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Huawei implicated in vast financial conspiracy to contravene U.S. sanctions

The Reuters corporate review reveals a vast web of conspiracy that crossed several countries and several organizations in Huawei’s attempt to contravene U.S sanctions.

Roberto Wakerell-Cruz Montreal QC

Since the arrest of Meng Wanzhou in Canada, more details have been emerging about the nature of the U.S. extradition request on the Huawei CFO

Internal documents and reporting by Reuters tells the story of a vast financial conspiracy that places Huawei at the middle. The company used two proxy companies to conduct financial dealings and sell embargoed telecommunication equipment to Iran and Syria.  

According to U.S. prosecutors Huawei officials lied to international banks about their relationship with Skycom Tech Co. Ltd. and Canicula Holdings Ltd., the two companies operating in Iran and Syria.

Both Iran and Syria have embargoes and trade sanctions placed on them by the United States.

The arrest of Meng Wanzhou

Wanzhou was arrested at the Vancouver airport on December 1st, facing extradition to the U.S. for allegedly violating the sanctions in place for Iran.

The Chinese embassy in Canada stated that they absolutely oppose the arrest, calling for Meng’s immediate release.

Foreign Affairs Minister Chrystia Freeland has said that Canada was not doing America’s bidding when they arrested Meng, as they were already aware of the charges which had become public.

The Crown has alleged that Meng “poses a potential flight risk” and should be released, because she is a Chinese citizen. She has been out on bail after paying $10 million and has a constant security detail

Meng now faces legal limbo for years. She’s now the centerpiece of a complicated political triangle between the U.S., Canada, and China, as President Donald Trump has just called for the release of two Canadians who had been detained in China.

Canadian PM Justin Trudeau has thanked Trump for his government's statements of support, but  Freeland does not want the Canadian prisoners used as pawns in a game of political chess.

U.S Sanctions on Iran

The U.S. applies a variety of sanctions against Iran, including economic, trade, scientific, and military sanctions.

As of now, the sanctions include an embargo on dealings with the country (implemented by the U.S.,) and a ban on selling aircraft and repair parts to Iranian companies.

Recently, the U.S. has reintroduced a number of their sanctions on Iran that it had relaxed after the 2015 nuclear deal. These have lead to Iranian politicians to defy the U.S. sanctions, going as far as to call them “economic warfare.

Canada, on the other hand, has eased its sanctions on Iran. Sanctions that were enacted under the United Nations Act in response to Iran’s nuclear weapons of mass destruction programs have since gone to the wayside, as many of the regulations were amended in February of 2016.

Prohibitions are still in place with the export to Iran of any items, materials, equipment, goods or technology related to uranium enrichment, and large number of goods related to uranium.

Canada’s extradition agreement with the United States

There are a number of steps that American authorities typically follow in seeking an arrest and extradition of an individual to a foreign country.

Prosecutors cannot just request that their foreign counterparts arrest and turn over an individual. Those steps go through the U.S Department of Justice’s Office of International Affairs. (OIA)

The OIA’s lines of communications with authorities in other countries takes on the task of extradition from other countries in order to arrest those desired individuals.

It’s plausible, some say likely, that the decision to arrest Meng was made by Federal higher-ups, as Meng is the daughter of Ren Zhengfei, who has significant authority across China.

The United States has signed more than 100 extradition treaties, with Canada being one of them.

Skycom Tech’s dealings with Iran

Huawei claimed that the companies were independent from them but recent findings show inextricable ties between Huawei and the firms.

Skycomtech Co. Ltd. had a high-level Huawei executive working as their Iran manager.

“Documents and email records show that persons listed as ‘Managing Directors’ for Skycom were Huawei employees.” says a U.S summary of facts on the case.

Meng Wanzhou herself, then going by the name “Cathy Meng” served on the board of Hong Kong-based Skycom Tech Co. Ltd. for two years between 2008 and 2009.

These revelations seem to indicate a hole in Huawei’s claim that it was an entirely separate entity from the two companies operating in Iran.

For her involvement Meng Wanzhou is facing possible charges of conspiracy to defraud financial institutions. The exact charges have not been made public yet.

According to the Reuters report banks cleared hundreds of millions of dollars in transactions to Iran throughout the period of the deception.

Bidding documents reveal that Skycom offered to sell 1.3 million Euros in HP equipment to Iran’s largest telecommunication provider in direct opposition to the U.S. embargo on the country.

The revelations point towards the claim that since the sanctions went into effect, China became a virtual backdoor for telecommunication equipment for Iran.

Canicula Holdings Ltd. is the other company implicated in the fraud

When Huawei was pressed about their holdings of Skycom shares, officials claimed that they had sold their holdings.

In reality they simply changed hands from the parent company Huawei, to another of their proxies Canicula Holdings.

Only two years ago Canicula operated in and had an office in Syria.

Osama Karawani, an attorney who liquidated Canicula said that Huawei “has been and is still operating in Syria through several companies which are Huawei Technologies Ltd. and Canicula Holdings Ltd.

The Reuters corporate review reveals a vast web of conspiracy that crossed several countries and several organizations in Huawei’s attempt to contravene U.S sanctions.

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