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Exclusive: U.S. probe of China's Huawei includes bank fraud accusations - sources

Reuters  |  WASHINGTON 

By Karen Freifeld

WASHINGTON (Reuters) - Chinese Technologies Co Ltd's was arrested as part of a U.S. investigation into an alleged scheme to use the global system to evade U.S. sanctions against Iran, according to people familiar with the probe.

The has been looking since at least 2016 into whether shipped U.S.-origin products to and other countries in violation of U.S. export and sanctions laws, reported in April.

More recently, the probe has included whether the company used Holdings Plc to conduct illegal transactions involving Iran, the people said.

Companies are barred from using the U.S. financial system to funnel goods and services to sanctioned entities. If the mobile phone and conducted such transactions and then misled about their true nature, it could be guilty of fraud, experts say.

declined to comment, but said in a statement after the arrest that it complies with all applicable export control and sanctions laws and other regulations.

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

A attorney's office in Brooklyn, which has reported is the office investigating Huawei, also declined to comment.

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

As part of that deal, HSBC was required to be monitored for five years to review its efforts to prevent and sanctions violations.

HSBC's U.S.-listed shares fell as much as 6 percent on Thursday after reported the bank's link to the Huawei case. They ended down 3.6 percent.

Huawei Meng Wanzhou, daughter of Huawei's founder, Ren Zhengfei, was arrested in on Dec. 1. She will appear in court on Friday and faces extradition to the The broke on Wednesday, roiling global stock markets over fears the move could escalate the Sino-U.S. trade dispute.

Huawei said it has been provided little information of the charges and that it was "not aware of any wrongdoing by Ms. Meng."


The probe of Huawei is similar to one that threatened the survival of China's Corp <0763.HK> <000063.SZ>, which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to paid a $892 million penalty.

Earlier this year, the said ZTE made false statements about disciplining some executives responsible for the violations and banned U.S. firms from selling parts and software to the company. After ceasing major operations as a result, ZTE paid another $1 billion as part of a deal to get the ban lifted.

In an incident similar to Meng's case, ZTE's was stopped at Airport during the U.S. investigation of that company, according to sources familiar with the case. U.S. authorities seized a laptop that contained a "treasure trove" of evidence of ZTE's illegal business in Iran, one of the sources said.

In 2016, the Commerce Department made documents public that showed ZTE's misconduct and also revealed how a second company, identified only as F7, had successfully evaded U.S. export controls.

In a 2016 letter to the Commerce Department, 10 U.S. lawmakers said F7 was believed to be Huawei, citing In April 2017, lawmakers sent another letter to asking for F7 to be publicly identified and fully investigated.

U.S. authorities also subpoenaed Huawei in 2016 seeking information related to possible export and sanctions violations, sources have said.

In January 2013, Reuters reported that Hong Kong-based Tech Co Ltd, which attempted to sell embargoed computer equipment to Iran's largest mobile-phone operator, had much closer ties to Huawei than previously known.

Meng, who also has used the English names and Sabrina, served on the board of between February 2008 and April 2009, according to records. Several other past and present Skycom directors also appear to have connections to Huawei.

(Reporting by Karen Freifeld; additional reporting by in Ottowa and Susan Heavey and Roberta Rampton in Washington.; Writing by Tomasz Janowski; editing by Chris Sanders, and Sonya Hepinstall)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, December 07 2018. 05:59 IST