Huawei hid business operation in Iran after Reuters reported links to CFO

Huawei Technologies Chief Financial Officer Meng Wanzhou leaves her home to attend a court hearing in Vancouver, British Columbia, Canada May 27, 2020. (Reuters)
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Updated 03 June 2020

Huawei hid business operation in Iran after Reuters reported links to CFO

  • Newly leaked documents show how Huawei effectively controlled Skycom - its separate local business partner in Iran
  • The documents are part of a trove of internal Huawei and Skycom Iran-related business records

LONDON/DUBAI: China’s Huawei Technologies acted to cover up its relationship with a firm that had tried to sell prohibited US computer gear to Iran, after Reuters in 2013 reported deep links between the firm and the telecom-equipment giant’s chief financial officer, newly obtained internal Huawei documents show.
Huawei has long described the firm — Skycom Tech Co. Ltd. — as a separate local business partner in Iran. Now, documents obtained by Reuters show how the Chinese tech titan effectively controlled Skycom. The documents, reported here for the first time, are part of a trove of internal Huawei and Skycom Iran-related business records — including memos, letters and contractual agreements — that Reuters has reviewed.
One document described how Huawei scrambled in early 2013 to try to “separate” itself from Skycom out of concern over trade sanctions on Tehran. To that end, this and other documents show, Huawei took a series of actions — including changing the managers of Skycom, shutting down Skycom’s Tehran office and forming another business in Iran to take over tens of millions of dollars worth of Skycom contracts.
The revelations in the new documents could buttress a high-profile criminal case being pursued by US authorities against Huawei and its chief financial officer, Meng Wanzhou, who is also the daughter of Huawei’s founder. The United States has been trying to get Meng extradited from Canada, where she was arrested in December 2018. A Canadian judge last week allowed the case to continue, rejecting defense arguments that the US charges against Meng do not constitute crimes in Canada.
A US indictment alleges that Huawei and Meng participated in a fraudulent scheme to obtain prohibited US goods and technology for Huawei’s Iran-based business via Skycom, and move money out of Iran by deceiving a major bank. The indictment alleges that Skycom was an “unofficial subsidiary” of Huawei, not a local partner.
Huawei and Meng have denied the criminal charges, which include bank fraud, wire fraud and other allegations. Skycom, which was registered in Hong Kong and was dissolved in 2017, is also a defendant. At one point, Huawei was a shareholder in Skycom but, according to corporate filings, sold its stake more than a decade ago.
The newly obtained documents appear to undermine Huawei’s claims that Skycom was just a business partner. They offer a behind-the-scenes look at some of what transpired at the two companies inside Iran seven years ago and how intertwined the companies were. The documents are variously written in English, Chinese and Farsi.
Huawei declined to comment for this story.
China’s foreign ministry said the United States was politicizing economic and trade issues, which is not in the interest of Chinese or American firms. “We urge the United States to immediately stop its unreasonable suppression of Chinese firms including Huawei,” it said. It referred specific questions about this story to Huawei.

NORMAL BUSINESS PARTNERSHIP
Reuters reported in March that Huawei had produced internal company records in 2010, including two packing lists, that showed it was directly involved in sending prohibited US computer equipment to Iran. Huawei declined to comment on that story, citing ongoing legal proceedings.
To read the March report, click https://www.reuters.com/article/us-huawei-iran-sanctions-exclusive/exclu...
The newly obtained documents show that Huawei’s efforts to obscure its relationship with Skycom began after Reuters reported in December 2012 that Skycom had offered to sell at least 1.3 million euros worth of embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator in late 2010. In January 2013, a second Reuters report described how Huawei had close financial ties and other links to Skycom, including the fact that Meng had served on Skycom’s board of directors between February 2008 and April 2009.
Click to read the December 2012 report
Click to read the January 2013 report
In its response at the time to the Reuters reporting, Huawei said Skycom was one of its “major local partners” and that the relationship between Huawei and Skycom was “a normal business partnership.”
But a newly obtained Huawei internal document from the Chinese company’s Iran office, dated March 28, 2013, indicates Huawei controlled Skycom. The document in Chinese stated: “In consideration of trade compliances, A2 representative office is trying to separate Skycom and Huawei.” A2 was Huawei’s code for Iran, according to the US indictment.
The document also noted that Huawei had installed one of its own employees to manage Skycom in Iran “to urgently avoid the risks of media hype.” Huawei had made an “urgent decision” to appoint Hu Mei as Skycom’s general manager in Iran, effective March 10, 2013, the document noted. Hu was a director of Skycom and was also listed as a Huawei employee in an internal Huawei directory.
The document detailed how Huawei quickly recognized a flaw in putting Hu in charge of Skycom. Hu was based at Huawei’s headquarters in China, and the job required dealing with business matters on the ground in Iran, the document stated. So, Huawei decided to appoint instead “a Chinese employee based in Iran” to manage Skycom’s Tehran office, the document shows.
Huawei decided to name Song Kai, deputy representative of its Iran office, to run Skycom in Iran. He was informed of the decision in an internal Huawei message that was reviewed by Reuters. “Please update your resume,” Song was instructed.
The message said that the change had been approved by a man named Lan Yun, who was identified as the “chief representative” of Huawei’s Iran office.
Hu, Song and Lan couldn’t be reached for comment.

