Front Burner - Huawei exec back in court as China dispute escalates

Episode Date: May 6, 2019

As Huawei's Meng Whanzou returns to court, CBC Vancouver's Jason Proctor on the repercussions from her arrest in December.

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Hello, I'm Jamie Poisson. Meng Wanzhou is back in court this week. This is the chief financial officer of Huawei, one of the largest telecom companies in the world. Last December, she was arrested in Vancouver, accused of violating economic sanctions with Iran. Meng Wanzhou is accused of fraud by the U.S. government. The Chinese government has condemned the arrest. The embassy in Canada called it a serious violation of human rights. The U.S., they want her extradited, which could mean potential jail time in the United States. The aftermath of Meng Wanzhou's arrest plunged Canada and China into an international diplomatic feud.

We've seen two Canadians detained in China, two Canadians sentenced to death for alleged drug offenses. We think that this is a cruel and inhumane punishment. A ratcheting up of a global trade war and in many ways a window into a technological arms race. Our sources overseas have told us that there is a reason to question whether the companies are tied to the Chinese government. It's the United States. I think that other countries may overtake its using advanced 5G technologies. My colleague Jason Proctor has been looking into all aspects of this story for a new CBC podcast called Sanctioned. Today, a look at the woman at the center of this story and an update on where we stand.

This is FrontBurner. Jason, thank you so much for coming back on the podcast. Oh, thanks for having me, Jamie. So I know that you've sorted through speeches and court affidavits to get a better sense of this woman behind the story, Meng Wanzhou. And obviously we can't talk about her without talking about her father, Ren Zhenfei, former military engineer who started Huawei in 1987. And how does his story affect hers? He is a former member of the military. There's been some speculation that, you know, he still has ties with the military. He, I would say, represents quite a different generation to her, obviously.

You know, growing up, she was born, I believe, in 1972. She's the child of his first marriage. And she took her mother's name. Interestingly, they didn't really have that much contact, it sounds like, when she was growing up because he was always working. I mean, the guy started this massive behemoth of a company, and he built it doggedly by pursuing markets first within China, rural markets that kind of set up the connectivity that would later lead to the modern China and the massive expansion and development of rural China into the state that we know now. When I first started out 30 years ago,

the communications industry was on the brink of enormous changes, changes equivalent to thousands of years in the history of mankind, all in the span of three decades. Back then, we didn't really have any telephones. The only phones we had were those hand-cranked phones that you see in old World War II films. We were pretty undeveloped then. So you have that on the one hand. She joins Huawei about, you know, 25 years ago. People who've worked with her say that she's never kind of, you know, touted the fact she's the founder's daughter. In her progression through the company, she started out as a, you know, as a secretary, that kind of a thing. But we see

between them, I guess, two fairly different styles. And I guess in terms of what they represent is two different generations of Chinese leadership and two generations of progress through Chinese industry and also China as it fits in the greater world. Right. And what are those two sides? Can you give me a sense of how they're both different? Ren Zhengfei in the past, certainly since this ordeal has happened with his daughter, has started giving more media interviews than it sounds like he's done for, you know, the entirety of his public career. I feel that I shouldn't see my children's trials

entirely through a father's eyes. I should also see them flying strong and free. Children must have their own character and find their own way. All my children are strong-willed, hard-working, and drive themselves to excel. As their parents, we cannot demand that they stay meekly by our side forever. He's a fairly charismatic figure.

He is not, though, you don't get, there's no tears or anything like that in terms of, you know, oh my God. It's sort of a, you know, well, this is going to, you know, be a character-building thing for his daughter. Right, he seems very matter-of-fact about it. Yeah, he seems very matter-of-fact. And you look at him and you think, OK, I could believe that guy's, you know, built a multi-billion dollar industry. On the other hand, she is known as being a lot more personable. She's very, I'd say she's almost new agey in terms of the references

she keeps bringing up in these various speeches she gives. You know, there's one where she quotes a poem from Octavio Paz, the Mexican poet, in terms of linking a poem that he did or that he wrote about sort of the bridge to humanity as being somehow related to the greater bridge that Huawei can bring to humankind. That's weird. She's also known for sort of being – she's popular within the company, takes a real interest in the people around her. Certainly we saw affidavits from people who were willing to get up and say, you know, how welcoming she is, how interested she is in her children. Very driven as well, though. I mean, she had said during the court proceedings through her lawyer that, you know, she hasn't had time to read a book in about 25 years.

