Top Huawei executives had close ties to company at center of U.S. criminal case
An obscure Hong Kong-registered company stands at the center of the U.S. criminal case against China’s Huawei Technologies and its chief financial officer.
U.S. authorities allege the giant telecom-gear maker used
the firm to skirt American economic sanctions on Iran between 2007 and 2014.
Huawei has said it sold the business in 2007 and denies any wrongdoing.
Now, Reuters has uncovered previously unreported links in
Brazil between Huawei and the company, Skycom Tech Co Ltd, that could offer support
to the U.S. case against the tech giant and Meng Wanzhou, its chief financial
officer and daughter of its founder. Corporate records filed with the state of
Sao Paulo in Brazil show that Huawei and Skycom were closely intertwined there
for five years after Huawei disposed of its shares in Skycom in 2007.
Until late 2007, two other top-level Huawei executives also
had close ties with Skycom, corporate records filed in Brazil and Hong Kong
show. Both men - Ken Hu and Guo Ping - currently are deputy chairmen of Huawei
and serve on a rotating basis as the company’s chairman. Guo now has the
chairman’s role.
The criminal case is part of a multifaceted, global campaign
by Washington to check the power of Huawei, a front in America’s broadening
cold war with China. The United States has been lobbying allies to avoid using
Huawei equipment in their next-generation mobile telecommunications systems,
known as 5G. Washington argues China could use the technology to attack
critical infrastructure and compromise intelligence sharing. Huawei and China
have strenuously denied this.
Huawei’s relationship with Skycom is central to the
high-profile U.S. criminal case. A U.S. indictment alleges Huawei controlled
Skycom and used it to violate American sanctions by obtaining embargoed U.S.
computer gear in Iran. Huawei and Meng have maintained that while Huawei once
owned Skycom, the firm later became in effect an arms-length business partner.
In a recent court filing related to the case, however, Meng’s lawyers acknowledged
that Huawei “exercised a level of control over Skycom.”
The information newly uncovered by Reuters buttresses the
U.S. case by establishing that Huawei’s control over Skycom was even stronger
than American prosecutors have asserted. Corporate records show that two
additional Huawei executives ran a company that owned Skycom - not just Meng,
the sole executive named by prosecutors. Records also show that Huawei’s
control of Skycom extended to Brazil, not only Iran, and lasted through the
period of the alleged sanctions violations, long after the Chinese tech giant
claims it sold its 100% stake.
Huawei declined to comment for this article.
Until now, only Skycom’s business activities in Iran have
received public attention. But the company records filed in Sao Paulo show that
Skycom also had a little-known presence in Brazil between 2002 and 2012.
The records show that Hu was based in Sao Paulo in May 2002
when Skycom acquired a small stake in Huawei Brazil, where he was then a
manager. Hu’s LinkedIn profile states he also was president of Huawei’s Latin
America region around that time.
Hu later left Brazil, but he established another link to
Skycom. Hong Kong company records show that in 2007, Hu and Guo were directors
of a Huawei affiliate, Hua Ying Management Co Ltd, that owned Skycom. Hua Ying
transferred its shares in Skycom to another company that year. Meng was listed
at the time as Hua Ying’s corporate secretary.
Documents filed by American authorities in the U.S. criminal
case describe the share transfer as essentially a sham transaction and that
Huawei continued to control Skycom as “an unofficial subsidiary.”
Last year, the U.S. Department of Commerce added Huawei and
scores of its affiliates, including Hua Ying, to its so-called “Entity List.”
That move restricted sales of U.S. goods and technology to Huawei. Washington
said the affiliates “pose a significant risk of involvement in activities
contrary to the national security or foreign policy interests of the United
States.”
Hu, Guo and Meng are currently listed as the three directors
of Hua Ying in the Hong Kong companies registry.
Hu, who is also known as Hu Houkun, and Guo aren’t named in
the U.S. criminal case. Their links to Skycom and its activities in Brazil
haven’t been reported before.
