Posts Tagged ‘Meng Wanzhou’

Huawei Freezes Orders From Japan Supplier — “Huawei is turned upside down internally”

December 13, 2018

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Yaskawa Electric Corp., which supplies industrial robots for Huawei’s smartphone and telecom gear factories, saw all orders for its machines put on hold after the arrest, President Hiroshi Ogasawara said in an interview on Wednesday. Of Yaskawa’s 448.5 billion yen ($4 billion) in revenue for the fiscal year that ended in February, 23 percent came from China.

“My people on the ground in China say that Huawei is turned upside down internally,” Ogasawara said. “All kinds of capex deals are temporarily on hold as they figure things out.”

Hiroshi Ogasawara Photographer: Akio Kon/Bloomberg

Huawei declined to comment. Yaskawa’s stock erased earlier gains in Tokyo trading, falling as much as 4 percent. Shares of other factory automation companies Fanuc Corp., SMC Corp. and Nabtesco Corp. have also paired gains.

Meng Wanzhou was arrested in Vancouver at the request of U.S. authorities for allegedly violating sanctions related to selling technology to Iran. While her detention has become an international incident, this is the first indication that it is beginning to affect Huawei’s operations. The arrest has further undermined the international standing of the company, which was already under suspicion in the West because of its ties to the Chinese government.

Separately, the Japanese media reported earlier this week that the country’s top three carriers — NTT Docomo Inc., SoftBank Group Corp. and KDDI Corp. — will ban telecommunications equipment by Huawei and ZTE Corp. France’s Orange SA said it does not plan to work with Huawei to build its fifth-generation mobile network.

Meng Wanzhou leaves her home under the supervision of security on Dec. 12.

Photographer: Ben Nelms/Bloomberg

The order freeze is making Yaskawa reconsider its outlook on the timing of demand for 5G phones and communications equipment, because Huawei was at the forefront of the technology’s rollout, Ogasawara said.

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Key Insights

  • Yaskawa said in October it expects memory chip manufacturers to start making capital investments related to 5G in the spring and see a boost in its own machinery orders by early next year. That outlook is now uncertain because of the events at Huawei, Ogasawara said.
  • The Huawei incident and trade tensions with U.S. are not likely to derail 5G’s rollout in China, he said. The deployment is driven by China’s national policy and orders for internal demand will make up for any losses due to trade barriers, he said.
  • Yaskawa has three factories in China, all of which make machines for domestic customers.
  • Global smartphone output is not likely to decline, but capital investment is likely to remain flat until 5G demand kicks in second half of 2019, Ogasawara said.

— With assistance by Yuan Gao


Trump sets ‘terrible precedent’ by crossing red line on Huawei case

December 13, 2018

The President’s remark is “extremely disturbing” — Crossing the red line of the rule of law.

China will see the arrest as “a plot to gain leverage in the [trade] negotiations, a plot to embarrass China, a plot to go after Huawei — any number of plots, pick your plot.”


President Donald Trump’s suggestion that he might use an arrested Chinese tech executive as a bargaining chip in trade talks with Beijing drew rebukes for setting a “terrible precedent” crossing the red line that separates American politics from the rule of law.


The remark triggered pushback from law enforcement officials, criticism from lawmakers and concern from legal and business analysts who said it’s not only a weak bargaining move that might create more friction with allies, but it represents a “poisonous” precedent that could eventually undermine the safety of Americans overseas.

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“The US, like Canada, we’re both rule of law countries based on a constitution, legal principles, rule of law,” said William Reinsch, the Scholl chair for international business at the Center for Strategic and International Studies. “Our history is that things like this proceed through the criminal justice system and justice is blind. Trump is basically saying he might interfere with this process, which is a terrible precedent.”


In an interview with Reuters Tuesday, Trump said he would intervene in the case against Meng Wanzhou if it proved beneficial in securing a trade deal that has splintered relations between the two countries in recent months.
The CFO of Chinese tech giant Huawei was arrested December 1 in Vancouver for violating US sanctions on Iran — the same night Trump was dining with Chinese President Xi Jinping during the G20 summit in Argentina.

‘I would certainly intervene’


“Whatever’s good for this country, I would do,” Trump told Reuters. “If I think it’s good for what will be certainly the largest trade deal ever made — which is a very important thing — what’s good for national security, I would certainly intervene if I thought it was necessary.”

The Huawei Case Just Got (More) Political

Huawei’s Meng Wanzhou on her way home after bail hearing (Screenshot)
While Trump’s assertion to Reuters violates a basic American tenet, Reinsch notes that, “on the other hand, this is exactly the kind of thing China understands … because China isn’t a rule of law country and that’s what they would do.”
There are also the unintended consequences to worry about, said Michael Zeldin, a CNN legal analyst and former global leader of the anti-money laundering/terrorist financing and economic and trade sanctions practice at Deloitte Touche Tohmatsu in Washington.
“The danger is the unintended consequence of an American citizen abroad being arrested and held hostage to the arresting state’s economic, trade desires,” Zeldin told CNN. “But now we’ve set the appropriateness of Americans abroad being held hostage to trade deals. There’s too much danger in that,” Zeldin added. “If I was counseling the President I would say those two things should not be coupled.”
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Michael Zeldin
If Trump were able to follow through on his impulse, it could also create more friction with Canada, Reinsch said. “It seems to me to be an odd thing to say at this point in the process,” he said. “She’s not in US jurisdiction. She’s in Canadian jurisdiction. Intervening in the process means he would talk to [Canadian Prime Minister Justin] Trudeau, who has said more than once the normal judicial process will go ahead. It just creates another point of friction with Canada.”
Canada’s Foreign Affairs Minister Chrystia Freeland told reporters Wednesday that she has spoken with Secretary of State Mike Pompeo about Meng’s case. When asked about Trump’s comments, Freeland said Canada is not responsible for the behavior of other countries. “Canada will very faithfully follow the rule of law,” she said.