That's one of the things she's hoping to do as part of this. You know, importantly as well, I would say you see in her this kind of very global person that you would expect to be the CFO of a multi-billion dollar company and to some degree kind of a generational model for what success might look like that actually kind of reflects a very American idea of success. Oh, that's interesting. That's what I was just going to ask you. Would you compare her to any American business leaders like Steve Jobs or Mark Zuckerberg? Well, that's exactly it. That's what I found fascinating in this. You read through her, through these speeches that she's given to American audiences. And again, I mean, let's not kid ourselves. We're talking about speeches that she knows are being recorded and that kind of thing. But I think you have to see something in that.

It sounded something like this. New York is a vibrant city with unlimited potential. The U.S. is a country that has given birth to the most advanced flexible systems of the U.S. She talks about Steve Jobs being, you know, a pioneer of what, you know, America represents to the world. Elon Musk, she mentions in another speech. These are people, you know, that essentially she could stand shoulder to shoulder with in terms of where she's going and what she is bringing to the technological universe, right? So, and I mean, a lot has been made as well in terms of her kind of relationship with America, when she gets stopped at Vancouver International Airport by CBSA, you know, the Canada Border Services agents.

Meng Wanzhou was taken into custody while changing planes in Vancouver and faces extradition to the United States. You know, she's only carrying one Huawei product. She's got iPhones and iPads and all this kind of American technology with her, all of which gets seized at that point. But I mean, clearly, she's somebody who, you know, exists in both those worlds and who is very comfortable in America, which makes it kind of all the more ironic, I guess you could say, that she ends up finding herself as kind of an avatar of China. Right. At the center of the storm. Yeah.

I immigrated from China, so I have interest to know what really happened. I think Huawei is a really important brand. I'm really proud of this Chinese brand. So I hope everything goes well. It's a great company like Huawei. We love you. I want to talk to you today about the allegations that she's facing. So she's accused of violating international sanctions against Iran through essentially this hidden subsidiary, a company called Skycom.

A grand jury in New York has returned an indictment alleging 13 additional crimes committed by Huawei, its CFO, its affiliate in Iran, and one of its subsidiaries here in the United States. And the allegations around Skycom, correct me if I'm wrong, are that they tried to sell Hewlett-Packard computer equipment to Iran's largest mobile phone operator in 2010, and that Meng essentially lied to U.S. banks about the fact that there were these connections between Huawei and Skycom, that essentially Skycom was a front for Huawei. Is that a fair description? It's an unusual kind of situation where, in a way, this PowerPoint that she gave in New York ends up being, you know, you'd consider it exhibit A in the prosecution against her. And what happened is Reuters looked into allegations that Huawei was violating Iranian sanctions through this front company, which, as you say, is called Skycom. And, you

know, you've got to kind of understand with regards to this, what is absolutely a no-go in terms of US sanctions? You know, there are Chinese companies doing a lot of business with Iran, but what is a no-go in terms of the US is the sale of US equipment, particularly US equipment like telecommunications equipment that could be used by the military or by the state, let's say, to spy on its own people. So those kind of form part of the US sanctions. There's that allegation about this front company, which appears in some Reuters stories. Bankers in New York read these stories and say, hey, we've been dealing with this company.

read these stories and say, hey, we've been dealing with this company. So they call Meng to New York. She goes and allegedly says, you know, in this PowerPoint presentation, look, that is not true. That is not happening. That is not going on. And so they rest assured as a result of that. And so what the U.S. government alleges is that by doing that, she essentially led these banks into violating economic sanctions. By claiming that Skycom was a separate company and not an affiliate of Huawei, which it actually controlled, Huawei allegedly asserted that all of its Iranian business was in compliance with the American sanctions.

