US charges Huawei, CFO Meng Wanzhou with fraud

CFO Meng Wanzhou is the daughter of the company's founder
CFO Meng Wanzhou is the daughter of the company’s founder
PHOTO: REUTERS

The US Justice Department has filed a host of criminal charges against Chinese telecoms giant Huawei and its chief financial officer, Meng Wanzhou.

The charges against the world’s second largest smartphone maker include accusations of bank fraud, obstruction of justice and theft of technology.

The case could ratchet up tensions between China and the US, and impact the firm’s global expansion efforts.

Both Ms Meng and Huawei deny the allegations.

Ms Meng was arrested in Canada last month at the request of the US for allegedly evading sanctions on Iran.

“For years, Chinese firms have broken our export laws and undermined sanctions, often using US financial systems to facilitate their illegal activities. This will end,” said US Commerce Secretary Wilbur Ross.

What are the charges?

The indictment alleges Huawei misled the US and a global bank about its relationship with two subsidiaries, Huawei Device USA and Skycom Tech, to conduct business with Iran.

US President Donald Trump’s administration has reinstated all sanctions on Iran removed under a 2015 nuclear deal and recently imposed even stricter measures, hitting oil exports, shipping and banks.

A second case alleges Huawei stole technology from T Mobile used to test smartphone durability, as well as obstructing justice and committing wire fraud.

The T-Mobile tech, known as Tappy, mimicked human fingers to test phones.

In all, the US has laid 23 charges against the company.

“These charges lay bare Huawei’s alleged blatant disregard for the laws of our country and standard global business practices,” said FBI Director Christopher Wray.

The US has laid 23 charges against Chinese telecoms firm Huawei
The US has laid 23 charges against Chinese telecoms firm Huawei

“Companies like Huawei pose a dual threat to both our economic and national security.”

What’s the context?

Huawei is one of the largest telecommunications equipment and services providers in the world, recently passing Apple to become the second biggest smartphone maker after Samsung.

READ: Six children killed ‘for body parts’

But the US and other Western nations have been concerned that the Chinese government could use Huawei’s technology to expand its spying ability, although the firm insists there is no government control.

The arrest of Ms Meng, the daughter of Huawei’s founder, infuriated China.

She was arrested on 1 December in Canada’s western city of Vancouver at the request of the US.

She was later granted a C$10m (£5.7m; $7.6m) bail by a local court. But she is under surveillance 24 hours a day and must wear an electronic ankle tag.

The US charges come the day after Canada fired its ambassador to China, soon after he publicly said the US extradition request for Ms Meng was flawed.

Days after Ms Meng’s arrest in December, China detained two Canadians – former diplomat Michael Kovrig and businessman Michael Spavor – in what some have seen as a tit-for-tat response.

The charges come as the US and China prepare to hold high-level trade talks in Washington this week.

US commerce secretary Wilbur Ross stated that the Huawei charges were “wholly separate” from ongoing trade negotiations with China.

President Trump’s administration has imposed tariffs on $250bn (£190bn) worth of Chinese goods, prompting Beijing to respond with its own tariffs.

Both countries agreed last month to suspend new tariffs for 90 days to allow talks.

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