Reuters alleges additional links between Huawei, Middle East companies at heart of CFO allegations

Reuters reported today that it has uncovered additional links between Huawei and a pair of Middle Eastern countries at the heart of the case the U.S. is expected to pursue against Huawei CFO Meng Wanzhou. Canadian authorities arrested Meng last month at the request of the U.S. Meng is currently out on bail and awaiting a possible extradition hearing.

Reuters reported today that it has uncovered additional links between Huawei and a pair of Middle Eastern countries at the heart of the case the U.S. is expected to pursue against Huawei CFO Meng Wanzhou. Canadian authorities arrested Meng last month at the request of the U.S. Meng is currently out on bail and awaiting a possible extradition hearing.

U.S. authorities are said to allege that Huawei in 2010 attempted to sell U.S.-sourced equipment to Iran in defiance of a U.S. Commerce Department ban on such transactions. At issue is whether Huawei used an Iranian company called Skycom Tech Co. Ltd. and the holding company that controlled it, Canicula Holdings Ltd., as fronts to pursue such sales while avoiding U.S. detection. Meng is alleged to have misled banks in 2013 regarding the relationship between Huawei and the companies, with the U.S. said to believe that Huawei had more control over the activities of Skycom than Meng is alleged to have described (see "U.S. seeks to charge Huawei CFO with bank fraud").

Reuters reported the alleged sales effort in 2012 and 2013 and that Huawei had close financial and other links with Skycom. For example, Reuters reported that Meng served on the board of Skycom between February 2008 and April 2009 and in 2007 was the company secretary of a management firm controlled by Huawei’s parent company that held all of Skycom’s shares at the time. Meng’s lawyers assert that Huawei divested itself of its interest in that management firm in 2009, before the illegal sales effort was made.

Reuters now reports that it found documents that show that “a high-level Huawei executive appears to have been appointed Skycom’s Iran manager.” The documents also indicate three “Chinese-named individuals” had signing rights for Iranian bank accounts for both Huawei and Skycom. Finally, Reuters reports that an unidentified lawyer in the Middle East wrote in a letter to a newspaper that Huawei conducted business in Syria via Canicula.

Huawei says it is unaware that Meng has done anything to break U.S. law and asserts that the company and its partners strive to abide by the laws of all the countries in which they operate.

If proven, the allegations could have severe repercussions not only for Meng, but for Huawei. The U.S. Department of Commerce nearly shut down ZTE last year by temporarily denying the Chinese telecommunications technology firm access to U.S. technology in connection with a similar case (see “ZTE faces export sanctions from US Department of Commerce,”“U.S. Commerce Dept. finds ZTE violated export disciplinary agreement, bans U.S. component supply,” and “ZTE back in business as Commerce technology ban suspended”).

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