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Canada Arrests Huawei CFO. She Faces US Extradition For Allegedly Violating Iran Sanctions

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Note: We do not plan to cover this directly, as there is little we can add to this beyond what many mainstream publications have reported and the broader impact is yet unknown.

However, given Huawei's huge size, the fact that this is Huawei's CEO's daughter, and how angry this may make China, it could eventually have an impact on the industry.

For the China side of this, below are some social media posts from the Chinese government:

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Yes, there is little to add by any mainstream publisher

as Ms Meng had sought a ban on the publication of details and this had been ordered by the courts. [Emphasis added.]

BBC: Huawei CFO arrest 'violates human rights', China says

 

 

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As that BBC opines:

It is hard to overstate the symbolism and significance of this event. Huawei is the crown jewel of Chinese tech and Ms Meng is effectively its princess.

Even though it's still not clear what the charges against her are, this is not simply a case about the arrest of one woman, or just one company.

This arrest could materially damage the relationship between the US and China at possibly one of the most sensitive times between the two countries in their long and torrid history.

The gloves are off. Things have taken a dramatic turn for the worse.

That the PRC is now worried about human rights violation is, at best, ironic.

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A number of China watchers have speculated that China may or should retaliate by arresting a US executive of an arms manufacturer selling to Taiwan:

The justification would be that selling arms to Taiwan is just as illegal in China as selling to Iran is for the US.

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This 2013 Reuters article explains the original claims / link between Huawei, Huawei CEO and Iran:

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For decades China has laughed at our laws and done whatever they wanted. They steal technology and lie even when caught red handed.

Now they know the game has changed.

I give China the finger!

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I give China the finger!

Just make sure it’s the pinky...

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Reuters: Chinese state media distance Huawei arrest from U.S. trade talks

That's a positive sign for trade talks but an implicit admission how much China was a resolution, despite the US actions.

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Update: China Global Times editor continues to talk up the risks to executives of both countries traveling to the other:

One interesting industry aspect to this: Will this impact Dahua and Hikvision's CEOs willingness to travel to the US? In years past, they regularly did.

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China Global Times editor continues to talk up the risks to executives of both countries traveling to the other:

With good reason:

Canadian ex-diplomat detained in China

 

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China 'detains' foreigners regularly, e.g. last month: US calls for release of young Americans trapped in China ahead of G20. The younger of the two was born in America with his connection to the PRC only being his parents. 

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Two prominent Canadians in as many days, detained for “National Security”, though may be more than just chance.

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John, I hope you did not have any plans to visit China.

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Take my husband, please?

Lawyers for indicted Huawei CFO Meng Wanzhou put a new spin on an old Rodney Dangerfield joke on Tuesday when they offered to pledge both of Meng's multimillion dollar homes as well as her husband (and her children) as collateral should the executive be granted bail.

Yes, you read that right:

  • HUAWEI CFO'S LAWYER PLEDGES HUSBAND PLUS 4 OTHERS AS SURETIES

Meng's lawyer also agreed that their client would wear an ankle bracelet while free on bail.

https://www.zerohedge.com/news/2018-12-11/huawei-cfo-offers-husband-children-bail-collateral

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Meng sprung.

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Meng's lawyer also agreed that their client would wear an ankle bracelet...

Yeah, now if they can just stop ten thousand Huawei engineers from typing 

http://192.168.0.1/anklet/unlatch?auth=YWRtaW46MTEK

 

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Law professor with a detailed analysis of the situation: The Detention of Huawei’s CFO is Legally Justified. Why Doesn’t the U.S. Say So?, key quotes:

The Chinese government threatened both Canada and the U.S. with “grave consequences” if Meng was not immediately released from detention. Its threats have been supported and amplified by Chinese state-run media and on Chinese social media. Boycotts of Apple products and Canada Goose down coats are spreading in China. Most dramatically, a Canadian think-tank scholar and diplomat, Michael Kovrig appears to have been detained in Beijing on murky charges of endangering Chinese state security.

Meng is being charged with bank fraud, rather than violating U.S. sanctions on Iran. It is likely that Meng will be charged by the U.S. with violating the bank fraud statute, 18 U.S.C. § 1344, which criminalizes any attempt “to defraud a financial institution,” or obtain funds from a “financial institution, by means of false or fraudulent pretenses, representations, or promises.” According to reports describing the U.S. affidavit, Meng is alleged to have personally made a presentation to HSBC claiming that a company doing business with Iran was not controlled by Huawei in violation of U.S. sanctions. If Meng knowingly misled HSBC in order to get some financial benefit or support, this would likely violate the statute—a breach that carries a possible 30-year jail sentence or $1 million fine.

