Sunday, October 17, 2021

Despite Meng deal, expert suggests that Huawei won’t get OK to sell 5G network equipment to Canadian telcos

Huawei Canada shouldn’t necessarily expect the resolution of the extradition case against CFO Meng Wanzhou to lead to the Canadian government approving the sale of 5G networking equipment to telecom providers here, says a security expert.

”I think it will mean nothing for [the sale of ] Huawei equipment unless the Canadian government has side conversations with the Chinese regime,” Christian Leuprecht, a Queen’s University professor and senior fellow in security and defence at the Macdonald Laurier Institute, said in an interview. And he doubts such talks have happened.

“Governments always try to avoid linkage of different matters,” he explained. “For example, if we have a steel tariff dispute and a software lumber dispute with the U.S. you try to avoid linking them. You try to negotiate them separately,” he said. Ottawa “will not want to be in a position where it might end up making concessions to Huawei.”

Friday afternoon a British Columbia judge dismissed the extradition hearing after learning the U.S. had withdrawn its request for Meng to be sent there to face charges. The move came after Meng accepted a deferred prosecution agreement from American authorities.

The extradition hearing had forced Ottawa to delay a decision on whether Huawei’s equipment is a security risk and thus should not be installed by Canadian telecom wireless network providers in their latest wireless networks. It has lasted for so long that those with existing Huawei equipment in their networks — mainly Bell and Telus — have chosen other 5G equipment providers. 

Related content: Huawei cyber risks can’t be mitigated, says expert

The arrest in China of Canadians Michael Spavor and Michael Kovrig shortly after Meng’s 2018 arrest in Vancouver on an extradition request from the U.S. further slowed the process. Meanwhile the U.S. regularly pressured Canada — and other countries — to stay away from Huawei network equipment on security grounds.

Leuprecht was interviewed before news broke that Spavor and Kovrig had been released and were on their way back to Canada.

When asked if it is still possible that in the future Canada will allow telcos to buy Huawei networking equipment, Leuprecht was skeptical.

“I think the Chinese know they have lost that fight,” he said. “We might never see Canada make an official decision on this – certainly not as long as there are Canadian hostages being held in Bejing. But the three large telecoms have basically said they are getting out of Huawei. The government is signaling they have left the door open for Huawei participation, but in practice I think they have been signaling the telecoms they’d be taking a high risk if they installed Huawei equipment. And the telecoms have got that message.”

Meanwhile Huawei Canada continues to try to have a high business profile here. In January it noted the company spent just over $261 million on research and development here in 2019, making it rank 18th among Canada’s Top 100 Corporate R&D spenders according to a report by RE$EARCH Infosource Inc.

Huawei opened a research centre in Ottawa in 2009, and has other R&D facilities in Waterloo, Edmonton, Vancouver, Montreal, Quebec City, Kingston, and at its Canadian headquarters in Markham, Ont. It has more than 1,200 researchers and engineers in this country.

On Friday afternoon Meng appeared by video link before a New York judge where U.S. federal attorney David Kessler said a deferred prosecution agreement had been reached. Washington will move to dismiss the charges against her if she complies with all of her obligations under the agreement, which ends in December 2022. As part of the deal, the United States withdraws its request to Canada for her extradition.

At the same time Meng pleaded not guilty to bank and wire fraud charges for allegedly misleading financial institution HSBC in 2013 about the telecommunications equipment giant’s business dealings in Iran. At the time the U.S. had sanctions against American companies dealing with the country. Briefly, the charges allege Meng misled the bank about its close relationship with Skycom Tech Co., which did a deal with Iran through a British company. Payments in that deal went through a U.S. branch of HSBC, allegedly in violation of the sanctions.

As part of the deferred prosecution, Meng agreed to a statement of facts, including that of making untrue statements to HSBC that Skycom was a business partner when in fact Huawei controlled the company.

U.S. charges against Huawei Technologies still remain. According to a Reuters report, the U.S. Justice Department is preparing for trial against Huawei.

After her release, Meng expressed her appreciation to the Canadian government for its adherence to the rule of law, and thanked the Canadian people for their tolerance, apologizing for the “inconvenience caused.”

In a tweet, Huawei Canada said “We look forward to seeing #MengWanzhou returning home safely to be reunited with her family. #Huawei will continue to defend itself against the allegations in the U.S. District Court for the Eastern District of New York.”

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Jim Love, Chief Content Officer, IT World Canada
Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@] soloreporter.com

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