Huawei’s global CFO arrested in Canada on US request

6 Dec 2018

Huawei logo above a stage. Image: Dserg/Depositphotos

Will the arrest of Huawei’s Meng Wanzhou lead to tensions in China?

The global chief financial officer (CFO) of Chinese telecoms equipment and smartphone giant Huawei, Meng Wanzhou, has been arrested in Vancouver and now faces extradition to the US.

Daughter of company founder Ren Zhengfei, Meng was arrested on 1 December and faces a court hearing tomorrow (7 December) over allegations Huawei violated Iran export sanctions.

The context of Meng’s arrest appears to be in relation to a US Department of Justice investigation into whether Huawei sold equipment to Iran despite sanctions on exports to the region. Earlier this year, the US instigated a trade ban against another Chinese manufacturer, ZTE, for selling goods to Iran.

Trade war may resume

The arrest is likely to provoke outrage in China and could complicate a tenuous truce in the trade war between the US and China. The Chinese embassy in Canada described the arrest as a violation of its citizens’ rights, calling on the US and its neighbour to “rectify wrongdoings” and free Meng.

Huawei said it has little information about the charges and was unaware of any wrongdoing by Meng.

Canada’s ministry of justice said: “She is sought for extradition by the United States, and a bail hearing has been set for Friday.” It is understood that the charges against Meng were filed in the eastern district of New York.

This is the latest in a series of setbacks for Huawei, which, along with various Asian tech firms, has found itself up against a wall of suspicion, with the US, Australia and New Zealand blocking the use of Huawei’s 5G equipment on security grounds.

Yesterday (5 December), we reported how UK telecoms giant BT is to strip Huawei equipment from its core 4G networks within the next two years. During the summer, a UK government panel issued a report into the security status of Huawei products – with inconclusive results – and, in recent weeks, the UK government wrote to several telecoms companies warning them that their 5G supply chain may be affected by a review of the UK’s telecoms infrastructure that was launched in July.

Earlier this year, the US government moved to block the acquisition of Qualcomm by Singapore-based Broadcom. How much of the US government’s censure against Asian tech firms is based on genuine security concerns or is more about protectionism is anybody’s guess.

Huawei is leading the charge by Chinese telecoms equipment and smartphone makers at such a velocity that it is outpacing traditional European equipment makers such as Nokia or Ericsson and US equipment makers such as Cisco.

In August, Huawei became the world’s number two smartphone vendor after shipping 54m handsets in the second quarter, overtaking Apple’s 41m units. Not only that, but another Chinese phone maker, Xiaomi, has bounded into fourth place. If the present momentum continues, Huawei could be in reach of becoming the world’s number one smartphone vendor in terms of shipments in a matter of weeks.

Huawei is a significant employer in Ireland, with close to 200 people engaged in a range of business and R&D activities in Dublin, Athlone and Cork.

Huawei logo above a stage. Image: Dserg/Depositphotos

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years