Reuters reported Wednesday on extensive documentation linking front companies in Iran and Syria with Chinese telecom giant Huawei, whose Chief Financial Officer Meng Wanzhou is currently in Canadian custody and may face extradition to the United States.
The United States wishes to prosecute Meng for using fraudulent means to evade sanctions against Iran. She is currently out on bail ahead of a February 6 hearing on the U.S. extradition request.
Reuters noted the U.S. case alleges ties between Huawei and a telecom company in Tehran called Skycom Tech and the shell company that owns it, Canicula Holdings. Documents described by the Reuters report suggests those ties were very strong indeed:
The documents reveal that a high-level Huawei executive appears to have been appointed Skycom’s Iran manager. They also show that at least three Chinese-named individuals had signing rights for both Huawei and Skycom bank accounts in Iran. Reuters also discovered that a Middle Eastern lawyer said Huawei conducted operations in Syria through Canicula.
The previously unreported ties between Huawei and the two companies could bear on the U.S. case against Meng, who is the daughter of Huawei founder Ren Zhengfei, by further undermining Huawei’s claims that Skycom was merely an arms-length business partner.
Huawei, U.S. authorities assert, retained control of Skycom, using it to sell telecom equipment to Iran and move money out via the international banking system. As a result of the deception, U.S. authorities say, banks unwittingly cleared hundreds of millions of dollars of transactions that potentially violated economic sanctions Washington had in place at the time against doing business with Iran.
Although the exact details of the U.S. case against Meng have not been made public, Reuters cited its previous reporting as an influence on prosecutors who contend Skycom was employed in a scheme to sell embargoed computer equipment to Iran, defrauding a number of financial institutions in the process.
Meng and other employees of Huawei are accused of lying to banks that inquired about the Chinese company’s relationship with Skycom. One darkly comical allegation has Meng assuring a bank executive in 2013 that Huawei sold off its interest in Skycom, without mentioning those shares were bought by another company Huawei controlled, Canicula Holdings.
A good number of Huawei executives also seem to have been Skycom executives, generating an impressive volume of Skycom paperwork plastered with Huawei logos. Reuters tried to interview one of those exceptionally hard-working executives, Huawei Middle Eastern regional president/Skycom Iran branch manager Shi Yaohong, but he hung up on them.
“Many corporate records filed by Skycom in Iran list signatories for its bank accounts in the country. Most of the names are Chinese; at least three of the individuals had signing rights for both Skycom and Huawei bank accounts,” Reuters observed.
As for Canicula Holdings, it turns out to have an office in the capital city of another heavily sanctioned country, Syria. A Middle Eastern business news article in 2014 asserted that Canicula was a unit of Huawei. U.S. investigators have determined Canicula did business with telecom operations in Syria, one of them an Iranian cell phone company that buys equipment from Huawei. Canicula’s office in Damascus was swiftly and unceremoniously shut down in late 2017 for unclear reasons.
The Chinese government grows increasingly nervous and combative as Meng’s extradition hearing approaches and the evidence against her piles up. China’s state-run Global Times declared on Wednesday that Beijing will “push for her unconditional release and is ready with possible responses to Canada if the latter fails to correct its mistakes.”
The Global Times anticipated U.S. President Donald Trump will drop the charges against Meng in exchange for a better trade deal with China – a prediction made largely to intimidate Canada by convincing it the U.S. will not save it from China’s wrath if Meng is not allowed to walk free:
Canada seems to be isolated on Meng’s case, as trade talks between China and the US, which Trump had said he may intervene in Meng’s case to help close the trade deal, is likely to end this week.
The positive sign in trade talks has created a favorable environment for resolving Meng’s case, Diao Daming, a US studies expert and an associate professor at the Renmin University of China, told the Global Times.
Daniel W. Levy, a principal in the New York office of Mckool Smith and a former Assistant US Attorney for the Southern District of New York, told the Global Times that it is unlikely that the US will not seek extradition in Meng’s case, but Meng can challenge extradition in Canada under Canadian law.
If the extradition materializes, China-Canada relations would suffer; and that China has also prepared a response for this situation, such as travel restrictions to Canada and Canadian imports, according to experts.
A new poll reported by Canada’s Globe and Mail on Tuesday suggested China’s heavy-handed tactics are backfiring by stiffening Canadian resolve. The poll found the arrest of Meng in Vancouver is seen as justified by 56 percent of Canadians, while only 29 percent feel the arrest was “economically motivated and threatens to damage relations with China.”
83 percent of Canadians now have a negative view of China’s government and 53 percent see it as a national security threat, numbers said to have grown worse after China began arresting Canadian citizens in what is widely seen as an effort to press for Meng’s release.