Huawei CFO facing US fraud charges, seen as flight risk

A Canadian prosecutor told a packed court in Vancouver on Friday that Meng Wanzhou, chief financial officer of Chinese telecommunications giant Huawei, defrauded US banks in 2013, and should not be granted bail because of extreme flight risk.

Prosecutors argued in the bail hearing that Meng should be extradited to the United States to face criminal proceedings, The Globe and Mail reported.

The hearing was adjourned until Monday, when the judge is expected to render a decision on bail. Until then, she will remain in custody, AFP reported.

According to Canadian counsel John Gibb-Carsley, the Huawei executive misrepresented her firm’s relationship with a subsidiary, Skycom, which was allegedly conducting business with Iranian firms in violation of US sanctions.

Under an extradition treaty Canada has signed with the US, it is obligated to comply with requests from the US Department of Justice’s Office of International Affairs, if the accused is wanted in connection with offenses that are a crime in both countries.

Meng’s arrest, which comes as the United States and China are engaged in sensitive trade negotiations, has roiled financial markets and prompted international public outrage and Chinese demands for her release.

The law-enforcement action has also led to questions as to the involvement of high-level officials in the two governments. Canadian Prime Minister Justin Trudeau denied any political motivation and said his government had no involvement with the police action or the judicial proceedings.

At least one top US official, national security adviser John Bolton, has said he was aware of the arrest in advance and caused confusion in a radio interview this week as to the motivation of the arrest.

Speaking with NPR, Bolton was pressed several times to clarify that Meng’s charges were related to the violation of Iran sanctions, and were separate from trade negotiations and the issue of cybersecurity and intellectual property theft.

In response to a specific question about Meng’s arrest, Bolton opined about broader criticisms of Chinese technology firms, playing down the importance of Iran sanctions.

“Well, I think the violations of the Iran sanctions are certainly of major concern to the Trump administration.… But with respect to a number of Chinese companies, we saw what happened with ZTE some months ago and many other issues of concern like that. And I think, as I say, as the negotiations proceed I think we’re gonna see a lot about what Chinese companies have done to steal intellectual property,” Bolton said.

ZTE, China’s second-largest telecommunications equipment maker behind Huawei, was facing crippling penalties last spring for violating Iran sanctions. An export ban of US components to the firm was eventually lifted amid a round of bilateral trade negotiations.

Meng’s arrest comes as the US continues efforts to persuade allies not to use Huawei equipment, especially for fifth-generation (5G) wireless networks, which are expected to be rolled out starting next year.

This week, the UK’s largest wireless provider, BT Group, announced that it would remove Huawei components from existing 3G and 4G networks and would not use the firm’s equipment for 5G. Australia and New Zealand have already said that they will not use Huawei for 5G.

As US stocks plunged again on Friday amid confusion regarding the state of talks between Washington and Beijing, top White House economic adviser Larry Kudlow tried to delink the issue of Meng’s arrests from the trade talks.

“I don’t know, by the way, that that necessarily spills over into the trade talks,” Kudlow said of the legal proceedings, adding: “Well look, I think it’s a separate track.

“The bigger picture here is extremely promising,” he said, citing the chemistry between US President Donald Trump and Chinese President Xi Jinping.

China demanded Meng’s release after her arrest was made public and has insisted that she has not violated any laws.

“Detaining an individual without giving any reason violates a person’s human rights,” Chinese Foreign Ministry spokesman Geng Shuang told reporters on Thursday, before Meng’s court appearance on Friday.

“We have made solemn representations to Canada and the US, demanding that both parties immediately clarify the reasons for the detention, and immediately release the detainee to protect the person’s legal rights,” he added.