For — ComplianceX
This will read like a plot from an over-the-top spy movie – except it is all true. The Chief Financial Officer of Chinese telecommunications giant Huawei, Meng Wanzhou, was arrested in Canada ordered by the United States for shipping products originated in U.S. to Iran — a violation of the current Iranian sanctions.
Ms. Wanzhou is not any old run-of-the-mill CFO, she is the daughter of the founder/CEO of Huawei, who is well-connected and a high-level business man with a close relationship with China’s President, Xi Jinping.
Huawei is facing a similar situation that another Chinese telecom company ZTE confronted earlier this year. The difference between the two companies is that Huawei is looking to build 5G networks, while ZTE sold cell phones. The U.S. is growing increasingly learly of China’s questionable business tactics as it relates to technology. There is an emerging belief that they are using these devices and technologies to spy on Americans, steal our intellectual property, and attempt to undermine our sovereignty. Similar complaints have been raised about their trafficking fentanyl which has caused tens of thousands of overdoses and deaths in the US.
U.S. government officials banned ZTE, in part, because products were sold to Iran and North Korea while they were being sanctioned by the United States. In this case, Huawei was looking to build a whole new infrastructure for the U.S., which Washington considers an elaborate cyber-subterfuge of our technology.
While we do not have the exact details of her arrest, we know that there may be serious ramifications for the U.S.-China ‘trade war.’ Wanzhou is the daughter of Ren Zhengfei, the founder of Huawei, and is considered “by birth and position a member of China’s corporate royalty,” said former Canadian ambassador to China, David Mulroney.
The arrest was made about the time Presidents Trump and Xi Jinping were discussing a tariff and trade agreement. The leaders appeared to make progress in the meeting, but between Trump’s “I am a Tariff Man” tweets and the awkward arrest of Wanzhou, China may turn up the heat on the ‘trade war’ and try to reciprocate. To put things into perspective, imagine Amazon’s CEO Jeff Bezos’ daughter being arrested in China (assuming that Bezos has a daughter and she engaged in sanctions violations). If that happened, I’d bet that all China’s Amazon deliveries would be sent to the wrong address or carelessly and violently thrown on door steps breaking the contents inside – pretty serious stuff.
This may all be a negotiating ploy by Trump, the master of the ‘Art of the Deal’. The arrest could be perceived as a high-fast-ball thrown at the head of a high-profile person as a message and to brush back the Chinese. It could also be a strong symbol to China and our allies that, if they don’t adhere and comply with U.S. sanctions, there will be serious consequences. The arrest additionally suggests that we may no longer idly stand by while Chinese standard operating business practices harm US interests.
We will keep you posted as this spy novel unfolds.