‘Let them grovel’


While Reinsch is adamant that Trump’s suggestion is not “the way we should be behaving,” he said that if Trump went ahead, it would be “a tactical mistake.”
“If you’re going to do it, the way to do it is make the Chinese come to us,” Reinsch said. “Let them grovel for a bit and then respond. You don’t give them what they want up front. What do we get if he does that? Nothing.”
At a Senate Judiciary Committee hearing Wednesday, top national security, counterintelligence and cybersecurity officials testifying on Chinese espionage threats also pushed back on Trump’s comments.
“What I do, what we do at the Justice Department, is law enforcement. We don’t do trade,” Assistant Attorney General John Demers, the department’s top national security official, said at when asked about the remarks.
“We follow the facts and we vindicate violations of US law. That’s what we’re doing when we bring those cases, and I think it’s very important for other countries to understand that we are not a tool of trade when we bring the cases,” he added.
Sen. Richard Blumenthal, the Connecticut Democrat who had asked the officials for their take on the President’s comments, said he felt “the danger of the President’s statement is that it makes it look like law enforcement is a tool of either trade or political or diplomatic ends of this country.”

‘Not in this one’


“That may be true in other countries,” Blumenthal said, “but not in this one.” The President’s remark was “extremely disturbing to me,” he said.
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Richard Blumenthal
“It seems to me,” the senator added, “that the President does a disservice to the work as well as the image of our nation in terms of law enforcement.”
Demers told the committee that if Meng is extradited from Canada, as the US has requested, “our criminal case will continue,” he said. He declined to comment further on the case.
Bill Priestap, the FBI assistant director in charge of the counterintelligence division, simply said the FBI would simply follow the motto “do your job.”
“From the FBI’s end, we’re going to continue to do our job,” he said.
Meng was arrested earlier this month at an airport in Vancouver, Canada, at the request of the US government, authorities have said.
The Chinese executive is accused of helping Huawei get around US sanctions on Iran by telling financial institutions such as HSBC that a Huawei subsidiary, Skycom, was a separate and unaffiliated company.
On Tuesday, Meng stepped out of detention after 10 days behind bars when a judge in Canada approved her release on $10 million Canadian bail ($7.5 million US).
Officials in China, where the judicial system is subordinate to the Communist Party, will have a hard time believing Meng’s arrest was due to the wheels of justice turning at their own pace, Reinsch said.
“They’ll believe it has nothing do with a judge in” New York who issued the warrant for her arrest in August, he said.
Instead, said Reinsch, a former president of the National Foreign Trade Council with long experience on US-China ties, the Chinese will see the arrest as “a plot to gain leverage in the [trade] negotiations, a plot to embarrass China, a plot to go after Huawei — any number of plots, pick your plot.”
That highlights another problem with Trump’s remarks, Reinsch said. “It will be seen as validation of what they already think, that we’re not a rule of law country,” he said. “That’s what makes it so poisonous, that they’ll think we’re just like them and we’re not.”
CORRECTION: The spelling of Meng Wanzhou’s name has been corrected.



Huawei arrest perceived as a “political kidnapping” in China

December 13, 2018


South China Morning Post

  • Foreign business executives face greater risks as US decides to target individuals in corporate misconduct cases
  • Donald Trump says he may intervene in the case, feeding into a popular belief in China that Meng’s arrest was a ‘political kidnapping’ for trade war leverage
  • US Deputy Attorney General Rod Rosenstein said in a speech on November 29 that under the revised Foreign Corrupt Practices Act, “pursuing individuals responsible for wrongdoing will be a top priority in every corporate investigation”
Image result for Huawei, logo, pictures
PUBLISHED : Thursday, 13 December, 2018, 5:01am
UPDATED : Thursday, 13 December, 2018, 1:15pm

The Huawei Case Just Got (More) Political

The Huawei Case Just Got (More) Political
The arrest of a former Canadian diplomat in China and unexpected comments from President Trump raise a fresh question about the case of Huawei’s Meng Wanzhou, who has now been released on bail: How political is it? Photo: Associated Press

The arrest of Huawei Chief Financial Officer Sabrina Meng Wanzhou is an early indication of the risks now facing foreign business executives, as American law enforcers start targeting individuals at companies that breach sanctions.

The controversy is increasingly being perceived as a “political kidnapping” in China, after US President Donald Trump suggested that he would intervene in the case as a means of gaining leverage in the trade war. For foreign corporate executives that facilitate trade with blacklisted countries, it may be a sign of things to come.

