Sun, Dec 09, 2018 - Page 1 News List

Huawei CFO a flight risk, prosecutor says as arrest risks US-China detente

AP, VANCOUVER, British Columbia

Reporters stand outside the Supreme Court of British Columbia ahead of a bail hearing for Huawei Technologies Co CFO Wanzhou Meng in Vancouver, British Columbia, on Friday.

Photo: Bloomberg

A Canadian prosecutor on Friday urged a Vancouver court to deny bail to a Chinese executive at the heart of a case that is shaking up US-China relations and worrying global financial markets.

Huawei Technologies Co (華為) chief financial officer Meng Wanzhou (孟晚舟) was detained at the request of the US during a layover at Vancouver International Airport on Saturday last week — the same day US President Donald Trump and Chinese President Xi Jinping (習近平) agreed over dinner to a 90-day ceasefire in a trade dispute that threatens to disrupt global commerce.

The US alleges that Huawei used a Hong Kong shell company to sell equipment in Iran in violation of US sanctions.

It also says that Meng and Huawei misled US banks about its business dealings in Iran.

The surprise arrest, already denounced by Beijing, raises doubts about whether the trade truce will hold and whether the world’s two biggest economies can resolve the complicated issues that divide them.

“I think it will have a distinctively negative effect on the US-China talks,” said Philip Levy, senior fellow at the Chicago Council on Global Affairs and an economic adviser in former US president George W. Bush’s administration. “There’s the humiliating way this happened right before the dinner, with Xi unaware. Very hard to save face on this one. And we may see [Chinese retaliation], which will embitter relations.”

Canadian prosecutor John Gibb-Carsley said in a court hearing that a warrant had been issued for Meng’s arrest in New York on Aug. 22.

Meng, arrested en route to Mexico from Hong Kong, was aware of the investigation and had been avoiding the US for months, even though her teenage son goes to school in Boston, he said.

Gibb-Carsley said that Huawei had done business in Iran through a Hong Kong company called Skycom Tech Co (星通技術公司).

Meng had misled US banks into thinking that Huawei and Skycom were separate when, in fact, “Skycom was Huawei,” he said.

Meng has contended that Huawei sold Skycom in 2009.

In urging the court to reject Meng’s bail request, Gibb-Carsley said the Huawei executive has vast resources and a strong incentive to bolt: She is facing fraud charges in the US that could put her in prison for 30 years.

Meng’s lawyer, David Martin, said that it would be unfair to deny her bail just because she “has worked hard and has extraordinary resources.”

He told the court that her personal integrity and respect for her father, Huawei founder Ren Zhengfei (任正非), would prevent her violating a court order.

Meng, who owns two homes in Vancouver, was willing to wear an ankle bracelet and put the houses up as collateral, he said.

There was no bail decision by the judge on Friday, so Meng was to spend the weekend in jail and the hearing is to resume tomorrow.

Justice William Ehrcke said he would think about proposed bail conditions over the weekend.

Huawei, in a brief statement e-mailed to reporters, said that “we have every confidence that the Canadian and US legal systems will reach the right conclusion.”

The company is the world’s biggest supplier of network gear used by telephone and Internet companies and long has been seen as a front for spying by the Chinese military and security services.

“What’s getting lost in the initial frenzy here is that Huawei has been in the crosshairs of US regulators for some time,” said Gregory Jaeger, special counsel at the Stroock law firm and a former US Department of Justice trial attorney. “This is the culmination of what is likely to be a fairly lengthy investigation.”

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