February 16, 2019

Huawei's global chief financial officer arrested in Vancouver

06 December 2018, 10:50 | Joann Bryant

The Chinese Embassy in Canada has issued a statement over the arrest of Meng Wanzhou

The Chinese Embassy in Canada has issued a statement over the arrest of Meng Wanzhou

BT, Britain's largest mobile provider, said this week it was removing the equipment of Huawei from its 4G cellular network.

Meng, one of the vice chairs on the company's board and the daughter of company founder Ren Zhengfei, was arrested on December 1 at the request of USA authorities and a court hearing has been set for Friday, a Canadian Justice Department spokesman said.

That was until her shock arrest in Canada at the request of US authorities on Wednesday, a move that has entangled her in the protracted diplomatic tensions between Washington and Beijing.

Huawei, the biggest global supplier of network gear used by phone and internet companies, has been the target of deepening United States security concerns.

The 46-year-old executive is the daughter of Ren Zhengfei, the former army engineer who founded Huawei and led its vast growth.

But as the group expanded worldwide into the industrial side of the telecoms sector, cracks started to appear. It has become China's premier global brand and it central to its "Made in China 2025" plan to dominate high-tech manufacturing. Investors stampeded for the safety of government debt, pushing the yield on the USA 10-year Treasury note back below 2.9 percent to its lowest level in three months.

Under former President Barack Obama, the USA government pressured allies to limit their use of Huawei technology due to security concerns. Facebook shares fell 2.5% in value, decreasing the company's value by $9.5 billion.

"That provides the capacity to exert pressure or control over our telecommunications infrastructure", he added.

New Zealand turned down Huawei equipment from being used in its rollout of 5G network over national security concerns, after Australia imposed a similar ban on both Huawei and fellow communications firm ZTE. Early in April, Reuters had reported that since at least 2016, the us attorney's office in Brooklyn has been probing Huawei's alleged shipping of USA -origin products to Iran and other countries in violation of us export and sanctions laws.

China's President Xi Jinping was forced to intervene to save ZTE from bankruptcy. The US later replaced the ban with a fine and governance changes.

Worse still, the continuing negotiations in the US-China trade war have only been set aside in recent days on a temporary basis and this move is likely to be seen by China as extremely inflammatory to the talks.

"The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms Meng", the company said.

The dispute over Meng's arrest comes just days after the USA and China agreed to a temporary truce on their escalating trade conflict.

Huawei has said it complies with all applicable export control and sanctions laws and United States and other regulations.

She is married with a son and daughter and has a brother who works in a services company affiliated to Huawei.

But it is unlikely they will end up running the company when their father steps down.

An executive with a US-based multinational company, meanwhile, said the incident may not be part of Trump's tactics.

"The other family members are in back office, Sabrina is CFO and sits on the board", a Huawei source said. "Thus, we will never be in the running of the successor race". Markets are already incredibly nervous over slowing economic growth thanks to the inverted USA yield curve.

Shares of Huawei suppliers slumped on Thursday as investors fretted over the arrest.

Confirming that China has lodged stern representations the United States and Canada, Geng demanded that Canada "immediately clarify the reasons for this detention, immediately release the detainee, and effectively protect the legitimate rights of the detainee".

The news also resulted in another down day for markets in Asia.

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