Against a backdrop of growing rivalry between Beijing and Washington, the case has infuriated the Chinese government and frayed China’s ties with Canada. It came as a result of a shift in focus by the US Department of Justice, which is centring corporate investigations on individual executives working at companies that break US laws.

Meng was arrested on fraud charges in Canada on December 1 upon the request of a district New York court, in relation to Huawei’s alleged violation of US sanctions on Iran. She has been granted US$7.5 million bail.

US Deputy Attorney General Rod Rosenstein said in a speech on November 29 that under the revised Foreign Corrupt Practices Act, “pursuing individuals responsible for wrongdoing will be a top priority in every corporate investigation”.

“The most effective deterrent to corporate criminal misconduct is identifying and punishing the people who committed the crimes. So we revised our policy to make clear that … a corporate resolution should not protect individuals from criminal liability,” read the transcript of Rosenstein’s speech.

Rosenstein said that the US Department of Justice has charged more than 30 individuals and convicted 19 in the past year, after a review of policy concerning individual accountability in corporate cases.

Previously, the US targeted the companies that breached sanctions, doling out mammoth fines to a series of international banks. However, the US targeting foreign nationals in its “long arm” law enforcement could bring fresh risks, analysts said.

Jeffrey Sachs, a professor at Columbia University and the author of A New Foreign Policy: Beyond American Exceptionalism, wrote in an opinion piece for Project Syndicate on Tuesday that, while executives should be held accountable for corporate misconduct, “to start this practice with a leading Chinese business-person, rather than the dozens of culpable US CEOs and CFOs, is a stunning provocation to the Chinese government, business community, and public”.

Sachs wrote that many banks, including US banks such as JP Morgan Chase, have violated US sanctions on Iran, but none of the CEOs or CFOs were put behind bars.

“One can say, without exaggeration, that this [arrest of Meng] is part of an economic war on China, and a reckless one at that”, he wrote.

Trump said in an exclusive interview with Reuters on Tuesday that he is open to using the case to help close a trade deal with Beijing, or for leverage in other American national security interests.

“If I think it’s good for the country, if I think it’s good for what will be certainly the largest trade deal ever made – which is a very important thing – what’s good for national security – I would certainly intervene if I thought it was necessary,” Trump told Reuters in the Oval Office.

Trump added that Chinese President Xi Jinping had not called him about the case, but said the White House had been in touch with both the Justice Department and Chinese officials over the arrest of Meng, a daughter of Huawei founder Ren Zhengfei.

This courtroom sketch shows Meng (right) in court in Vancouver. Image: Jane Wolsak via AFP

Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation, a state-owned think tank affiliated with the Ministry of Commerce, said that Trump’s comments could be read as an “indirect confession” of kidnapping Meng.

“Isn’t this a self confession that he [Trump] had directed the kidnapping and now is blackmailing a ransom [from China]?” Mei wrote in a brief note.

Meng’s arrest in Canada has infuriated Beijing. She was apprehended while changing planes en route to Mexico from Hong Kong, after an arrest warrant was issued by the US for the alleged sanctions violations.

The Chinese foreign ministry has summoned the Canadian and US ambassadors to lodge a “strong protest” against the arrest and has demanded that Canada release Meng or face “grave consequences”.

China’s state media and researchers have widely depicted the case as a conspiracy by Washington to undermine the development of Huawei’s 5G technology, and to broadly thwart China’s rise.

“Washington should not attempt to use its domestic laws as strategic support for its commercial and diplomatic competition around the world. There is no doubt that the US actions are political, as the thin veneer of justice cannot conceal the political motives,” Chinese state-backed tabloid Global Times argued in an editorial on Tuesday.

US Attorney for the Eastern District of New York Richard P. Donoghue (centre) is trying to get Meng extradited from Canada to America. Photo: Getty Images via AFP

When Meng was released on bail on Tuesday, she was ordered to wear a GPS ankle bracelet, submit to the 24-hour supervision of a private security firm, and surrender her Hong Kong and Chinese passports.

She will live in a Vancouver home she owns with her husband. Meng has been told to return to court on February 6 to set a date for her extradition hearing.

The US is seeking her extradition on fraud charges related to alleged breaches of US and EU sanctions on Iran. Huawei has denied the charges.

“Huawei complies with all applicable laws and regulations in the countries and regions where we operate, including export control and sanction laws of the UN, US, and EU,” the company said in a statement after Meng was released.

See also:

Canadian Michael Spavor Questioned in China Following Detention of Ex-Diplomat

Michael Spavor: Second Canadian ‘missing’ in China — China now confirms he is being questioned

December 13, 2018

Canada’s foreign ministry says it is trying to make contact with a second Canadian who is believed to have been detained in China.

Michael Spavor, a businessman based in Dandong near the North Korean border, had contacted Canadian officials this week to say he was being questioned.

Foreign ministry spokesman Guillaume Bérubé said Canada was working hard to determine Mr Spavor’s whereabouts.

It comes after former diplomat Michael Kovrig was arrested in China this week.

