comment, or one legitimate arrest of the CFO of a foreign company that has been caught already stealing technology can cause markets to crash, then those markets are not healthy to begin with. They are overpriced, puffed up by the fed's printing of free money, and ripe for a fall. The long term trendline for support in the DOW is around 12,000.

[300sd]

Stupid move Canada.

[bristolboy]

12 minutes ago, 300sd said:

Stupid move Canada.

I don't think Canada had much of a choice in executing the arrest. Extradition is a different matter.

[from the home of CC]

23 minutes ago, 300sd said:

Stupid move Canada.

I agree that it isn't exactly in Canada's interest to do America's bidding but in this case the potential repercussions of not acting are huge. I'd rather the Canadians throw this Chinese woman to the wolves than get punished by the Americans again, our economy is on the brink of collapse as it is. Next to the Chinese we are geographically attached to one of the biggest bullies in the world which is currently run by a sociopath.

 

Edited December 6, 2018 by from the home of CC
optics

[varun]

Compliance is a big deal now days.

It wouldn't surprise me if she was complicit in going about compliance in the "Chinese Way" and did indeed violate some sanctions.

 

Some articles indicate this could be the case:

https://www.scmp.com/tech/article/2176655/detained-huawei-cfo-sabrina-meng-wanzhou-told-staff-one-may-accept-risk

Edited December 6, 2018 by varun

[lovelomsak]

24 minutes ago, 300sd said:

Stupid move Canada.

Do not see anything stupid in what Canada did. Why would you say that?

[stevenl]

14 minutes ago, varun said:

Compliance is a big deal now days.

It wouldn't surprise me if she was complicit in going about compliance in the "Chinese Way" and did indeed violate some sanctions.

 

Some articles indicate this could be the case:

https://www.scmp.com/tech/article/2176655/detained-huawei-cfo-sabrina-meng-wanzhou-told-staff-one-may-accept-risk

So? Huawei may have violated USA sanctions on Iran, so the whole world has to obey the USA?

[overherebc]

Lots of reports on various countries and now BP company will not use or allow Huawei any contracts.

[bristolboy]

7 minutes ago, stevenl said:

So? Huawei may have violated USA sanctions on Iran, so the whole world has to obey the USA?

I was wondering about that, too. It may be that the items Huawei sold had some parts made in the USA. The article should have addressed that question even if only to state that the exact grounds of the arrest request were unclear.

[mikebike]

1 hour ago, 300sd said:

Stupid move Canada.

 

58 minutes ago, bristolboy said:

I don't think Canada had much of a choice in executing the arrest. Extradition is a different matter.

 

47 minutes ago, lovelomsak said:

Do not see anything stupid in what Canada did. Why would you say that?

Canada did do something VERY stupid that caused this, in a sense, but it was was in 1952.

 

They allowed US Customs and Border Patrol operate in Canadian airports.

 

US Border Preclearance

 

Seeing that she was detained transferring at Vancouver airport I believe she was apprehended by US officers. 

 

Unfortunately for them it is not an embassy and she is subject to Canadian law upon detention and must be formally extradited.

 

 

 

[300sd]

51 minutes ago, lovelomsak said:

Do not see anything stupid in what Canada did. Why would you say that?

She's the daughter of the founder of the company, the CFO. Not the CEO. She was in transit from what the story says. You mean everyone who works for that company is under arrest in the US......and Canada needs to comply to that! As a Canadian I think it's a stupid move. 

[Hank Gunn]

21 minutes ago, bristolboy said:

I was wondering about that, too. It may be that the items Huawei sold had some parts made in the USA. The article should have addressed that question even if only to state that the exact grounds of the arrest request were unclear.

That’s the exact reason she was apprehended (Huawei selling American sourced parts). If you read the whole article it’s mentioned twice. (And note that these sanctions and the investigation of Huawei for breaking them, were both implemented under Obama.)

 

First:

”Sources told Reuters in April that U.S. authorities have been probing Huawei, the world's largest telecoms equipment maker, since at least 2016 for allegedly shipping U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws.“

 

Second:

”In January 2013, Reuters reported that Hong Kong-based Skycom Tech Co Ltd, which attempted to sell embargoed Hewlett-Packard computer equipment to Iran's largest mobile-phone operator, had much closer ties to Huawei than previously known.“

[dcnx]

45 minutes ago, stevenl said:

So? Huawei may have violated USA sanctions on Iran, so the whole world has to obey the USA?

Only while the USA is still the top dog. China’s day is coming.

[dcnx]

Sells phone parts during embargo, jail time. Drop bombs on various counties killing countless civilians for reasons unknown, no problem.

 

What a time to be alive.

[marcusarelus]

1 hour ago, 300sd said:

Stupid move Canada.