It is worth noting that bank fraud prosecutions are not rare in the U.S. The Justice Department’s web page is filled with press releases about numerous bank fraud convictions.

 
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Good article.

But does it even attempt to answer the question “...Why Doesn’t the U.S. Say So?”* Considering that this administration is not shy about forcefully pushing back in far less justifiable situations, it’s odd.

*Yes, I’m aware that editors write headlines, not authors, but still...

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Agreed, the title is misleading, the post is really about why it is legally justified, not why the US government is not 'saying' so.

My guess, and it's just a guess is that the US judicial system is disinterested in engaging in the political PR issues and is just focused on the case / their cases generally.

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Former Canadian ambassador article: We must finally see China for what it truly is - quote:

We need to understand that China behaves the way it does because it works. This is enabled by a chorus of advisers in the West who don’t seem particularly discomfited by how China treats people at home or abroad. The global consulting firm McKinsey, whose bullish line on China is avidly consumed by our own government, recently held a lavish retreat for its executives in Xinjiang, in China’s far west, ground zero for the country’s repression of its Muslim Uyghurs...

they all connect to a larger narrative that is finally taking hold, one that concedes that China is an increasingly irresponsible power and partner, one that feigns compliance with international norms only when it is convenient to do so.

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China's ambassador to Canada with a stern warning for Canadians, in a recent article:

I have recently heard a word repeatedly pronounced by some Canadians: bullying. They said that by arresting two Canadian citizens as retaliation for Canada’s detention of Meng, China was bullying Canada. To those people, China’s self-defence is an offence to Canada. If someone slaps you on your left cheek, give him your right cheek, they told us. But I have never seen them doing as they said.

That's a pretty blunt message. I am curious how Canadians will take such a move.

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Also, and evidently I missed this on my first scan, the same China Ambassador says 'white supremacy' is behind this:

The reason why some people are used to arrogantly adopting double standards is due to Western egotism and white supremacy.

That is quite a fascinating tactic to win over the Canadians.

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And Chinese government Global Times is doubling down on the 'white supremacy' comment:

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They said that by arresting two Canadian citizens as retaliation for Canada’s detention of Meng, China was bullying Canada. To those people, China’s self-defence is an offence to Canada. If someone slaps you on your left cheek, give him your right cheek, they told us. But I have never seen them doing as they said.

Isn’t that what just happened?

2 Canadians detained = 2 Cheeks with no retaliatory detentions by Canada

I have recently heard a word repeatedly pronounced by some Canadians: bullying

Although Jesus suggested turning the other cheek, he didn’t say you had to hold your tongue...

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How did both Jesus and Huff Post get involved here?

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I think the reporting here is solid; it looks like they have two different sources who are on-the-record to confirm the origin of the “cheek” statement.

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A Canadian has been sentenced to death for drug dealing inside of China, widely viewed, even on the Chinese side, as being in retaliation for Huawei's CFO's arrest. Comment from Sinocism:

there can be no doubt Beijing is using the threat of death to a Canadian citizen to interfere in Canada’s internal judicial affairs to try to get the Huawei CFO Meng released…this is so stupid on so many levels by Beijing, but this is how the Party rolls inside China and it sees no reason to act differently outside the PRC borders…

I am not sure these bully tactics are going to work in the West.

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And China criticizes Canada for this:

This is a bit surreal. Canada is one of, if not the most, polite, respectable countries in the world. If China is going to treat Canada like this, it shows their general approach...

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Canada and China - who know these two would become so heated.

Latest roundChina’s envoy to Canada on Thursday warned Ottawa there would be repercussions if it banned technology firm Huawei Technologies Co Ltd from supplying equipment to Canadian 5G networks, the latest blast in a deepening bilateral dispute...

“If the Canadian government does ban Huawei from participating in the 5G network, then as for what kind of repercussion there will be, I’m not sure, but I believe there will be repercussions,” Lu said through an interpreter, urging Ottawa to “make a wise decision on this issue”.

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China's Ambassador to Canada with more fuel to the fire, saying Canada's detaining of Huawei's CFO is a 'backstabbing':

“In China, we have a saying that a good friend would die for his friend, would shield the knife attack of a friend, but in this case, we feel it is completely the opposite," Mr. Lu said. “It is backstabbing.”

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There is another saying in China. Do as you are told or we will arrest you. This works quite well in China, not so much in the free world. I hope China keeps on talking so more people wake up to who they really are.

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China Foreign ministry contradicts China Ambassador to Canada:

The Chinese government appears to be distancing itself from remarks made by its ambassador to Canada, saying Beijing has no plans to retaliate against Ottawa if it blocks the installation of fifth-generation cellular technology made by Huawei.

