December 6, 2018 3:49 pm

U.S. investigating Huawei over suspicions of bank fraud, violating Iran sanctions: sources

The court date for the CFO of Huawei Technologies has been set to take place Friday, according to Canadian officials, as China calls for her release. The arrest is also threatening the trade war truce between the country and the U.S., prompting global stock markets to tumble.

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

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READ MORE: Who has taken action against telecom giant Huawei and why Canada hasn’t

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

Huawei CFO Meng Wanzhou, the daughter of the company’s founder, was arrested in Vancouver and faces extradition to the United States, sparking fears it could reignite a Sino-U.S. trade dispute and roiling global stock markets.

WATCH: Arrest of Huawei executive prompts reaction in Ottawa

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

An HSBC spokesperson declined to comment. HSBC is not under investigation, according to a person familiar with the matter.

READ MORE: China could retaliate against Canadian businesses and citizens after Huawei CFO arrest, analysts warn

Huawei also declined to comment. After news of the arrest, Huawei said it has been provided little information of the charges against Meng, adding that it was “not aware of any wrongdoing by Ms. Meng.”

A spokesman for the U.S. Attorney’s office in Brooklyn, which Reuters has reported is investigating Huawei, declined to comment.

READ MORE: What is Huawei Technologies and why is the Chinese company so controversial?

U.S. and Asian shares tumbled as news of the arrest heightened anxiety over prospects of a collision between the world’s two largest economic powers, not just over tariffs but also over technological hegemony.

HSBC’s U.S.-listed shares initially fell as trading volume rose, dropping as much as 6 per cent after Reuters reported the bank’s link to the case, and were subsequently down 4.7 per cent.

Huawei is already under intense scrutiny from Washington and other western governments over its ties to the Chinese government, driven by concerns it could be used by Beijing for spying. It has been locked out of U.S. and some other markets for telecom gear, but has repeatedly insisted Beijing has no influence over it.

WATCH: China calls on Canada, U.S. to release Huawei CFO after being arrested in Vancouver

© 2018 Reuters

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