Michael Spavor (L) in North Korea with former NBA star Dennis Rodman (right) (3 Sept 2013)
Michael Spavor (left) helped arrange ex-NBA star Dennis Rodman’s trip to North Korea in 2013. AFP photo


Canadian officials say the reason for Mr Kovrig’s detention remains unclear

But Chinese state media have reported that Mr Kovrig is being held “on suspicion of engaging in activities that harm China’s state security”.

Mr Kovrig currently works for a think thank, the International Crisis Group (ICG), which has said it is concerned for his health and safety.

At a news conference in Ottawa on Wednesday, Foreign Minister Chrystia Freeland said Mr Kovrig’s case had been raised directly with Chinese officials.

Michael Kovrig
Michael Kovrig was working for a think tank that focuses on conflict reduction research. AFP photo

She also said a second Canadian had contacted them earlier in the week because “he was being asked questions by Chinese authorities”.

She did not name the individual, saying it was “delicate situation” and she wanted to respect his privacy.

But Mr Bérubé later named the man in a statement as Mr Spavor and said he was “presently missing in China”.

China state media confirmed on Thursday that, as with the previous arrest, Mr Spavor was under investigation on suspicion of “engaging in activities that endanger China’s national security”.

Mr Spavor runs an organisation called Paektu Cultural Exchange, which organises business, culture and tourism trips to North Korea.

Michael Spavor with North Korean leader Kim Jong-un (2013)
Mr Spavor met North Korea’s Kim Jong-un during his 2013 visit to Pyongyang. AFP

He is a regular visitor to North Korea and regularly comments in the media on Korean issues. He is particularly well known for helping to arrange the visit by former NBA star Dennis Rodman to North Korea in 2013.

Rodman is a personal friend of North Korean leader Kim Jong-un.

His last tweet, on Sunday, said he was about to travel to Seoul in South Korea, but he did not arrive on Monday as planned.

The detentions have come after Canada arrested Chinese telecoms executive Meng Wanzhou last week.

Ms Meng is the chief financial officer of Huawei, one of China’s biggest telecoms companies, and the daughter of its founder.

She was arrested at the request of the US and is accused of violating sanctions on Iran. She was granted bail on Tuesday for C$10m (£6m; $7.4m) bail but could be extradited to the US.

China has demanded that Canada release Ms Meng, and has threatened unspecific consequences.

Canada has said there is currently no “explicit indication” of any link between her arrest and Mr Kovrig’s detention.

See also:

Canadian Michael Spavor Questioned in China Following Detention of Ex-Diplomat


China confirms second Canadian Michael Spavor under investigation for allegedly endangering national security

Huawei: Why the Chinese telecoms giant is in the cross hairs

December 12, 2018

Sabrina Meng Wanzhou, the 46-year old CFO of Chinese telecoms giant Huawei and daughter of its founder Ren Zhengfei, has been granted bail by a Canadian court, setting up a protracted legal fight over extradition to the United States.

Logo von Huawei (Reuters/H. Hanschke)

Meng was arrested in Vancouver earlier this month at the request of US authorities, who have accused her of fraudulently representing Huawei to get around US sanctions on Iran.

Her case has now become embroiled in the wider trade war between China and the US after US President Donald Trump suggested he may intervene if it would help secure a broad deal with Beijing. The arrest came the same day Trump and Chinese President Xi Jinping declared a 90-day truce in their trade war during summit talks in Buenos Aires.

By Meng Jing
South China Morning Post

Although Meng’s arrest prompted outrage in China, Beijing is walking a fine line between defending one of the crown jewels of the country’s tech industry and preventing a nationalist backlash that could derail a potential trade deal with Washington.

But what is Huawei and why is it so important to the future of relations between China and the US? Here is what you need to know.

 What is Huawei?

Established in 1987, Huawei is a Chinese tech champion that sells smartphones and telecoms equipment across the world. Headquartered in China’s southern coastal city of Shenzhen, Huawei is China’s top smartphone maker, and overtook Apple as the second-largest smartphone vendor globally in the second quarter this year – a feat it also maintained in the third quarter, according to IDC data.

Perhaps more importantly, Huawei is now the world’s largest telecom equipment supplier and has a key role to play in China’s ambition to lead the way in next-generation mobile telecoms infrastructure – known as 5G. Competing with the likes of Ericsson and Nokia Oyi, Huawei was the only major equipment-maker to achieve an increase in market share in 2017.

Who created Huawei?

Huawei’s founder Ren Zhengfei is a noted figure in China’s business world and moves in the highest government circles. The 74-year-old self-made billionaire is the son of schoolteachers and grew up in a mountainous town in China’s poorest province, Guizhou. A survivor of China’s great famine between 1958 and 1961, Ren graduated from the Chongqing Institute of Civil Engineering and Architecture.

He worked in the civil engineering industry until 1974 when he joined the People’s Liberation Army as an engineer – a connection that still provokes questions in the West about Huawei’s ties to the Chinese army and government. Ren was an elected member of the 12th National Congress of the Communist Party of China.

Today Huawei does business in more than 170 countries and regions globally, has around 180,000 employees and a sales volume of over US$39 billion. The low profile Ren is ranked 83rd in Forbes’ China Rich list with a net worth of US$3.2 billion.

Who owns Huawei?

