News of a broad US investigation of Huawei Technologies Co (華為) over possible Iran sanctions violations adds to the tension over trade as senior US officials head to China in the coming days in hopes of a deal.
Agents from the FBI, which is overseen by the US Department of Justice, have been looking into transactions by Huawei, China’s largest maker of telecommunications equipment, according to two people familiar with the investigation.
They are joined by the US Department of Treasury’s Office of Foreign Assets Control (OFAC), which enforces sanctions, and the Department of Commerce, which are also looking into the transactions of the Shenzhen-based mobile and telecommunications giant.
The Huawei criminal inquiry grew out of an earlier sanctions violation probe that ultimately led to penalties against another Chinese technology company, ZTE Corp (中興), one of the people said.
Glenn Schloss, a spokesman for Huawei in Shenzhen, declined to comment about the probes.
The company has said it complies with all applicable laws and regulations where it operates, including US export controls and sanctions laws and regulations, and that it “actively cooperates” with government agencies regarding its compliance.
Huawei’s US$500 million of 2027 notes fell US$0.013 on the dollar to a record low of US$0.93 as of early afternoon in Hong Kong, according to Bloomberg-compiled prices.
On Wednesday, the company dropped a planned US dollar-
denominated bond sale and delayed pricing a European offering.
The Commerce Department in 2016 issued an administrative subpoena aimed at Huawei seeking information about whether it was sending US technology to rogue nations, including Syria, Iran and North Korea.
Internal ZTE documents posted on the Commerce Department’s Web site cited a rival, referred to only as “F7,” as also violating US export controls in sales of equipment to Iran.
A group of Republican lawmakers pushed US President Donald Trump’s administration in April last year to investigate and identify F7, citing news reports that have highlighted the similarities between the company described in the documents and Huawei.
The FBI and OFAC investigations into Huawei have been going on since at least early last year, according to one of the people with knowledge of the probes.
A spokesman for the Justice Department declined to comment.
Separately, the US Federal Communications Commission (FCC) last week voted unanimously to ban federal funds from being used to purchase networking gear from companies determined to be a national security risk, dealing another blow to ZTE and Huawei.
The measure has yet to be finalized.
FCC Chairman Ajit Pai cited the risk of “hidden ‘back doors’ to our networks in routers, switches and other equipment” that could “allow hostile foreign powers to inject viruses and other malware.”
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