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Huawei CFO Faces Fraud Allegations Related To Iran Sanctions Violations

At her bail hearing on Friday in Canada, Huawei CFO Meng Wanzhou was accused of covering up Huawei's relationship with Skycom, a company that was doing business in Iran despite trade sanctions. The Canadian government said that Huawei and Skycom are the same company.

Huawei Technologies Co. CFO Meng Wanzhou was accused on Friday of misleading financial institutions about the connection between Huawei and an unofficial subsidiary that allegedly did business in Iran as recently as four years ago, despite U.S. trade sanctions in place against the Middle Eastern country.

The Canadian government said during a bail hearing on Friday that Meng fraudulently covered up Huawei’s control of Skycom, a Hong Kong company that was doing business in Iran from 2009 to 2014, when she said there was no relationship between the two companies. Canadian prosecutor John Gibb-Carsley said that in fact, Huawei and Skycom were the same company, according to a report in the Wall Street Journal.

“This is the crux, I say, of the alleged fraud,” Gibb-Carsley reportedly said during the hearing. The court is deciding whether or not to allow bail.

[Related: Huawei Loses U.S. Carrier Support, But Partners Can Still Resell The Latest Huawei Smartphone]

Meng requested a publication ban after her arrest so that the Canadian government could not release any details of her imprisonment, but the ban was lifted on Friday.

A spokesperson for Huawei told CRN that the company is "still in the information gathering stage right now and don’t have any further comments" beyond what Huawei said two days ago: "Recently, our corporate CFO, Ms. Meng Wanzhou, was provisionally detained by the Canadian Authorities on behalf of the United States of America, which seeks the extradition of Ms. Meng Wanzhou to face unspecified charges in the Eastern District of New York, when she was transferring flights in Canada. The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng. The company believes the Canadian and US legal systems will ultimately reach a just conclusion. Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU."

Huawei has faced scrutiny regarding potential ties it may have to the Chinese government and spying allegations. The Chinese carrier struggled to keep its strong footing in the U.S. in 2018 as political pressure may have ultimately caused the erosion of reported deals between Huawei, and U.S.-based carriers AT&T and Verizon.

The U.S. has been investigating the alleged shipment of U.S.-made products to Iran in violation of U.S. laws since 2016. Skycom Tech is a company which in late 2010 offered to sell HP equipment worth at least $1.3 million euros to Iran-based Mobile Telecommunication Co., according to Reuters.

Meng was arrested in Vancouver on her way to Mexico on Saturday at the request of U.S. law enforcement and is currently facing extradition to the U.S. The Chinese government, on the other hand, began demanding Meng’s release, calling the arrest a serious violation of human rights. Meng could face up to 30 years in prison in the U.S, if convicted.

Meng, who is also deputy chair of Huawei's board of directors and served on the board of Skycom, is also the daughter of Ren Zhengfei, Huawei's founder.

In related news, The Nikkei Asian Review reported on Friday that Cisco Systems is implementing a restriction of all nonessential travel by U.S.-based Cisco employees into China, according to a leaked internal memo that references the arrest of Meng in Canada. Cisco later told the media outlet that the memo "was sent in error to some employees" and "does not reflect Cisco policy."

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