Unlike its Chinese rival ZTE Corp, which is a state-backed enterprise, Huawei is a private company collectively owned by its employees. Not being familiar with Western stock option systems, Huawei’s founder Ren Zhengfei says he designed an employee stock ownership plan at the inception of the company.

At a time when China was still struggling with the aftermath of the Cultural Revolution, being a private owner and hence open to being perceived as a capitalist – Ren felt that not owning the company was the least dangerous thing for a founder to do, according to a Harvard Business Review story which studied Huawei’s profit sharing model. Ren himself holds a 1.4 per cent stake in Huawei, according to the company’s 2017 annual report.

How did Huawei become successful?

The vast domestic market, the timing of overseas expansion and heavy investment in research and development have all been important positive factors for Huawei. But many analysts attribute the secret of its success to a unique company culture, sometimes dubbed “wolf-culture” for being fearless and aggressive. Workers have also been known to pass out on office mattresses from exhaustion. It has strong discipline and nobody – not even Ren – has their own driver or flies first class on the company dime.

Why and how was Meng arrested?

Meng was detained in Vancouver on December 1 at the request of US authorities. Meng was accused by the US of helping Huawei cover up violations of US sanctions on Iran, according to Canadian prosecutors. She is said to have told financial institutions that affiliate Skycom was a separate company in order to conduct business in the country, when in fact it was a Huawei subsidiary.

“Meng and other Huawei employees repeatedly lied about the nature of the relationship between Huawei and Skycom and the fact that Skycom operated as Huawei’s Iran-based affiliate in order to continue to obtain banking services,” the US authorities said in the arrest request delivered to Canadian authorities.

Meng has denied any wrongdoing and said in her personal affidavit for bail that she will contest the allegations if surrendered to the US.

Why is Huawei banned in the US and in some other markets?

The US government has for years seen Huawei as a national security threat due to fears about its association with China’s government, the Chinese Communist Party and its military. This has been of particular concern when it comes to networking gear and the possibility for breaches of data privacy.

In February, US intelligence officials warned Americans not to buy Huawei devices because they could be used to spy on users. The Chinese smartphone maker was supposed to enter the US via mobile network AT&T, but the deal fell through at the last minute.

The US in August enacted the National Defence Authorisation Act to ban the government’s use of Huawei and ZTE technology products and services on concerns over their connections with Chinese intelligence. US security experts have warned of a range of potential security risks, including but not limited to the capacity to control telecommunications infrastructure and even conduct undetected espionage.

Japan, a US ally, this week excluded Huawei and ZTE from public procurement, adding to the list of countries that have pushed back against the Chinese technology company on security issues. Australia and New Zealand have also effectively blocked Huawei from their roll-out of 5G network infrastructure, with the UK and Canada also weighing up the possible security risks posed by Huawei.

What has Huawei said in its defence?

Huawei has consistently denied any connections with the military, saying that it is a private company that is part-owned by its employees.

When Australia took the decision to block Huawei from its 5G infrastructure in August on national security grounds, Huawei said the decision was not aligned with the long-term interests of the Australian people, and denied Australian businesses and consumers the right to choose from the best communications technology available.

It has said all countries need to recognise the importance of setting better common standards, adopting ­industry best practice and implementing risk-mitigation procedures to ensure that there is an objective basis for choosing technology vendors.


(This will likely add to the perception of China as a nation that does not obey the rule of law, many in the U.S. say)


 — (Wang Yi hints that human rights laws are being violated)


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China Detains Former Canadian Diplomat

December 12, 2018

A former Canadian diplomat has been detained in China, according to Prime Minister Justin Trudeau of Canada, less than a week after Canada announced the arrest of a senior Chinese tech executive, angering the government in Beijing.

The detention could inflame tensions between China and Canada, which are already sparring over the arrest in Vancouver in early December of Meng Wanzhou, the chief financial officer of Huawei, a Chinese tech conglomerate.

The former diplomat, Michael Kovrig, has worked since early 2017 for the International Crisis Group, an independent nongovernmental organization that tries to defuse international conflict.

Image result for Michael Kovrig, pictures

Michael Kovrig

Previously he worked for the Canadian foreign service, where he had risen to be vice consul at the embassy in Beijing. He is a well-known specialist on East Asia and Chinese foreign policy.

“We are aware of the situation of the Canadian detained in China,” Mr. Trudeau told reporters on his way into the House of Commons in Ottawa.

“We have been in direct contact with the Chinese diplomats and representatives,” he said. “We are engaged on the file, which we take very seriously and we are, of course, providing consular assistance to the family.”

The Chinese Ministry of Foreign Affairs had no immediate comment.

Two friends of Mr. Kovrig’s in Beijing said they had been unable to reach him by phone or email. Both requested that their names not be used, fearing unwelcome attention from the Chinese authorities. Calls to Mr. Kovrig’s two cellphone numbers went unanswered.

Mr. Kovrig’s last activity on his Twitter account, a retweeted comment, appeared on Sunday.

“I am not willing to speculate as to the reason why the Chinese authorities chose to do what they did. I am willing to state categorically what is not the reason for Michael’s detention. He did not engage in illegal activities. He was not endangering Chinese national security,” said Rob Malley, president and chief executive of the International Crisis Group. “He was doing what all Crisis Group analysts do: objective and impartial research and policy recommendations to end deadly conflict.”

