Wrapup 1: White House, Trudeau seek to distance themselves from Huawei move

Chinasoft International

07/12/2018 01:13

By Roberta Rampton and David Ljunggren
    WASHINGTON/OTTAWA, Dec 6 (Reuters) - President Donald Trump
did not know about plans to arrest a top executive at Chinese
telecoms giant Huawei in Canada, two U.S. officials said on
Thursday, in an apparent attempt to stop the incident from
impeding crucial trade talks with Beijing.
    Huawei Technologies Co Ltd's  HWT.UL  chief financial
officer, Meng Wanzhou, the 46-year-old daughter of the company's
founder, was detained in Canada on Dec. 1, the same day Trump
and Chinese President Xi Jinping dined together at the G20
summit in Buenos Aires.
    A White House official told Reuters Trump did not know about
a U.S. request for her extradition from Canada before he met Xi
and agreed to a 90-day truce in the brewing trade war.
    Meng's arrest during a stopover in Vancouver, announced by
the Canadian authorities on Wednesday, pummeled stock markets
already nervous about tensions between the world's two largest
economies on fears the move could derail the planned trade
talks.  urn:newsml:reuters.com:*:nL1N1YB10N  TOP/GLOMKT 
    The arrest was made at Washington's request as part of a
U.S. investigation of an alleged scheme to use the global
banking system to evade U.S. sanctions against Iran, according
to people familiar with the probe.  urn:newsml:reuters.com:*:nL1N1YB1TM
    Another U.S. official told Reuters that while it was a
Justice Department matter and not orchestrated in advance by the
White House, the case could send a message that Washington is
serious about what it sees as Beijing's violations of
international trade norms. 
    The official, speaking on condition of anonymity,
acknowledged that the arrest could complicate efforts to reach a
broader U.S.-China trade deal but would not necessarily damage
the process.
    Meng's detention also raised concerns about potential
retaliation from Beijing in Canada, where Prime Minister Justin
Trudeau sought to distance himself from the arrest. urn:newsml:reuters.com:*:nL1N1YB20G
    "The appropriate authorities took the decisions in this case
without any political involvement or interference ... we were
advised by them with a few days' notice that this was in the
works," Trudeau told reporters in Montreal in televised remarks.
             
    IRAN SANCTIONS 
    The United States has been looking since at least 2016 into
whether Huawei violated U.S. sanctions against Iran, Reuters
reported in April. More recently, the probe has included the
company's use of HSBC Holdings Plc  HSBA.L  to make illegal
transactions involving Iran, people familiar with the
investigation said.
    In 2012, HSBC paid $1.92 billion and entered a deferred
prosecution agreement with the U.S. attorney's office in
Brooklyn for violating U.S. sanctions and money-laundering laws.
    An HSBC spokesperson declined to comment on Thursday. HSBC
is not under investigation, according to a person familiar with
the matter.
    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."  
    Huawei is under intense scrutiny from Washington and
other governments over its ties to the Chinese government,
driven by concerns it could be used for spying. It has been
locked out of U.S. and some other markets for telecom gear, but
has repeatedly insisted Beijing has no influence over it.
    On Friday, a person with direct knowledge and a person
briefed on the matter told Reuters that Japan plans to ban
government purchases of equipment from China's Huawei and ZTE
Corp  0763.HK   000063.SZ .
    The Yomiuri newspaper, which first reported the news, said
the Japanese government was expected to revise its internal
rules on procurement as early as Monday to prevent intelligence
leaks and cyber attacks.
    ZTE pleaded guilty in 2017 to violating U.S. laws that
restrict the sale of American-made technology to Iran in efforts
to curb Tehran's missile and nuclear programs.  urn:newsml:reuters.com:*:nL2N1T71OZ 
    Before the arrest on Wednesday, Britain's BT Group  BT.L 
said it was removing Huawei's equipment from the core of its
existing 3G and 4G mobile operations and would not use the
Chinese company in central parts of the next network.           
       
    Republican Senators Ted Cruz, Marco Rubio and Ben Sasse
welcomed news of the arrest and said the world's biggest
telecoms equipment maker posed a security threat.
    Cruz tweeted: "Huawei is a Communist Party spy agency thinly
veiled as a telecom company."
    Huawei has said it complies with all applicable export
control and sanctions laws and other regulations.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
BREAKINGVIEWS-U.S. markets could be Huawei’s best ally      
 urn:newsml:reuters.com:*:nL1N1YB0SS
EXPLAINER-What is China's Huawei Technologies and why is it so
controversial?     urn:newsml:reuters.com:*:nL4N1YB4CQ
EXPLAINER-How does extradition to the U.S. work?     L1N1YB20B 
EXCLUSIVE-U.S. probe of China's Huawei includes bank fraud
accusations      L1N1YB1TM 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Additional reporting by Karen Freifeld and Matt Spetalnick in
Washington, Julie Gordon in Vancouver and Alison Martell in
Toronto 
Writing by Tomasz Janowski
Editing by Sonya Hepinstall)
 ((tomasz.janowski@thomsonreuters.com; +1 646 223 6151; Reuters
Messaging: tomasz.janowski.reuters.com@reuters.net))