Huawei in Hot Water after Reports of Trade Sanction Violations
Documents have surfaced that apparently link Huawei CFO Cathy Meng to Skycom Tech and a plot to try and sell HP equipment to a firm in Tehran – From Reuters
Reuters published on Thursday a status report describing further details in the goings on between Huawei and a firm called Skycom Tech in Iran. Originally it was reported that Cathy Meng, CFO at Huawei and daughter of Huawei founder Ren Zhengfei, served on the board of Skycom Tech between February 2008 and April 2009. In late 2010 Skycom offered to sell at least 1.7 million dollars in HP goods to Mobile Telecommunications Co. of Iran, a sale that would be banned under U.S. Trade Sanctions with Iran. At least 13 documents marked “Huawei Confidential” and also embossed with the Huawei logo were found pertaining to the transaction. Huawei since has provided information stating that a transaction for the goods between Huawei or Skycom and Telecommunications Co. of Iran never took place.
Huwaei refers to Skycom Tech as one of it’s “Major Local Partners”. Corporate records suggest the contrary, and that there are actually much closer ties between the two companies. While Meng was serving as secretary at a company controlled by Huawei’s parent company, that company held all of Skycom’s shares.
Meng, whom also goes by the name Ms. Meng Wanzhou met with international reporters after Huawei’s 2012 financial results presentation on the 21st of January. This was the first on-the-record interview that the company’s first family has ever allowed, but she declined to answer any questions about the Reuters report. Huawei issued this statement via E-Mail:
“The relationship between Huawei and Skycom is a normal business partnership. Huawei has established a trade compliance system which is in line with industry best practices and our business in Iran is in full compliance with all applicable laws and regulations including those of the UN. We also require our partners, such as Skycom, to make the same commitments.”
The U.S. House Intelligence Commitee also had a bit to say about the report and the CFO not offering any statement about operations in Iran.
(Huawei/Skycom have failed to) ”provide evidence to support its claims that it complies with all international sanctions or U.S. export laws.”
These sanctions are in place to deter Iran’s nuclear operations.
In the same year that the sale of these HP products were supposed to take place, a London credit report company called International Company Profile performed a “company status report” on Skycom. The report included an interview with Skycom’s Financial Manager in Iran, with the following statement being highlighted.
Skycom “is a subsidiary of Huawei Technologies Corporation,”
It is looking like Huawei is going to be under even more scrutiny in the United States than it has been previously. I can only assume that it is no fun ride having the U.S. Government breathing down your neck and the Huawei higher-ups, if not before, now have a reason to sweat. The now number two maker of telecom equipment and their hopes of expansion in the U.S. may have to make some changes to keep that growth from being foiled.