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Exclusive: New documents link Huawei to suspected front companies in Iran, Syria

Reuters  |  LONDON/HONG KONG 

By Steve Stecklow, Babak Dehghanpisheh and James Pomfret

LONDON/HONG KONG (Reuters) - The U.S. case against the of China's Technologies, who was arrested in last month, centers on the company's suspected ties to two obscure companies. One is a that operated in Tehran; the other is that firm's owner, a holding company registered in

U.S. authorities allege deceived international banks into clearing transactions with by claiming the two companies were independent of Huawei, when in fact controlled them. has maintained the two are independent: Tech Co Ltd and shell company Canicula Holdings Ltd.

But corporate filings and other documents found by in and show that Huawei, the world's largest supplier of network equipment, is more closely linked to both firms than previously known.

The documents reveal that a high-level Huawei appears to have been appointed Skycom's They also show that at least three Chinese-named individuals had signing rights for both Huawei and accounts in Iran. also discovered that a Middle said Huawei conducted operations in through Canicula.

The previously unreported ties between Huawei and the two companies could bear on the U.S. case against Meng, who is the daughter of Huawei founder Ren Zhengfei, by further undermining Huawei's claims that was merely an arms-length partner.

Huawei, U.S. authorities assert, retained control of Skycom, using it to sell equipment to Iran and move money out via the international system. As a result of the deception, U.S. authorities say, banks unwittingly cleared hundreds of millions of dollars of transactions that potentially violated economic sanctions had in place at the time against doing with Iran.

Meng did not respond to a request for comment by Reuters, and Huawei declined to answer questions for this story. Canicula's offices could not be reached. A Justice Department in declined to comment.

Meng was released on C$10 million ($7.5 million) bail on Dec. 11 and remains in while tries to extradite her. In the United States, Meng would face charges in connection with an alleged conspiracy to defraud multiple financial institutions, with a maximum sentence of 30 years for each charge. The exact charges have not been made public.

Huawei said last month it has been given little information about the U.S. allegations "and is not aware of any wrongdoing by Ms. Meng." The company has described its relationship with Skycom as "a normal partnership." It has said it has fully complied with all laws and regulations and required Skycom to do the same.

Meng's arrest on a U.S. warrant has caused an uproar in It comes at a time of growing trade and military tensions between Washington and Beijing, and amid worries by that Huawei's equipment could contain "backdoors" for Chinese espionage. The firm has repeatedly denied such claims. Nevertheless, and recently banned Huawei from building their next generation of mobile phone networks, and British authorities have also expressed concerns.

OFFER TO IRAN

Articles published by in 2012 https://and 2013 https://about Huawei, Skycom and Meng figure prominently in the U.S. case against her. Reuters reported that Skycom had offered to sell at least 1.3 million euros worth of embargoed computer equipment to Iran's largest in 2010. At least 13 pages of the proposal were marked "Huawei confidential" and carried Huawei's logo. Huawei has said neither it nor Skycom ultimately provided the U.S. equipment.

Reuters also reported numerous financial and personnel links between Huawei and Skycom, including that Meng had served on Skycom's board of directors between February 2008 and April 2009.

Several banks questioned Huawei about the Reuters articles, according to court documents filed by Canadian authorities at the request of the U.S. for Meng's bail hearing in last month.

According to the documents, U.S. investigators allege that in responding to the banks, which weren't named, Meng and other Huawei employees "repeatedly lied" about the company's relationship with Skycom and failed to disclose that "Skycom was entirely controlled by Huawei." U.S. authorities also allege that at a private meeting with a executive, in or about August 2013, Meng said Huawei had sold its shares in Skycom, but didn't disclose that the buyer was "a company also controlled by Huawei."

The court documents allege that Huawei told the executive's that the Chinese company had sold its shares in Skycom in 2009 - the same year Meng stepped down from Skycom's board. Skycom's buyer wasn't identified in the documents.

But Skycom records filed in Hong Kong, where the company was registered, show that its shares were transferred in November 2007 to Canicula. Canicula, which was registered in in 2006, continued to hold Skycom shares for about a decade, Skycom records show.

A "Summary of Facts" filed by U.S. authorities for Meng's Canadian bail hearing states: "Documents and email records show that persons listed as 'Managing Directors' for Skycom were Huawei employees." None of those individuals were named.

A company record filed by Skycom in Iran that was entered in the Iranian registry in December 2011 states that a "Shi Yaohong" had been elected as of Skycom's Iran branch for two years. Huawei employs an named

According to his profile, Shi was named Huawei's "Middle East Region" in June 2012. An Agency press release identified him in November 2010 as "of Huawei Key Account." is a major Middle Eastern group and a Huawei partner.

Shi, now of Huawei's software business unit, hung up the phone when Reuters asked him about his relationship with Skycom.

Many corporate records filed by Skycom in Iran list signatories for its in the country. Most of the names are Chinese; at least three of the individuals had signing rights for both Skycom and Huawei (One of the names is listed in the Iranian registry with two slightly different spellings but has the same passport number.) U.S. authorities allege in the court documents filed in that Huawei employees were signatories on Skycom bank accounts between 2007 and 2013.

Records in Hong Kong show that Skycom was voluntarily liquidated in June 2017 and that Canicula was paid about $132,000 as part of the resolution. The liquidator, Chan Leung Lee, of in Hong Kong, declined to comment.

The Financial Services Commission in Mauritius, where Canicula remains registered, declined to release any of its records to Reuters, saying they were confidential.

SYRIAN CONNECTION

Until two years ago, Canicula had an office in Syria, another country that has been subject to U.S. and sanctions. In May 2014, a Middle Eastern business website called published a brief article about the dissolution of a in that specialized in automated machine (ATM) equipment. Osama Karawani, an who was identified as the appointed liquidator, wrote a letter asking for a correction, stating that the article had caused "serious damage" to Huawei.

Karawani said the article suggested that Huawei itself had been dissolved, not just the company. In his letter, which was linked to on the Aliqtisadi website, he said Huawei was still in business.

"Huawei was never dissolved," he wrote; he added that it "has been and is still operating in Syria through several companies which are Ltd and Canicula Holdings Ltd." is one of Huawei's main operating companies.

Karawani didn't respond to emailed questions from Reuters about Canicula.

U.S. investigators are aware of Canicula's connection to Syria, according to a person familiar with the probe. Canicula had an office in and operated in Syria on behalf of Huawei, another person said.

That person said Canicula's customers there included three major telecommunications companies. One is MTN Syria, controlled by South Africa's MTN Group Ltd, which has mobile-phone operations in both Syria and Iran. MTN has a joint venture in Iran - MTN Irancell - that is also a Huawei customer. MTN advised Huawei on setting up the structure of Skycom's office in Iran, according to another source familiar with the matter.

"Skycom was just a front" for Huawei, the person said.

An with MTN said no one at the company was available to comment.

In December 2017, a notice was placed in a Syrian newspaper by "the General of the company Canicula Ltd." He was not named. It announced that Canicula had "totally stopped operating" in Syria two months before. No explanation was given.

(By in London, Babak Dehghanpisheh in Geneva and James Pomfret in Hong Kong. Additional reporting by in Cairo, and and Bozorgmehr Sharafedin in London. Editing By Richard Woods)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, January 08 2019. 21:16 IST
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