It is unclear whether Mr. Kovrig’s disappearance is related to his work for the crisis group. He specialized in sober analyses of North Korea, tensions over the South China Sea, China’s involvement in international peacekeeping and other diplomatic issues.

Read the rest:


See also The WSJ:

China Detains Michael Kovrig, a Former Canadian Diplomat

Meng Wanzhou: Trump could intervene in case of Huawei executive — Released on $10 million bail

December 12, 2018

Donald Trump says he could intervene in the case of Huawei executive Meng Wanzhou if it helps to avoid a further decline in US relations with China.

“Whatever’s good for this country, I would do,” the US president said.

Court sketch of Meng Wanzhou during her bail hearing in Vancouver, British Columbia, Canada 7 December 2018
Meng Wanzhou has said she will contest allegations of fraud. Reuters

Ms Meng, the chief financial officer of the Chinese telecoms giant, was granted bail on Tuesday by a Canadian court.

She was arrested on 1 December and could be extradited to the US to face fraud charges linked to the alleged violation of sanctions on Iran.

Ms Meng, 46, denies any wrongdoing and has said she will contest the allegations.

She is the daughter of Huawei’s founder and her detention, which comes amid an increasingly acrimonious trade dispute between Washington and Beijing, has angered China and soured its relations with both Canada and the US.

In an interview with Reuters news agency on Tuesday, Mr Trump said he would intervene in the US Justice Department’s case against Ms Meng if it would serve national security interests or help achieve a trade deal with China.

“If I think it’s good for what will be certainly the largest trade deal ever made – which is a very important thing – what’s good for national security, I would certainly intervene if I thought it was necessary,” he said.

What happened in the courtroom?

Justice William Ehrcke in Vancouver set bail for Ms Meng at C$10m (£6m; $7.4m).

Of that, C$7m must be provided in cash with C$3m in collateral.

The judge said that she would be under surveillance 24 hours a day and must wear an electronic ankle tag. She will be unable to go out between 2300 and 0600 and must surrender all passports and travel documents.

In the three-day bail hearing in Vancouver, Ms Meng’s lawyers sought to provide guarantees that she would not pose a flight risk if released. The application was opposed by Canadian prosecutors.

Supporters of Meng Wanzhou outside the court in Vancouver. 11 Dec 2018
Supporters of Ms Meng gathered outside the court in Vancouver. AFP

US prosecutors say Ms Meng used a Huawei subsidiary called Skycom to evade sanctions on Iran between 2009 and 2014. They allege she had publicly misrepresented Skycom as being a separate company from Huawei. It is also alleged she deceived banks about the true relationship between the two companies.

Applause broke out in the courtroom when Justice Ehrcke granted bail. Ms Meng cried and hugged her lawyers.

The judge ordered her to reappear in court on 6 February.

After the ruling, Huawei issued a statement, saying: “We have every confidence that the Canadian and US legal systems will reach a just conclusion.”

How has China reacted to Ms Meng’s arrest?

China, which insists that Ms Meng has not violated any laws, had threatened severe consequences unless Canada released the Huawei executive.

Vice Foreign Minister Le Yucheng earlier summoned both the US and Canadian ambassadors and lodged a “strong protest” urging her release.

The ministry described Ms Meng’s arrest as “extremely nasty”.

Meng Wanzhou, chief financial officer of Huawei, 2 October 2014
Ms Meng is chief financial officer of Huawei, the world’s second-biggest smartphone maker. EPA

Separately on Tuesday, it emerged that a Canadian former diplomat had been detained in China.

Michael Kovrig’s current employer, the International Crisis Group, said it was working for his prompt release. There has been no official word from China about his whereabouts.

Prime Minister Justin Trudeau said Canada was in direct contact with Chinese authorities concerning the case.

Mr Kovrig previously worked as a diplomat in Beijing, Hong Kong and at the UN in New York.

Canadian officials said there was no “explicit indication” of any link between Mr Kovrig’s reported detention and the arrest of Ms Meng.

Who is Meng Wanzhou?

Meng Wanzhou joined Huawei as early as 1993, when she began a career at her father’s company as a receptionist.

After she graduated with a master’s degree in accountancy from the Huazhong University of Science and Technology in 1999, she joined the finance department of Huawei.

She became the company’s chief finance officer in 2011 and was promoted to vice-chair a few months before her arrest.

Ms Meng’s links to her father, Ren Zhengfei, were not public knowledge until a few years ago.

In a practice highly unusual in Chinese tradition, she adopted her family name not from her father but her mother, Meng Jun, who was Mr Ren’s first wife.

BBC News


Meng Wanzhou Released on $10 million bail

What to Do About Huawei?

December 12, 2018

China’s turn toward totalitarianism should not shake Western confidence in freedom.

It will be a different kind of cold war, if a new cold war is in the offing with China.

The daughter of a top-ranking Chinese business leader has been sitting in a Canadian jail, subject to a U.S. extradition request. In arguing for bail in Canada, her lawyer cited facts that never would have been cited in the case of a Soviet official arrested while passing through Vancouver’s airport: She owns two homes in Vancouver. Three of her children and her husband were educated in the city. Her family members still summer there.

