Huawei is the biggest global supplier of network gear for phone and internet companies and has become the target of deepening U.S. security concerns over its ties to the Chinese government. The U.S. has driven European countries and other allies to limit use of its technology, warning they could be opening themselves up to surveillance and theft of data.

The technology giant’s chief financial officer, Meng Wanzhou, was arrested December 1 and faces extradition to the United States, where she is accused of helping Huawei circumvent US sanctions on Iran.

Huawei’s CFO Meng is thought to have helped Huawei circumvent US sanctions on Iran by telling financial institutions a Huawei subsidiary was a different company, Canadian prosecutors said in a hearing Friday to determine whether Meng should be released on bail.

Canadian prosecutor John Gibb-Carsley said in a court hearing Friday that a warrant had been issued for Meng’s arrest in New York on August 22, 2018. He said Meng was aware of the investigation and was avoiding the United States even though her teenage son goes to school in Boston.

Navarro admitted that is was “unusual” that Meng’s arrest came just as US President Donald Trump and Chinese Dictator Xi Jinping reached a trade truce in Argentina, but said the government’s activities are legitimate.

In a statement Saturday summoning Canadian Ambassador to China John McCallum, Yucheng said Meng’s arrest “severely violated the Chinese citizen’s legal and legitimate rights and interests, it is lawless, reason-less and ruthless, and it is very vicious.”

China’s Xinhua reported that Meng’s detention was “extremely egregious” and demanded that the U.S. vacate an order for her arrest. It called for the U.S. to “immediately correct its wrong actions” and said it would take additional steps based on Washington’s response.

US intelligence agencies have said Huawei phones shouldn’t be used by citizens, and US government agencies are banned from buying the corporation’s equipment. With over $100 billion in Chinese Government subsidization and direct financing, Huawei is able to offer unsuspecting U.S. businesses low-cost offers difficult to refuse in exchange for access to U.S. networks.

Earlier this week, Huawei said Meng was detained by Canadian authorities on behalf of the United States when she was transferring flights in Canada.

Concerns that Huawei devices pose national security risks have hurt its ability to grow overseas.

The People’s Daily, the Communist Party’s official newspaper, threatened Canada and the US with “grave consequences” if Meng is not released.

Meng’s lawyer said she wouldn’t breach a court order because doing so would embarrass her personally, and would also humiliate her father, Huawei and China itself. He added that the case against Meng had not been fully laid out.

The allegation is that Huawei had done business in Iran through a Hong Kong company named Skycom. Meng tricked U.S. banks into thinking that Huawei and Skycom were separate when, in fact, Skycom was Huawei. Meng has claimed that Huawei sold Skycom in 2009.

The Chinese state controls its own judicial system and so Beijing has difficulty comprehending the idea that courts are independent in a rule-of-law country. There’s no point in pressuring the government. Judges will decide.

The surprise arrest raises doubts about whether the trade war truce will hold.

In urging the court to reject Meng’s bail petition, Gibb-Carsley said the Huawei executive had vast resources and a powerful incentive to bolt: She is facing fraud charges in the USA that could put her in prison for 30 years.

The U.S. alleges that Huawei used a Hong Kong shell company to sell technology to Iran in violation of U.S. sanctions. It also states that Huawei and Meng tricked banks about its business dealings.

China summoned the U.S. ambassador to Beijing on Sunday to protest the detention of Huawei CFO Meng Wanzhou in Canada at Washington’s behest and demanded Washington cancel an order for her arrest.

China Trade War Truce Over

There’s no way Dictator Xi is going to deal with President Trump while Huawei’s Meng is held in jail which means the 90-day clock is ticking.

Not only will Xi not deal with Trump, I believe that Xi will order the arrest of high ranking US corporate officers in China to use as a bribe in order to get Meng released.

Is Meng and Huawei dirty? You bet. Huawei put tens-of-thousands of Canadians out of work by stealing Nortel’s technology with the help of the Chinese government.

A trader sent me an email that says:

If Huawei sold equipment to Iran, why is this any business of the US? US laws don’t apply outside of the US. Is it a US or International law that Meng is accused of breaking? If it’s an International law, then she could be tried in any country, including Canada. There would be no need to extradite her to the US. How can the US dictate sanctions on any country unless it’s within the US’s jurisdiction?

I think Huawei licenses software and hardware technologies from the US and the US does not want Iran to get its hands on that technology. Therefore, Meng provided Iran with US technologies that is in violation of US law. While it’s true that the US can not force China or Russia to not trade with Iran, it can say if you want to buy our US chips and license our software, you will not allow these technologies to get into Iran.

The US is winning in its push to get Huawei out of many countries. This should bode well for US 5G corporations like QCOM.

QCOM stock chart

Follow me