These alleged false claims led banks to do business with the company and therefore to unknowingly violate our laws. Okay. And obviously she's saying that that's not true and she's putting up a defense right now in fighting these extradition requests. Her defense lawyer Richard Peck noted the political character of her case, saying comments by U.S. President Donald Trump suggesting Meng could be a bargaining chip in a trade war. He also cited concerns about her arrest at YVR in December, saying he will be filing applications alleging abuse of process.

In a minute, I want to get to more concerns around Huawei in general and how Meng Wanzhou might fit into that larger picture. But first, can we talk a little bit more about what's been happening in Vancouver, where she lives? There's this security around her. She's now relegated to her home. I walk by her house pretty much every day. There's lots of very wealthy Chinese that live in the neighborhoods. And why do you think there's been so much fascination in the city? I think it's fascinating to people on a number of different levels. First off, you have just

the mere fact of this story of global import that happens right here. Then, you know, it was revealed very early on in the proceedings here that she owns not one but two giant houses, multi-million dollar houses. You know, she doesn't spend that much time here, but she used to be a permanent resident here. And I think there's sort of a fascination if you walk around the neighborhood with the idea that in Vancouver over the past few years, there have been an enormous influx of wealth. A lot of it has been pointed back to China. Average family-sized townhouses cost $1 million. Rental units are not being built fast enough.

Half of renters in BC pay more than they can afford to house themselves. My generation is looking ahead and thinking, how the heck can we afford to stay here when we want to raise a family? Vancouver's a world-class city that draws in investment from around the world and that's a good thing. We just have to make sure that we're ensuring that the people who live here, who want to raise their families, who want to build a future here can actually afford it. It's this kind of idea that you never really know who actually controls the levers of power and who's living in your city. We'll be back in a second.

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membership are free, including a free book. Go to www.audible.ca slash cbc to learn more. I would be interested to hear your perspective on whether you think that the intrigue around her, for all the reasons you just mentioned, is overshadowing other people who have been caught up in this international incident, essentially. You know, we have two Canadians in detention in China. The Chinese government is saying this morning that Michael Kovrig and Michael Spavor are accused of stealing state secrets. Both remain in detention in what's described as secret jails in China. This is where the lights remain on and the two are subjected to frequent questioning. And do you think that her story is overshadowing theirs? Very much. It's interesting. I mean, we pointed out or kind of detailed the conditions of her bail, which, as you say, involve an ankle bracelet and sort of an area of movement that she's allowed to go around in.

You know, we received emails from people saying, well, you know, send us, you know, why don't you publish the conditions that, as you say, Michael Kovrig or Michael Spavor, like what kind of, you know, what's their area of movement? What things are they allowed? And I mean, that's what we're hearing, that these are Canadians living in a dire situation, accused of spying in China. There's two other men now who are possibly facing the death penalty, Canadians in

China. A Canadian identified as Fan Wei has been sentenced to death for producing and trafficking methamphetamine. In January, Canadian Robert Schellenberg received that very sentence in a drug smuggling case. Canada stands firmly opposed to the use of the death penalty everywhere around the world. Not to mention the fate of thousands of people who make their living farming canola in the prairies. China has claimed the Canadian seed is contaminated and has blocked large quantities from its country.

Federal Agriculture Minister Marie-Claude Bibeau promises increased cash advances for producers. We stand shoulder to shoulder with Canada's canola producers and farm families across the country. And we will continue to listen to their needs. These people's fates, it would appear, are directly connected to the fate and the situation of this one woman here.

So it is really worth bearing that in mind. This is a woman whose fate has had these unbelievable ripple effects beyond the glassed-in courthouse where she first appeared within days of her arrest at Vancouver's airport. It also seems very clear at this point that the story is not just about these specific charges that Meng Wanzhou is facing, that this is also about a war between the U.S. and China, essentially, a battle for dominance by one of the most powerful telecom companies in the world. And Huawei has been working on building 5G networks around the world.