Ya, Canada.  Don't you know that the rule of law is always superseded by warlike, authoritarian dictatorships? Get your stuff together or Canada will be the next Chinese province.   

[Hank Gunn]

3 minutes ago, 300sd said:

She's the daughter of the founder of the company, the CFO. Not the CEO. She was in transit from what the story says. You mean everyone who works for that company is under arrest in the US......and Canada needs to comply to that! As a Canadian I think it's a stupid move. 

Officers of a company (CEO, CFO, CTO, etc.) have much different responsibilities and obligations, in a legal sense, as opposed to other employees. While they may draw a paycheck, they quite different from “regular employees “.

 

So no, not anyone in that company would have been named in the extradition request unless they were specifically named (e.g. a sales executive or corporate legal counsel who were involved in the prohibited transfer of technology). Therefore not any and all employees of Huawei are under threat of arrest, barring the caveat I mentioned.

[Hank Gunn]

54 minutes ago, stevenl said:

So? Huawei may have violated USA sanctions on Iran, so the whole world has to obey the USA?

It’s called an extradition treaty. Kind of like when Thailand sends crooks wanted in the UK back to the UK.

[from the home of CC]

With Huawei in direct competition with Apple this whole thing reeks of protectionism with the Iran violations used as window dressing.

[stevenl]

18 minutes ago, Hank Gunn said:

It’s called an extradition treaty. Kind of like when Thailand sends crooks wanted in the UK back to the UK.

Which has nothing to do with my comment.

[moontang]

best computer I have ever owned...  Chinese must continually be reminded to play fair...kind of like a certain country that puts a 200% tax on wine, cheese, and running shoes.

[Hank Gunn]

Just now, stevenl said:

Which has nothing to do with my comment.

My point was, this had nothing to do with "obeying" the US (which was your original comment) and everything to do with honoring an extradition treaty.

[stevenl]

1 minute ago, Hank Gunn said:

My point was, this had nothing to do with "obeying" the US (which was your original comment) and everything to do with honoring an extradition treaty.

It's ok if you don't understand. Which you have made very clear twice now.

[FritsSikkink]

2 hours ago, zydeco said:

When one tweet, one comment, or one legitimate arrest of the CFO of a foreign company that has been caught already stealing technology can cause markets to crash, then those markets are not healthy to begin with. They are overpriced, puffed up by the fed's printing of free money, and ripe for a fall. The long term trendline for support in the DOW is around 12,000.

"one legitimate arrest of the CFO of a foreign company that has been caught already stealing technology"

Any proof of this?

[Hank Gunn]

1 hour ago, 300sd said:

She's the daughter of the founder of the company, the CFO. Not the CEO. She was in transit from what the story says. You mean everyone who works for that company is under arrest in the US......and Canada needs to comply to that! As a Canadian I think it's a stupid move. 

See my post on p. 2 of this thread (post #17).

[Hank Gunn]

55 minutes ago, stevenl said:

It's ok if you don't understand. Which you have made very clear twice now.

You're either being intentionally obtuse or just don't understand what an extradition treaty is.

 

With regards to Huawei, they can do whatever they want, but once they shipped American equipment, that's a different story. Or maybe you didn't read the whole OP and just threw out a comment without full knowledge of the situation.

[marcusarelus]

59 minutes ago, FritsSikkink said:

"one legitimate arrest of the CFO of a foreign company that has been caught already stealing technology"

Any proof of this?

The lady will be extradited to NY and given the best lawyer money can buy and the evidence will be presented and a jury will decide on the validity of the evidence and her innocence or guilt unlike trials in China. If it is determined it was a malicious wrongful prosecution she can sue the government for millions.

Edited December 6, 2018 by marcusarelus

[overherebc]

1 hour ago, FritsSikkink said:

"one legitimate arrest of the CFO of a foreign company that has been caught already stealing technology"

Any proof of this?

Do a search and check how many counties won't allow them to supply or get involved in their IT industry.

Wonder why??

[overherebc]

2 hours ago, overherebc said:

Do a search and check how many counties won't allow them to supply or get involved in their IT industry.

Wonder why??

Should be countries not counties but seriously I sat on my glasses this morning so vision is a bit iffy until I get a new pair.

Anyway, Australia, New Zealand are two I know won't allow them in and also the company BP have said they won't use them.

[Bill Miller]

5 hours ago, stevenl said:

So? Huawei may have violated USA sanctions on Iran, so the whole world has to obey the USA?

Apparently there were US origin components involved, so sorta yeah.
It will involve a number of international lawyers to determine if the US was legally correct in demanding that Canada conduct ab arrest, I imagine.
Did they, the US, issue an Interpol notice, I wonder?