A federal prosecutor told a bail hearing for Meng Wanzhou in Vancouver on Friday that the chief financial officer of Huawei Technologies is wanted in the United States to face criminal proceedings, alleging Huawei used subsidiary Skycom to do business with Iran.
Meng faces charges of fraud in the United States for allegedly misrepresenting Huawei's relationship with Hong Kong-based Skycom, according to evidence read in court on Friday.
She appeared in a Vancouver court Friday to seek bail.
If she is released on bail, she would likely have to surrender her passport and submit to electronic monitoring until she is discharged or surrendered for trial to the United States.
Meng Wanzhou, the daughter of Huawei's founder, faces possible extradition to the United States to face fraud charges.
Meng had been a member of SkyCom´s board a decade ago, but the company was later sold, said her lawyer David Martin. A judge on Friday lifted a publication ban Meng had secured that curbed the media's ability to report on the evidence or documents presented in court.
The Trump administration has tightened regulations on high-tech exports to China and made it harder for Chinese firms to invest in US companies or to buy American technology in cutting-edge areas like robotics, artificial intelligence and virtual reality.
In an interview with the Australian Financial Review, former Central Intelligence Agency chief Michael Hayden said there is evidence that Huawei spies for Beijing. That information was passed on to federal prosecutors in the Eastern District of NY, the Journal report said.
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Richard Harris, chief executive of Port Shelter Investment Management, suggested that while the arrest will likely blow over and not affect the negotiations between the United States and China, "it serves to highlight how toxic the Huawei brand has become in the West".
Meng was arrested while changing planes in Vancouver. SkyCom is believed to be an unofficial subsidiary of Huawei, though the companies do not claim to be connected. There are exemptions for telecom equipment in U.S. sanctions against Iran, he argued. Prosecutors claim that she is a flight risk due to her family's huge wealth, while the defense points out that Meng has resided with her husband and children in Vancouver for years, and had obtained permanent residence status.
Ming Xia, a professor of political science and global affairs at City University of NY, said Meng's arrest was another example of how members of Trump's trade team know how to use very sharp, pinpoint moves to teach China a lesson.
Meng's bio on the company website says she joined in 1993 and held various positions across the company, including director of global accounting and CFO of Huawei Hong Kong.
For a period of time she was in charge of Huawei's successful internationalization efforts.
"These are organizations, ultimately tightly tied to the Chinese security apparatus, and we think there are some real, serious issues there", said Harper.
Some have noted that USA tech executives would be wise to avoid traveling to China over the next two weeks, out of concern that they might get caught up in the tug of war over Huawei.