Huawei CFO Meng Wanzhou’s arrest: why business executives the world over should be held to account
- Richard Harris says while it’s easy to jump to the conclusion that the Huawei CFO’s detention is a trade war escalation, businesspeople are arrested every week, with little public outcry, and those at the top must take responsibility for their actions
It’s amazing that the story that knocked Brexit off the international front pages wasn’t Donald Trump’s impeachment, or that Santa Claus is real, but the arrest of the unknown Sabrina Meng Wanzhou, the chief financial officer of Huawei.
After being been arrested on US fraud allegations in Canada, this rather private businesswoman has had her 15 minutes of fame. Her lifestyle, which looks like any rich Canadian with two homes in Vancouver, has been plastered across the globe.
China retaliated so aggressively that you couldn’t help thinking that, to paraphrase Hamlet, “they doth protest too much!” Various official voices called the arrest “unjust” and “vile”. Canada was accused of “hurting the feelings of the Chinese people” and acting “against human rights”. The tabloid Global Times was beside itself, frothing that the detention of the 46-year-old family woman was a “declaration of war”.
The context is, of course, fascinating. The Chinese side is convinced that it is a trade-war-induced conspiracy. It is much more likely to be an American cock-up where one side doesn’t know what the other is doing.
The fact that it began with a tip-off from an independent supervisor working through a bank’s historical records, who would have reported irregularities to bank regulators, who reported to the police, who would follow up the allegation, is tough to accept for the conspiratorial mindset. Yet it is believable because Trump is indicating that she might be released.
Individuals can only be extradited from Canada through the even-handed rule of Canadian law. The process meant that it took just US$7.5 million in bail for Meng to be free to prepare her defence in the comfort of one of her own Vancouver homes.
The most likely outcome is that the charges will be dropped. The Americans allowed JD.com founder Richard Liu Qiangdong to return to China, even though he was facing an accusation of rape, because of a lack of immediate evidence.
Trump quickly backtracked on his stern allegations that Chinese technology company ZTE had been selling to North Korea when it became clear that the embargoes were nearly destroying the company. That case is particularly interesting because this accusation about Huawei is not being made against the company but an individual director, Meng.
A quick check shows businesspeople being arrested in Russia, Britain, Germany and elsewhere every week. The most celebrated captive at present is one of the world’s top businessmen, Carlos Ghosn, the hero of the car industry, the man who saved Nissan and Renault.
He moved from hero to zero after his arrest in Japan following accusations of undeclared tax. He is currently languishing inside a Japanese detention centre without bail, facing prosecutors who reportedly have a conviction rate in the high 90s.
In the middle of last year, a number of chairmen of massive Chinese conglomerates – Angbang, Dalian Wanda and Fosun – had their collars felt. Some went missing, sometimes for weeks – later appearing contrite and confessional. No public protests against their treatment were recorded.
Sadly, Huawei has become a toxic name in the West despite its excellent product line, including the next generation 5G mobile network. Yet, the admitted theft of intellectual property from Cisco is bubbling in the press 15 years later.
Allegations persist that ex-military engineer and now chairman Ren Zhengfei is too close to his former colleagues. Accusations of covering up (apparently not very well) embargoed sales to Iran have only encouraged further bans from Western countries.
This column last week spoke of the law of unintended consequences regarding Trump’s trade tariff tantrums making China stronger. We are here seeing the reverse. China, which once shut out foreign companies, is finding Chinese companies shut out of Western markets. It’s a predicament.
Meng’s wealth and contacts will almost certainly ensure that she is released soon. We should reserve our thoughts for the ultimate pawn, former Canadian diplomat Michael Kovrig, who was detained in China in what appears to be a reprisal arrest. Taking someone’s freedom away like that is just childish and unnecessary.
Far from decrying Meng’s detention, we should applaud the fact that senior businesspeople are being brought to account. For too long, it has been the company’s innocent shareholders who have paid for the wrongdoings of management – usually in whopping fines. Few greedy bankers paid the price for losing the savings of ordinary people during the global financial crisis.
It is about time that those making the decisions at the top took the responsibility. That’s why they get paid the really big bucks.
Richard Harris is chief executive of Port Shelter Investment, a veteran investment manager, banker, writer and broadcaster, and financial expert witness