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Update: US to formally seek extradition of Huawei executive Meng Wanzhou: Report

SCMP report follow-up says "China warned on Tuesday that it will take action against the United States and Canada if Washington goes ahead with a demand for the extradition of a senior Huawei executive."

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Canada’s ambassador to China John McCallum says Huawei’s Meng Wanzhou has ‘strong case’ against extradition:

One, political involvement by comments from [US President] Donald Trump in her case. Two, there’s an extraterritorial aspect to her case, and three, there’s the issue of Iran sanctions which are involved in her case, and Canada does not sign on to these Iran sanctions. So I think she has some strong arguments that she can make before a judge

This has caused political debate in Canada:

The opposition Tories accused McCallum of possible “political interference” in the case and of discrediting the extradition process.

It’s a setback and an unfortunate setback. It undermines that Canada is playing this by the book

Mulroney said giving advice to a judge is completely inappropriate when the government has been saying that Meng’s extradition is up to judicial authorities.

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Seems like the (some) Canadians sympathetic to Meng and her extradition, and are just following the rule of law.

If so, why isn’t China targeting Americans?

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why isn’t China targeting Americans?

China Communist Party uses bully tactics, safer to pick on weaker Canada than stronger America, even though the US is the country that 'started this' by requesting the extradition.

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China government's Global Times: Canada must not extradite Meng Wanzhou:

Canada, being a henchman for the US and abiding by the so-called extradition treaty between the US and Canada, persecutes senior executives of Chinese companies regardless of international law and friendly ties with China. How can Canada be detached from the case if Meng is extradited? 

It is expected that if Meng is extradited to the US, Canada will face a severe backlash from China that puts bilateral ties in jeopardy.

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US files criminal charges in two Huawei cases, seeks extradition of CFO Meng Wanzhou

https://www.cnbc.com/2019/01/28/us-files-extradition-request-for-huawei-cfo-meng-wanzhou.html

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An analysis of a commentator on reddit, but I'm supposing it's pretty accurate:

2 counts of Conspiracy to Commit Bank Fraud

1 count of Conspiracy to Commit Wire Fraud

2 counts of Bank Fraud

1 count of Wire Fraud

1 count of Conspiracy to Defraud the US

2 count of Conspiracy to Violate IEEPA

2 counts of Violation of IEEPA

1 count of Money Laundering Conspiracy

1 count of Conspiracy to Obstruct Justice

Signed by 13 courts, and an open investigation of IP theft again Huawei

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From the WSJ's report on indictments, the charges are quite serious:

In one of the newly unsealed indictments, the U.S. alleged Huawei, its finance chief and other employees worked over the years to deceive multiple global banks and the U.S. government about its business in Iran. The superseding indictment, returned last week, charged Huawei and two affiliates with bank fraud, violations of U.S. sanctions and conspiracy to obstruct justice related to the grand jury investigation....

Huawei offered bonuses to employees who were successful in stealing confidential information from other companies, U.S. prosecutors alleged, adding that the alleged conspiracy against T-Mobile wasn’t limited to rogue employees but a companywide endeavor.

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Excerpt from the indictment detailing the US claim:

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Wow, another amazing development in this case - Huawei CFO suing Canada, its border agency and police force:

A Huawei executive is suing the Canadian government, its border agency and the national police force, alleging that they detained, searched and interrogated her before informing her she was under arrest.

So inside China, the CPC can abduct anyone they want, torture them any way they desire, and tell every other country to mind their own business. But in Canada...

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Huawei's CFO uses and was carrying 3 Apple products, rival to Huawei, when arrested:

When Canadian police arrested Meng Wanzhou at the behest of the U.S. on a Dec. 1 stopover at Vancouver International Airport, they seized her iPhone 7 Plus, a MacBook Air and an iPad Pro, according to a court filing Friday.

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...they seized her iPhone 7 Plus, a MacBook Air and an iPad Pro...

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The two Michaels who were detained in China have also been released, and I believe are back in Canada now, after over 1000 days in Chinese prison. Supposedly unrelated and not a retaliatory arresting. One was recently sentenced to 11 years in prison (in China). But now that Meng is free, so are the Michaels.

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This PRC State media tweet has been making the rounds. It's quite funny juxtaposed to numerous and passionate declarations that Huawei is a private company:

IPVM Image

Could you imagine a US executive saying "She also affirmed to uphold the leadership of the [Republican|Democratic party] with [Trump|Biden] at the core, always be loyal to the country..."

Also, related Dahua CEO Is Communist Party Secretary, Declares "Always Follow The Party"

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