POWERPOINT PRESENTATION
In response to the Reuters articles of 2012 and 2013, several Western banks questioned Huawei about its relationship with Skycom. They included HSBC Holdings PLC, where both Huawei and Skycom held bank accounts.
HSBC declined to comment for this story.
In August 2013, Meng met with HSBC’s deputy head of global banking for the Asia-Pacific region. She is accused in the US indictment of making “numerous misrepresentations regarding Huawei’s ownership and control of Skycom.”
Meng gave a PowerPoint presentation during the meeting that said Skycom was merely “a business partner of Huawei.”
The newly obtained documents show that Huawei soon became directly involved in shutting Skycom down.
In a letter dated Nov. 2, 2013, Song, the Huawei employee appointed to manage Skycom, told a major Iranian client that Skycom “has decided to annul and terminate its business activities and dissolve the branch company in Iran.” Song’s letter was addressed to a vice president of Iran’s largest mobile-phone operator, Mobile Communication Co. of Iran, or MCCI.
MCCI couldn’t be reached for comment.
The next day, Skycom, MCCI and a new Huawei company — Huawei Technologies Service (Iranian) Co. Ltd. — signed an agreement. It stated that Skycom planned to transfer its contracts to the new Huawei entity. The agreement listed eight contracts worth a total of 44.6 million euros (about $50 million), with about 34.6 million euros remaining on them. Any money owed to Skycom was to be paid to the Huawei entity upon completion of the contracts.
“All the parties promise that this three-way contract remains confidential,” it stated.


Tanker off UAE sought by US over Iran sanctions ‘hijacked’

Updated 16 July 2020

Tanker off UAE sought by US over Iran sanctions ‘hijacked’

  • The circumstances of the hijack are still unclear and the boat has been tracked to Iranian waters

DUBAI: An oil tanker sought by the US over allegedly circumventing sanctions on Iran was hijacked on July 5 off the coast of the UAE, a seafarers organization said Wednesday.

Satellite photos showed the vessel in Iranian waters on Tuesday and two of its sailors remained in the Iranian capital.

It wasn’t immediately clear what happened aboard the Dominica-flagged MT Gulf Sky, though its reported hijacking comes after months of tensions between Iran and the US

David Hammond, the CEO of the United Kingdom-based group Human Rights at Sea, said he took a witness statement from the captain of the MT Gulf Sky, confirming the ship had been hijacked.

Hammond said that 26 of the Indian sailors on board had made it back to India, while two remained in Tehran, without elaborating.

“We are delighted to hear that the crew are safe and well, which has been our fundamental concern from the outset,” Hammond told The Associated Press.

Hammond said that he had no other details about the vessel.

TankerTrackers.com, a website tracking the oil trade at sea, said it saw the vessel in satellite photos on Tuesday in Iranian waters off Hormuz Island. 

Hormuz Island, near the port city of Bandar Abbas, is some 190 kilometers (120 miles) north of Khorfakkan, a city on the eastern coast of the United Arab Emirates where the vessel had been for months.

The Emirati government, the US Embassy in Abu Dhabi and the US Navy’s Bahrain-based 5th Fleet did not respond to requests for comment. Iranian state media did not immediately report on the vessel and Iran’s mission to the United Nations did not immediately respond to a request for comment.

In May, the US Justice Department filed criminal charges against two Iranians, accusing them of trying to launder some $12 million to purchase the tanker, at that time named the MT Nautica, through a series of front companies. 

The vessel then took on Iranian oil from Kharg Island to sell abroad, the US government said.

Court documents allege the scheme involved the Quds Force of Iran’s paramilitary Revolutionary Guard, which is its elite expeditionary unit, as well as Iran’s national oil and tanker companies. The two men charged, one of whom also has an Iraqi passport, remain at large.

“Because a US bank froze the funds related to the sale of the vessel, the seller never received payment,” the Justice Department said. “As a result, the seller instituted a civil action in the UAE to recover the vessel.”

That civil action was believed to be still pending, raising questions of how the tanker sailed away from the Emirates after being seized by authorities there.

Data from the MT Gulf Sky’s Automatic Identification System tracker shows it had been turned off around 4:30 a.m. on July 5, according to ship-tracking website MarineTraffic.com. Ships are supposed to keep their AIS trackers on, but Iranian vessels routinely turn theirs off to mask their movements.

Meanwhile, the 28 Indian sailors on board the vessel found themselves stuck on board without pay for months, according to the International Labor Organization. It filed a report saying the vessel and its sailors had been abandoned by its owners since March off Khorfakkan. The ILO did not respond to a request for comment.

As tensions between Iran and the US heated up last year, tankers plying the waters of the Mideast became targets, particularly near the crucial Strait of Hormuz, the Arabian Gulf’s narrow mouth through which 20 percent of all oil passes. Suspected limpet mine attacks the US blamed on Iran targeted several tankers. Iran denied being involved, though it did seize several tankers.