U.S. charges Chinas Huawei over alleged Iran sanctions violations

The United States on Monday announced criminal charges against China’s Huawei Technologies Co Ltd, escalating a fight with the world’s biggest telecommunications equipment maker and coming days before trade talks between Washington and Beijing. The Justice Department charged Huawei and its chief financial officer, Meng Wanzhou, with conspiring to violate U.S. sanctions on Iran by doing business with Tehran through a subsidiary it tried to hide.

In a separate case, the Justice Department said Huawei stole robotic technology from T-Mobile US Inc. Huawei has said the two companies settled their disputes in 2017.

Meng, the daughter of Huawei’s founder, was arrested in Vancouver on Dec. 1. China subsequently arrested two Canadians on national security grounds.

Meng, who has been on monitored bail, is set to appear in a Canadian court on Tuesday to discuss changes to her bail terms, according to British Columbia Supreme Court schedules.

Canadian public broadcaster CBC on Tuesday said Canada has received a formal extradition request, citing Canada’s Justice Department.

China’s Foreign Ministry expressed “grave concern” about the charges and urged the United States drop the arrest warrant and end “unreasonable suppression” of Chinese companies. Huawei did not respond to a Reuters request for comment.

U.S. Commerce Secretary Wilbur Ross said the charges are “wholly separate” from the trade negotiations. Yet the development is likely to upset high-level talks between Beijing and Washington this week as part of negotiations intended to walk back trade tensions between the globe’s two largest economies.

According to Canada’s legal procedures, its Justice Minister will have 30 days from receipt of the extradition request to decide whether to issue an authority to proceed. If he grants it, Meng’s case would be sent to the British Columbia Supreme Court for an extradition hearing, which could take weeks or months.

U.S. authorities accuse Meng of playing a lead role in the scheme to use a subsidiary to conduct business in Iran in violation of U.S. sanctions against Tehran. Meng has said she is innocent. Huawei, whose equipment includes base stations, switches and routers, derives nearly half of its total revenue outside China

However, the Trump administration is trying to prevent American companies from buying Huawei gear and pressing allies to do the same. U.S. security experts are concerned the equipment could be used to spy on the United States. Its founder, Ren Zhengfei, denies Huawei’s products would be used by the Chinese government to spy.

News of the charges against Huawei and Meng marks a serious blow to the company’s global ambitions. It has been battling against piling security concerns as Western governments including Australia and New Zealand followed the U.S. lead in restricting its market access over the past year.

Huawei is the world’s leading provider of 5G technology. It has said it has won 30 5G contracts globally – more than any of its competitors – including 18 in Europe, three in Asia-Pacific and nine in the Middle East.

It is unclear how the U.S. charges would impact Huawei’s business. Chinese peer ZTE Corp, which was similarly charged, was slapped with a devastating supply chain ban last year that prevented it from buying essential components from U.S. companies.