Whatever Huawei did, the case against Meng looks spiteful

Huawei's chief financial officer is back in a Canadian courtroom this week and her extradition case could run for years.

Iain Morris, International Editor

August 3, 2021

6 Min Read
Whatever Huawei did, the case against Meng looks spiteful

Held in Canada since December 2018, Huawei's Meng Wanzhou returns to a Vancouver courtroom this week to fight a US demand for extradition. With a final Canadian decision due in October or November, this month's legal battle could be critical in determining if Meng will ultimately face charges of fraud on US soil.

The specific accusation levelled against Huawei's chief financial officer – and the daughter of company founder Ren Zhengfei – is that she deliberately misled bankers at HSBC about Huawei's relationship with another equipment maker called Skycom.

HSBC was given to believe Skycom was just an affiliate or business partner, according to the US Department of Justice (DoJ), when it was previously controlled by Huawei. Meng's lawyers maintain this is a falsehood and that HSBC executives always knew Skycom was under Huawei's control.

Huawei's ownership of Skycom – and whether Meng lied about this – is important only because of what Skycom itself is accused of doing. Its alleged crime, as first reported in a Reuters exclusive, is to have tried selling IT equipment made by Hewlett-Packard to a service provider in Iran.

This activity would be in breach of US trade sanctions that forbid the sale of American products to Iran. If HSBC bankrolled Huawei when it was in full possession of these details, then HSBC would also be culpable.

Questions to answer

Suspicion surrounds both HSBC and Huawei. Internal HSBC documents, released to Huawei by a Hong Kong court and subsequently made public, clearly show that HSBC staff exchanged emails with Huawei about the closure of Skycom bank accounts – an odd thing to have done if they believed the two companies were just partners.

Huawei sought permission to have these documents accepted as evidence in the extradition proceedings. Unfortunately, it was rebuffed by Associate Chief Justice Heather Holmes.

Her basic rationale appears to have been that the HSBC documents were not conclusive and that any questions they raise should not be dealt with during the extradition process.

This forces Huawei to fall back on other documentation that has already been admitted to the courtroom. It includes pages from a PowerPoint presentation that Meng gave to HSBC at a Hong Kong restaurant in 2013 as well as Huawei's own email records.

However, Meng is also challenging the extradition request on three other "abuse of process" claims.

The first is that Donald Trump, the former US president, politicized the case from the outset, remarking in late 2018 that he would be willing to use her as a bargaining chip with China.

Meng also insists her rights were violated when she was first arrested at Vancouver airport, because she was searched without a warrant and not provided with access to a lawyer.

Her final point of defense is that the US has no legal authority to intervene in a case centered on a meeting between a Chinese equipment maker and a British bank in Hong Kong.

As salient as these claims may be, the very fact that Huawei used a front company to deal in Iran suggests it had something to hide. Nor does the Chinese company's reputation help Meng's case in North America. For years, it has been linked to intellectual property theft and seen as a possible cyber conduit for Chinese government spies.

It denies having a cozy relationship with China's government, and no evidence of backdoors for spies in its products has ever been presented. Yet all Chinese companies are ultimately answerable to China's rulers. Western critics say that alone is reason to be suspicious of their activities.

The screws have already been tightened

The problem with the case against Meng is that Huawei has already suffered the most extreme penalties imaginable. Sanctions introduced by Donald Trump and maintained by Joe Biden, his presidential successor, have cut it off from any US suppliers.

Huawei cannot even buy products that were developed using American design expertise or made with US manufacturing tools. Numerous operators in Europe, North America and the Asia Pacific are stripping it out of their networks, often at the behest of local authorities.

ZTE, a smaller Chinese equipment maker, was only hit with these penalties when it was charged with violating trade sanctions against Iran. In Huawei's case, the US justified its clampdown on security grounds and Biden has tightened the screws. Even if there were irrefutable evidence that Huawei sold US equipment to Iran, it is hard to see how they could be tightened further.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

All this makes the US pursuit of fraud charges against Meng look unnecessary and spiteful. A win for the DoJ cannot be the prelude to a clampdown on Huawei that has already happened. Meng has now been under a form of house arrest for two-and-a-half years and a decision later this year is unlikely to free her, whichever way it goes. An appeals process could realistically drag on for several years.

Whatever one thinks of Huawei or its chief financial officer, Meng Wanzhou is not a Bernie Madoff type of white-collar criminal who has defrauded thousands of investors. The treatment of her and Huawei is at odds with that meted out to ZTE, which was allowed to resume relations with US suppliers after paying fines and changing its management team.

There is no such conceivable way back for Huawei, and yet ZTE's links to the Chinese government are far more obvious. That makes US policy look inconsistent at best and hypocritical at worst.

Meng's situation could be far less favorable. She owns a large property in Vancouver and is allowed to visit parts of the city, although not to leave it, under the terms of her arrest. But she might have to wait years before she discovers her eventual fate.

That anyone can be detained for so long in these circumstances does not show the North American justice system in a very flattering light.

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— Iain Morris, International Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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