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 — (Wang Yi hints that human rights laws are being violated)


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Asian markets perked up by positive China-US trade news

December 12, 2018

Asian markets enjoyed healthy buying interest Wednesday on much-needed good news on the China-US trade talks, while energy firms rallied with oil prices, though the pound remained beaten down by Brexit woes.

A flurry of positive developments in the tariffs stand-off between the world’s top economies provided some early Christmas cheer on trading floors, fuelling hopes they can avert an all-out trade war.

Canada on Tuesday released on bail Meng Wanzhou, chief financial officer at Chinese telecoms giant Huawei, whose arrest last week sparked fury in Beijing and worries about a truce agreed at the G20 by Donald Trump and Xi Jinping this month.

Providing some extra support to the news of Meng’s release was an interview in which Trump said he could intervene in the case if it helps seal a trade pact with China, adding: “Whatever’s good for this country, I would do.”

China added to market-friendly noise by saying it had agreed to cut tariffs on US autos to 15 percent from 40 percent — wiping out a levy imposed earlier this year in response to US measures.

Investors welcomed the headlines — despite news China had detained a former Canadian diplomat who served in Beijing — fuelling a surge in regional markets.

The pound is under pressure as Prime Minister Theresa May struggles to get her Brexit agreement through parliament, raising the possibility Britain will leave the EU without a deal

The pound is under pressure as Prime Minister Theresa May struggles to get her Brexit agreement through parliament, raising the possibility Britain will leave the EU without a deal The pound is under pressure as Prime Minister Theresa May struggles to get her Brexit agreement through parliament, raising the possibility Britain will leave the EU without a deal AFP

Tokyo ended the morning session 1.9 percent higher, while Hong Kong jumped 1.4 percent and Shanghai gained 0.3 percent.

Sydney rose 0.7 percent and Seoul jumped 1.3 percent, while Taipei and Wellington chalked up 0.8 percent gains.

“Last week, events seemed to conspire to throw the truce into disarray, but the underlying incentives of both sides at the moment are to try to maintain that truce,” said Freya Beamish, chief Asia economist at Pantheon Macroeconomics, told Bloomberg News.

“Now we are seeing the possibility that China will come through with reductions of tariffs on US autos, and that’s another good, concrete step.”

– May on the precipice? –

Car firms across Asia tracked gains in their US counterparts as the China tariffs news lifted optimism in the auto market with Hyundai three percent higher in Seoul while in Tokyo Toyota was up 2.4 percent in and Mitsubishi added three percent.

And energy firms were also well up after data showed a massive drop in US stockpiles, indicating a pick-up in demand to offset worries about a global supply glut that has hurt prices.

Both main crude contracts were more than one percent higher.

But it is not all rosy.

Prime Minister Theresa May, touring Europe to win help in pushing her Brexit deal through parliament after delaying a vote this week, was told she will not be able to renegotiate, leaving Britain facing an EU divorce with no deal.

The pound duly tanked two percent Tuesday and, with May facing a possible leadership challenge, the country another general election and the economy months of uncertainty, there are fears it could drop further.

No new date has been set for the key vote on her deal to be held.

“With no resolution within sight, the pound is likely to remain volatile for at least a few more weeks, if not months,” said National Australia Bank senior strategist at Rodrigo Catril.

There was also unease in some quarters after Trump threatened to shut down the government if Democrats, who will control the House of Representatives from next month, do not meet his demand for $5 billion to build a wall between Mexico and the United States.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 1.9 percent at 21,546.43 (break)

Hong Kong – Hang Seng: UP 1.4 percent at 26,132.84

Shanghai – Composite: UP 0.3 percent at 2,602.87

Pound/dollar: UP at $1.2506 from $1.2481 at 2150 GMT

Euro/dollar: UP at $1.1332 from $1.1319

Dollar/yen: UP at 113.50 yen from 113.40 yen

Oil – West Texas Intermediate UP 62 cents at $52.27 per barrel

Oil – Brent Crude: UP 67 cents at $60.87 per barrel

New York – Dow Jones: DOWN 0.2 percent at 24,370.24 (close)

London – FTSE 100: UP 1.3 percent at 6,806.94 (close)


Huawei CFO Case Hinges on an Offshore Puzzle

December 11, 2018

Defense says telecom giant cut ties to firm doing work in Iran; opaque trail leads to Mauritius

Why China's Huawei Matters

Why China’s Huawei Matters
Chinese telecom giant Huawei has long caused tension between Washington and Beijing. WSJ’s Shelby Holliday explains what the company does and why it’s significant. (Photo: Aly Song/Reuters)

HONG KONG—In a presentation to bankers in 2013, Meng Wanzhou, the chief financial officer of Huawei Technologies Co., explained that her company no longer had a stake in Skycom Tech Co., a Hong Kong company that did business with Iran, and that she had quit its board, according to the executive’s defense.

Ms. Meng said she had served on the Skycom board to ensure it complied with trade rules, according to newly released defense filings that cite the 2013 PowerPoint presentation to HSBC Holdings Ltd.

Ms, Meng’s lawyer said Friday that she and Huawei severed ties to Skycom in 2009 and can’t be held responsible for its activities in the years that followed.

