Risk & Compliance

Arrest of Huawei CFO Fans US-China Tensions

Meng Wanzhou, who was arrested in Canada at the request of the United States, is "by birth and position a member of China’s corporate royalty.”
Matthew HellerDecember 6, 2018
Arrest of Huawei CFO Fans US-China Tensions

The CFO of Chinese telecom giant Huawei has been arrested in Canada at the request of the United States, fanning fears of a further escalation in tensions between the Trump administration and Beijing.

The arrest of Meng Wanzhou, the daughter of Huawei founder Ren Zhengfei, in Vancouver has drawn protests from China’s embassy in Canada, which said she should be released immediately. It came at a particularly sensitive time as China and the United States are about to begin talks to resolve their bitter trade dispute.

Meng “is sought for extradition by the United States, and a bail hearing has been set for Friday,” a Justice Department spokesman told The Globe and Mail on Wednesday.

U.S. authorities have not released details of the arrest but The Globe and Mail, citing a Canadian law-enforcement source, said the United States is alleging Meng tried to evade American sanctions aimed at crippling Iran’s economy.

“The arrest of a family member linked to Huawei’s founder indicates how the tension between [the United States and China] is rapidly escalating,” T.J. Pempel, a professor of political science at the University of California, Berkeley, told The New York Times.

Meng Wanzhou

Meng’s father built Huawei into a powerhouse that generated more than $90 billion in revenue in 2017. But as The Wall Street Journal reports, “Washington has lately been stepping up efforts to curb Huawei’s global dominance in telecom-networking due to concerns that its systems could be used for spying by Beijing.”

Since at least 2016, moreover, U.S. authorities have been reviewing Huawei’s alleged shipping of U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws.

Meng has worked across various Huawei divisions over the past 25 years and recently emerged as her father’s potential successor. “This [arrest] is a really big deal,” David Mulroney, a former Canadian ambassador to China. “Ms. Meng is by birth and position a member of China’s corporate royalty.”

Huawei said in a statement it “had complied with “all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, U.S., and EU.”

Image: Huawei Technologies Co.