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Exclusive: New documents link Huawei, suspected for businesses in Iran, Syria

LONDON/HONG KONG (reuters) – The U.S. case against the chief financial officer of the chinese Huawei Technologies, who was arrested in Canada last month, centres on the company’s suspected ties with two obscure companies. One is a telecom equipment vendor that operated in Tehran; the other is that the business of the owner, a holding company registered in Mauritius.

FILE PHOTO: The Huawei logo is seen during the Mobile World Congress in Barcelona, Spain, February 26, 2018. REUTERS/Yves Herman/File Photo

The US authorities claim CFO Meng Wanzhou cheated of international banks in the clearing of transactions with Iran by claiming that the two companies were independent of Huawei, Huawei checked. Huawei has maintained, the two are independent: equipment seller Skycom Tech Co Ltd and the shell company Canicula Holdings Ltd.

But corporate filings and other documents found by Reuters in Iran and Syria show that Huawei, the world’s largest supplier of telecommunications network equipment, is much more closely connected with both companies than before.

The documents reveal that a high-level Huawei executive seems to have been appointed Skycom Iran manager. They also show that there are at least three Chinese persons mentioned had signing rights for both Huawei and Skycom bank accounts in Iran. Reuters also discovered that the Middle East, the lawyer said Huawei carried out operations in Syria by Canicula.

The previously unreported links between Huawei and the two companies could bear on the AMERICAN case against Meng, who is the daughter of Huawei founder Ren Zhengfei, by further undermining Huawei claims that Skycom was only an arms-length business partner.

Huawei, the AMERICAN authorities claim to retain control of Skycom, selling telecom equipment to Iran, and moving money through the international financial system. As a result of the deception, the AMERICAN authorities say that the banks have unconsciously erased hundreds of millions of dollars of transactions that might violate economic sanctions, Washington had in place at the time against doing business with Iran.

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

Mix was released on C$10 million ($7.5 million) bail on Dec. 11 and remains in Vancouver while Washington is trying to extradite her. In the United States, Mixing would face the charges in connection with an alleged plot to defraud several financial institutions, with a maximum sentence of 30 years for each charge. The exact cost has not yet been made public.

Huawei said last month it is little information about the AMERICAN accusations “and is not aware of any wrongdoing by Mrs Mix.” The company has described its relationship with Skycom as “a normal business partnership.” He has said that it has fully complied with all laws and regulations and mandatory Skycom to do the same.

Mix the arrest on an AMERICAN warrant caused a stir in China. It comes at a time of growing trade and military tensions between Washington and Beijing, and in the midst of the concerns by U.S. intelligence that Huawei’s telecommunications equipment may contain “backdoors” for the Chinese espionage. The company has repeatedly denied such claims. Nevertheless, Australia and New Zealand recently banned Huawei from building their next generation of mobile networks, and the Uk authorities have also expressed concerns.

OFFER TO IRAN

The articles published by Reuters in 2012 here and 2013 here the Huawei, Skycom and Mix prominent figure in the AMERICAN case against her. Reuters reported 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 2010. At least 13 pages of the proposal were marked “Huawei confidential” and carried Huawei logo. Huawei said neither it nor Skycom ultimately provided the AMERICAN equipment.

Reuters also reported many financial and personal ties between Huawei and Skycom, including that Mix had served on Skycom’s board of directors between February 2008 and April 2009.

Several banks questioned Huawei about the Reuters articles, according to the court documents, submitted by the Canadian authorities at the request of the USA to Mix the bail hearing in Vancouver last month.

According to the documents, AMERICAN researchers propose that the answers of the banks, which were not mentioned, Mix and other Huawei employees “repeatedly lied” about the company’s relationship with Skycom and not to disclose that “Skycom was entirely controlled by Huawei.” The AMERICAN authorities also claim that it is in a private meeting with a bank executive, in or about August 2013, Meng said Huawei had sold its shares in Skycom, but does not reveal that the buyer was “a company controlled by Huawei.”

The court documents claim that Huawei told the executing bank that the Chinese company had sold its shares in Skycom in 2009, the year Mix stepped down from Skycom’s board of directors. Skycom, the buyer was not identified in the documents.

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

A “Summary of Facts”, submitted by the US authorities for Mix the Canadian bail hearing says: “the Documents and the e-mail data show that persons as ‘Directors’ for Skycom were Huawei employees.” None of those individuals were named.

A company record submitted by Skycom in Iran, which was introduced in the Iranian registry, in December 2011, states that a “Shi Yaohong” was chosen as manager of Skycom Iran branch for two years. Huawei has an executive with the name Shi Yaohong.

According to his LinkedIn profile, Shi was the name of Huawei’s “President Middle East” in June 2012. A Emirates News Agency press release identified him in November 2010 as President of Huawei Etisalat Key Account.” Etisalat, a major Middle East telecommunications group and a Huawei partner.

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

Many companies that are submitted by Skycom in Iran list of signatories for its bank accounts in the country. Most of the names are Chinese; at least three of the people has the signing rights for both Skycom and Huawei bank accounts. (One of the names that is mentioned in the Iranian registry with two slightly different spellings, but it has the same passport number.) The US authorities allege in the court documents filed in Canada that Huawei employees were signatories of Skycom bank accounts between 2007 and 2013.

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

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

SYRIAN CONNECTION

Until two years ago, Canicula had an office in Syria, another country that is subject to the V. S. and European Union sanctions. In May 2014, the Middle East business website Aliqtisadi.com published a short article about the dissolution of a company Huawei in Syria that is specialized in automated teller machine (ATM) equipment. Osama Karawani, a lawyer who was identified as the appointed liquidator, wrote a letter asking for a correction, stating that the article had caused “serious harm” to Huawei.

Karawani said the article suggested that Huawei itself had resolved, not only the ATM business. In his letter, which was linked to the Aliqtisadi website, he said Huawei is still in business.

“Huawei has never been resolved,” he wrote; he added that it “was and is still active in Syria by the different companies, Huawei Technologies Ltd and Canicula Holdings Ltd.” Huawei Technologies is one of Huawei’s main operating companies.

Karawani not respond to e-mail questions from Reuters about Canicula.

AMERICAN researchers are aware of Canicula, the connection to Syria, according to a person familiar with the probe. Canicula had an office in Damascus and is operated in Syria on behalf of Huawei, another person said.

That person said, Canicula, the customers there are three major telecom companies. Is MTN Syria, which is controlled by the South african MTN Group Ltd, the mobile phone activities in both Syria and Iran. MTN is a joint venture in Iran – MTN Irancell – which is also a Huawei customer. MTN advised Huawei on the establishment of the structure of Skycom office in Iran, according to another source familiar with the matter.

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

An official with MTN said that no one at the company was available for comment.

In December 2017, a message was placed in a Syrian newspaper “the General Director of the branch of the company Canicula Ltd.” He was not called. It is known that Canicula had “completely stopped working” in Syria, two months earlier. No explanation was given.

By Steve Stecklow in London, Babak Dehghanpisheh in Geneva and James Pomfret in Hong Kong. Additional reporting by Nadia El-Gowely in Cairo, Shadia Nasralla and Bozorgmehr Sharafedin in London. Edited By Richard Bos

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