Canadian Authorities Arrest Huawei CFO in Vancouver, Faces U.S. Extradition [UPDATE]

Canadian authorities have arrested the chief financial officer of Chinese tech giant Huawei at the request of the US, for alleged violations of sanctions against Iran.

A new report from The Globe and Mail explains that while details of the arrest have not been released, the United States has applied to extradite CFO Meng Wanzhou from Vancouver, with a bail hearing set for tomorrow.

“Wanzhou Meng was arrested in Vancouver on December 1. She is sought for extradition by the United States, and a bail hearing has been set for Friday,” Justice Department spokesman Ian McLeod told The Globe and Mail. “As there is a publication ban in effect, we cannot provide any further detail at this time. The ban was sought by Ms. Meng.”

Meng, the daughter of Huawei‘s founder Ren Zhengfei and deputy chair of Huawei’s board, was apprehended following requests received from American law enforcement authorities.

As detailed by The Globe and Mail, “A Canadian source with knowledge of the arrest said the U.S. is alleging Ms. Meng tried to evade the American embargo against Iran but provided no further details.”

“The company has been provided with very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng. The company believes the Canadian and U.S. legal systems will ultimately reach a just conclusion,” Huawei said, and added the company “complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws.”

China has demanded Meng’s release, explains the report. The Chinese Embassy in Ottawa said Meng broke no US or Canadian laws and demanded Canada “immediately correct the mistake.”

“The Chinese side expresses firm opposition and strongly protests this serious violation of human rights,” said the embassy, in a statement.

The arrest — which appears to have taken place on Saturday, December 1, the same day Donald Trump and Xi Jinping were meeting in Argentina to reduce trade tensions — marks a serious escalation of US action against a Chinese tech giant that Washington has long been suspicious of. It could dramatically worsen relations between the US and China, the latter of which already sees the trade war as an effort to contain its technological advancement.

Chinese phone makers Huawei and ZTE have been suspected of repeatedly violating US sanctions on Iran and North Korea. In July, President Trump reversed a ban on American companies doing business with ZTE in order to pave the way for trade talks with Chinese President Xi Jinping.

Update:Reuters now reports the following details:

Chinese telecoms giant Huawei Technologies Co Ltd’s chief financial officer was arrested as part of a U.S. investigation into an alleged scheme to use the global banking system to evade U.S. sanctions against Iran, according to sources familiar with the situation.

The United States has been looking into whether Huawei Technologies Ltd violated U.S. sanctions against Iran since at least 2016 and more recently the company’s use of HSBC Holdings Plc to make illegal transactions involving Iran.

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