A senior Chinese tech executive faces fraud charges in the United States related to business dealings with Iran, a Canadian prosecutor said Friday, offering the first details of a case that has pummeled financial markets and raised questions about a current trade truce between Beijing and Washington.
Before a packed courtroom in Vancouver, British Columbia, a Canadian prosecutor disclosed that Meng Wanzhou, chief financial officer of Huawei Technologies, is wanted by the United States for allegedly deceiving financial institutions about the relationship between Huawei and SkyCom, a company that is widely believed to have close links to the tech giant.
They argued that Meng should be kept in custody pending possible extradition to the United States because she is a flight risk.
The case appears to center on sales of U.S.-manufactured technology to Iran by SkyCom, which is based in Hong Kong.
Meng, the daughter of Huawei’s founder, Ren Zhengfei, was arrested at an airport in Vancouver last Saturday as she was transiting from Hong Kong to Mexico, the court heard.
News of her arrest this week roiled markets already shaken by months of conflict between the world’s two largest economies. The fear is that the arrest of a top Chinese executive could impact a trade war truce struck last week by President Trump and Chinese President Xi Jinping.
The U.S. and Canadian sides have thus far said little about the Meng case. Canada’s Department of Justice said Meng initially requested and was granted a publication ban, so few details about her case were released. On Friday, the ban was lifted.
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In China, the government called for her immediate release. “To detain someone without giving clear reason is an obvious violation of human rights,” said Geng Shuang, a spokesman for China’s Foreign Ministry.
The case has called fresh attention to a long-standing U.S. effort to limit the Chinese telecom giant’s presence in the United States and elsewhere.
Huawei, the world’s second-largest maker of smartphones, is one of the pillars of the new, high-tech economy championed by Xi. But its very survival could now be in question.
A previous case against ZTE Corp., another Chinese telecommunications giant accused of violating U.S. export sanctions on Iran, brought it to the brink of bankruptcy last year. ZTE was initially blacklisted in the United States, but after Trump’s intervention that was downgraded to an $890 million fine.
Although the United States has not formally announced charges against Huawei, the cases appear similar.
“China has more incentive than the U.S. to stop the escalation,” said Yanmei Xie, an analyst at the Gavekal Dragonomics consultancy in Beijing. “The Chinese priority is to stop the U.S. from launching crippling sanctions against Huawei. If the U.S. does what it did to ZTE, there’s very little China can do to prevent Huawei from collapsing, and that’s not in China’s interest.”
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The Washington Post’s Anna Fifield in Beijing contributed to this report.