US ‘was probing Huawei for an alleged global banking scheme to evade US sanctions on Iran before it arrested Sabrina Meng Wanzhou’

  • The Chinese telecoms giant has been under investigation since at least 2016, according to sources familiar with the investigation
PUBLISHED : Friday, 07 December, 2018, 3:43am
UPDATED : Friday, 07 December, 2018, 7:23pm

Chinese telecommunications giant Huawei Technologies' chief financial officer, Sabrina Meng Wanzhou, was arrested as part of a US investigation into an alleged scheme to use the global banking system to evade US sanctions against Iran, according to sources familiar with the probe.

The United States has been looking into whether Huawei violated US sanctions against Iran since at least 2016. More recently, the investigation has included the Shenzhen-based company’s alleged use of HSBC Holdings to make illegal transactions involving Iran.

Meng, the daughter of Huawei founder Ren Zhengfei, was arrested in Canada and faces extradition to the United States, sparking fears it could reignite a the China-US trade dispute and roiling global stock markets.

In 2012, HSBC paid US$1.92 billion and entered into a deferred prosecution agreement with the US Attorney’s office in Brooklyn for violating US sanctions and money-laundering laws.

China wants clarity over arrest of Huawei CFO at US’ request

An HSBC spokesman declined to comment. HSBC is not under investigation, according to a person familiar with the matter.

Huawei also declined to comment. After news of the arrest, Huawei said it has been provided little information of the charges against Meng, adding that it was “not aware of any wrongdoing by Ms Meng”.

A spokesman for the US Attorney’s office in Brooklyn, which is investigating Huawei, declined to comment.

US and Asian shares tumbled as news of the arrest heightened anxiety over prospects of a collision between the world’s two largest economic powers, not just over tariffs but also over technological hegemony.

HSBC’s US-listed shares initially fell as trading volume rose, dropping as much as 6 per cent after Reuters reported the bank’s link to the case, and were subsequently down 4.7 per cent.

US stocks extend slide after Huawei arrest casts more doubt on trade deal

Huawei is already under intense scrutiny from Washington and other Western governments over its ties to the Chinese government, driven by concerns that the company's equipment could be used by Beijing for spying.

The firm has been locked out of US and some other markets for telecoms gear, but has repeatedly insisted Beijing has no influence over it.