U.S. prosecutors say Skycom remained under Huawei’s control; between 2010 and 2014, they say, Skycom was used as a front for Huawei’s dealings with Iran in an arrangement that duped banks into approving millions of dollars in transactions that violated sanctions.

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From Reuters

A Hong Kong-based firm that attempted to sell embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator has much closer ties to China’s Huawei Technologies than was previously known, corporate records show.

Cathy Meng, Huawei’s chief financial officer and the daughter of company founder Ren Zhengfei, served on the board of Hong Kong-based Skycom Tech Co Ltd between February 2008 and April 2009, according to Skycom records filed with Hong Kong’s Companies Registry.

Reuters reported last month that in late 2010, Skycom’s office in Tehran offered to sell at least 1.3 million euros worth of HP gear to Mobile Telecommunication Co of Iran, despite U.S. trade sanctions. At least 13 pages of the proposal were marked “Huawei confidential” and carried Huawei’s logo. Huawei said neither it nor Skycom ultimately provided the HP equipment; HP said it prohibits the sale of its products to Iran.

Huawei has described Skycom as one of its “major local partners.”

But a review by Reuters of corporate records and other documents found numerous financial and other links over the past decade between Huawei, Meng and Skycom, suggesting a closer relationship between the two firms. In 2007, for instance, a management company controlled by Huawei’s parent company held all of Skycom’s shares. At the time, Meng served as the management firm’s company secretary.

Meng, who also goes by the name Meng Wanzhou, appears to be a rising star at Shenzhen-based Huawei, now the world’s second-largest maker of telecommunications equipment. During a presentation of Huawei’s financial results last week in Beijing, she met foreign journalists in an on-the-record session that was reported to be a first for anyone in her family.

“We will honor our commitment to transparency and openness,” she told the journalists.

Meng did not respond to a request for comment for this article. Huawei declined to make her available for an interview, or answer any specific questions about the company’s or her links to Skycom.

In an emailed statement, Huawei said, “The relationship between Huawei and Skycom is a normal business partnership. Huawei has established a trade compliance system which is in line with industry best practices and our business in Iran is in full compliance with all applicable laws and regulations including those of the UN. We also require our partners, such as Skycom, to make the same commitments.”

A Hong Kong accountancy and secretarial firm that Skycom has listed in financial filings as its corporate secretary, did not respond to a request for comment.

The U.S. House Intelligence Committee recently criticized Huawei for not answering questions about its Iranian operations and for failing to “provide evidence to support its claims that it complies with all international sanctions or U.S. export laws.” The sanctions on Iran are designed to deter it from developing nuclear weapons; Iran says its nuclear program is aimed purely at producing domestic energy.

Huawei, which has contracts with many Iranian telecoms, says it is reducing its business in Iran.

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Corporate filings offer few clues about the operations of Skycom, which like Huawei is a private company.

Telecommunications managers who have worked in Iran say that many employees at Skycom’s offices are Chinese nationals who wear Huawei badges or carry Huawei business cards. On, several telecom workers list having worked at “Huawei-skycom” on their resumes.

Skycom’s corporate filings show that since it was first incorporated in Hong Kong in 1998, the firm has had a succession of different controlling shareholders, including individuals and offshore companies.

In its annual return filed in May 2007, Skycom reported that all of its shares had been transferred three months earlier from two companies in the British Virgin Islands to a Hong Kong firm called Hua Ying Management Co Ltd. Hua Ying’s shares were held by Shenzhen Huawei Investment & Holding Co Ltd, Huawei’s parent company, according to Hua Ying’s filings.

Meng was then Hua Ying’s company secretary, corporate records show.

In November of that year, all of Skycom’s shares were transferred to a company called Canicula Holdings Ltd, which is registered in Mauritius. Huawei declined to answer any questions about the transfer or whether it is related to Canicula.

According to Mauritius company records, Canicula’s registered address is a local company called Multiconsult Ltd. An employee there declined to answer any questions.

Besides Meng, several other past and present Skycom directors appear to have connections to Huawei. In its most recent annual return, Skycom lists a director named Hu Mei, who also appears to have a Huawei email address and was listed in an internal Huawei employee directory, according to a person familiar with the matter. A former Skycom director, Wu Shuyuan, also has a Huawei email address and was listed in an internal Huawei directory, this person said.

Reached for comment, both confirmed they had served or serve as directors of Skycom but declined to answer any questions about Huawei. Huawei declined to answer any questions about them.

n early 2010 – the same year Skycom offered to export the HP equipment to Iran – a London firm called International Company Profile that prepares credit reports, released a “company status report” on Skycom in Tehran. The report said ICP had interviewed Skycom’s financial manager there.

Skycom “is a subsidiary of Huawei Technologies Corporation,” the report stated.

The report also listed Skycom’s chief executive as Zhang Hongkai. In 2009, the website of China’s embassy in Iran published a press release announcing that Huawei had signed a cooperation agreement with an Iranian university. The article reported that the agreement was co-signed by “Mr. Zhang Hongkai, CEO from Huawei Iran Office.”

Zhang could not be reached for comment. Huawei declined to answer questions about the credit report.

Additional reporting by Grace Li in Hong Kong; Edited by Simon Robinson