Huawei’s close links to Skycom in Iran after the purported
2007 sale have been previously documented by Reuters. The Brazilian documents,
filed with the Sao Paulo companies registry, show the extent to which Huawei
and Skycom also continued to be closely linked in Brazil for five more years.
For example, in July 2008, Huawei Brazil’s two shareholders
at that time – Skycom and a Huawei affiliate called Huawei Tech Investment Co
Ltd – each appointed the same Chinese person to represent them at Huawei
Brazil. The documents also show that Meng, who was then serving on the boards
of both shareholding companies, authorized the appointments.
Indeed, during Skycom’s decade as a shareholder of Huawei
Brazil until 2012, Skycom was always represented in the Brazilian company by
people who were also representing Huawei’s interests, the documents show.
‘NUMEROUS MISREPRESENTATIONS’
The United States has been trying to get Meng extradited
from Canada, where she was arrested at the request of U.S. authorities while
changing planes in Vancouver in December 2018.
The U.S. indictment alleges that Huawei and Meng
participated in a fraudulent scheme to obtain prohibited U.S. goods and
technology for Huawei’s Iran-based business via Skycom, and move money out of
Iran by deceiving a major bank. U.S. authorities have identified the bank as
HSBC Holdings PLC. Meng is accused of giving a PowerPoint presentation to a
HSBC executive in 2013 that included “numerous misrepresentations regarding
Huawei’s ownership and control of Skycom.”
A spokesman for HSBC declined to comment.
Huawei and Meng have denied the U.S. criminal charges, which
include bank fraud, wire fraud and other allegations. They have argued in court
filings in Canada that Meng did not deceive HSBC. Skycom, which was
incorporated in Hong Kong in 1998 and dissolved in 2017, is also a defendant.
The U.S. indictment cites Reuters stories in 2012 and 2013
that detailed numerous financial and other ties between Skycom, Huawei and Meng
and described an attempt by Skycom in 2010 to obtain embargoed U.S. computer
equipment in Iran. The 2013 article directly linked Meng to Skycom.
In June, Reuters reported that following its 2013 article,
Huawei acted to cover up its relationship with Skycom in Iran, according to
internal Huawei documents. Huawei declined to comment on the story.
The Brazilian records show Skycom became a small shareholder
of Huawei Brazil in 2002 without injecting new money into the company. Instead,
Huawei Brazil’s two shareholders at the time - both Huawei-affiliated companies
- transferred shares to Skycom.
When Skycom exited Huawei Brazil in 2012, it transferred its
shares to yet another Huawei entity, Huawei Technologies (Netherlands) BV, the
Brazilian filings show.
PUBLIC ROLE
Hong Kong corporate filings show that in 2005, Hu and Guo
became directors of Hua Ying, the Huawei affiliate, within days of the unit’s
incorporation there that year. Hua Ying later played a key role in Huawei’s
purported sale of Skycom.
Skycom filings in Hong Kong show that Hua Ying acquired all
of Skycom’s shares in February 2007. Nine months later, Hua Ying transferred
the shares to a company called Canicula Holdings Ltd, a holding company
registered in Mauritius.
U.S. authorities allege that Huawei never gave up control of
Skycom. In court papers filed in Canada, they allege that Huawei treated
Canicula as a subsidiary and that Huawei lent Canicula money to buy Skycom. The
loan came from another Huawei affiliate, Huawei Tech Investment, they say.
Huawei Tech Investment is the company that co-owned Huawei Brazil with Skycom.
Hu and Guo today are among Huawei’s highest-level
executives. At times, both have played key public roles at the tech giant.
Shortly after Meng’s 2018 arrest, Hu held a press conference
in China with international media, in part to address U.S. allegations against
Huawei. Asked about Huawei’s relationship with Skycom, he said he couldn’t
provide any information because the matter was “under a judicial process.”
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