Published: Fri, December 07, 2018
Finance | By Jaime Brady

Huawei finance chief Meng Wanzhou arrested in Canada

Huawei finance chief Meng Wanzhou arrested in Canada

A bail hearing has been set for Friday. For Canada, the arrest could sour the chances of improving trade ties with Beijing as Ottawa looks to strike more global economic allies in the wake of the NAFTA 2.0 skirmish with the U.S.

Huawei said in a statement that it had been given little information "about the charges" against Meng.

Jasper Lawler, head of research at London Capital Group, responded: "Traders have quickly moved out of riskier assets reflecting nerves that the arrest is likely to escalate tensions between the USA and China once again".

There were also losses for other tech firms in the region, with Sony down three percent in Tokyo and Samsung nearly two percent lower.

The arrest came the same day as Trump's self-described "extraordinary" meeting with Chinese President Xi Jinping in Argentina, on the sidelines of the Group of 20 summit. She is facing extradition to the United States on US suspicions that Huawei violated sanctions against Iran by providing that country with telecommunications equipment.

Canadian Justice Department spokesman Ian McLeod said the U.S.is seeking Meng's extradition, but couldn't provide further details about the case because a publication ban is in effect at Meng's request.

The US and Canadian governments haven't specified what charges Meng faces.

What could be behind it?

There had already been concerns in the U.S. over the security of Huawei's technology amid worries that the Chinese government could use the tech company's products to spy on Americans, an allegation the company has long denied.

It is believed her arrest is part of a U.S. Justice Department probe into possible violation of sanctions against Iran.

"We know from the Chinese government that they want Chinese companies to share intelligence with the government, and therefore that's a real problem for other countries around the world who do not necessarily want their telecommunications systems piped straight into Beijing", said Stephanie Hare, an independent technology analyst.

USA lawmakers have urged Prime Minister Justin Trudeau to block Huawei from 5G in Canada.

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According to Huawei's website, Meng joined the company in 1993, obtained a master's degree from Huazhong University of Science and Technology in 1998, and rose up the ranks over the years, mostly holding financial roles.

How have China and Huawei responded?

"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 European Union", the firm said in a statement.

"The company believes the Canadian and USA legal systems will ultimately reach a just conclusion".

The Chinese consulate in Vancouver has been providing her assistance, he added, declining further comment. But Canada's Globe and Mail newspaper says she is suspected of trying to evade US sanctions against Iran - something USA officials have been suspecting about her company, Huawei, for the last two years.

The Chinese embassy in the Canadian capital Ottawa had also taken the floor and appealed to the United States of America "to correct the misstep and restore Mrs. Meng Wanzhou's personal freedom".

But suspicions persist. Concern now centres on the deployment of fifth-generation (5G) mobile networks, where Huawei is at the cutting edge.

Huawei is one of the world's largest telecommunications equipment and services providers.

But Australia and New Zealand recently banned Huawei from building 5G networks, and there are indications that other countries including Germany are revisiting the issue.

Meng, 46, is deputy chairwoman of Huawei Technologies, one of China's telecom giants and a family business founded in 1987 by her former military-engineer father Ren Zhengfei.

New Zealand's worldwide spy agency also followed Australia's lead, banning the use of Huawei equipment in its planned 5G upgrade, saying it posed a "significant network security risk".

He says he's had no direct or indirect conversations with the Chinese about the case. But ZTE (ZTCOF), a Chinese tech firm that was temporarily crippled by a U.S. export ban earlier this year, slumped almost 9%.

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