These are networks that would offer way faster data downloads and the Internet available on more devices at one time. And can you remind us sort of what's at stake there? Yeah. So basically, I mean, what we're talking about is the battle to kind of put up the next wave of wireless technology. So we're at the fifth generation or about to begin the fifth generation of wireless network in Canada and around the world. And the reason that's going to be so important is, first off, because of speed, the sort of absolute, you know, if you think about it, it's almost the sort of how long it takes you to download something now will be instantaneous with this next generation of the network. Beyond downloading movies and that kind of thing, though, what you're talking about is the ability that that speed has to connect all the other devices in our lives, which are

connected to us and to each other. Huawei is one of the leading contenders in countries around the world to build that technology. It will be building that technology regardless in places around the world. because of concerns about, you know, the influence and the sort of relationship between the Chinese state and this juggernaut of a Chinese company. And remind us where we stand now with the latest news on what's happening globally with Huawei. I know most recently the British defense secretary was just sacked. The UK defense secretary Gavin Williamson's been fired for allegedly leaking a controversial national security decision about Huawei to the press. News broke last week in a British newspaper that Britain would allow Huawei, the Chinese telecoms and mobile phone giant, to build parts of the country's 5G network over the objections of allies including the US and Australia. You know, as you mentioned, the concerns around this company are two, seem two pronged to me. One is that they're close ties with the Chinese state. People are concerned

that they could spy on people through like a backdoor for these 5G networks. And the other real concern is that the company has allegedly partook in intellectual property theft. So what other things have happened recently? Well, exactly. I guess the United States has led the charge on this by essentially banning Huawei from dealing with any government contracts or contractors associated with the government, which obviously is going to prevent the company from being active in the construction of the bigger 5G network in the U.S. Huawei and ZTE have become dominant global players in the telecommunications market, leaving the world increasingly dependent on their telecommunications goods and services. We've heard reports about backdoors and unexplained beaconing from the equipment sold by both companies. As you say, I think the UK has set up kind of a testing system

to look at security concerns around Huawei. It is still kind of making its decision. Canada has not made a final decision on whether or not Huawei will be allowed to bid on those contracts to build Canada's 5G network. We are examining the security issues as well as the technical issues with a great deal of care. We've made abundantly clear that we will not compromise national security. Just recently, we saw in the Netherlands their largest telecom company saying they would be seeking a Western contractor to do this with.

And Australia's outright banned Huawei from working on its 5G network. Great admiration for the company, but capability takes a long time to put in place. Intent can change in a heartbeat. So you've got to hedge. There is, as you say, this kind of concern about that backdoor idea, the idea that somehow in the technology would be built this backdoor that should they want to use it, the Chinese state could get in there. Huawei has pointed out, you know, these are hypothetical concerns. Huawei has not and will never implant black doors. We will never allow others to install any in our equipment. The way it was explained to us though was that

what is a fear is because a lot of the way that the technology works is that as opposed to being, you know, a hard technology that's there, like the hardware, a lot of 5G technology is going to be based in the software. And you think about your phone or whatever devices you have and how many updates there are that you have to kind of constantly go, okay, yeah, let that go or whatever. OK, yeah, let that go or whatever. If that is the case with 5G and you have all these, you know, updates, how do you keep control of constant changes that might kind of possibly be built into, you know, an update which allow for a backdoor? You know, it will be interesting to see what Canada does. Canada Safety Minister Ralph Goodale, as you mentioned, we haven't made a decision yet. He said last week that we will probably make a decision before elections in October.

We understand the importance and the urgency of the question. We want to make sure Canadians have access to the best, most beneficial 5G technology. Yeah, I mean, so a huge decision is facing Goodale. And, you know, it'll be interesting to see the degree to which it sort of factors into things as an election issue. And it's tough to imagine what the pressure must be like to make that decision with all of this background activity going on around Meng Wanzhou, around China, threats to Canada. And I mean, the very real economic impacts that this entire situation is having. Jason, as always, thank you so much for coming on the podcast. Well, thank you for having me. As I mentioned earlier, Meng Wanzhou is heading to the B.C. Supreme Court this week as part of her extradition hearing.

As for the sanctioned podcast, the final episode comes out today. You can find it wherever you get your podcasts. Thanks for listening and see you tomorrow. For more CBC Podcasts, go to cbc.ca slash podcasts. It's 2011 and the Arab Spring is raging. A lesbian activist in Syria starts a blog. She names it Gay Girl in Damascus. Am I crazy? Maybe. As her profile grows, so does the danger.

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