China telecoms giant Huawei CFO arrested in Canada

Canada has arrested Chinese telecoms giant Huawei's global chief financial officer in Vancouver, where she is facing extradition to the United States, Canada's Department of Justice said on Wednesday.

The arrest is related to violations of U.S. sanctions, a person familiar with the matter said. Reuters was unable to determine the precise nature of the violations.

Sources told Reuters in April that U.S. authorities have been probing Huawei, one of the world's largest makers of telecommunications network equipment, since at least 2016 for allegedly shipping U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws.

Meng Wanzhou, who is one of the vice chairs on the company's board and the daughter of company founder Ren Zhengfei, was arrested on Dec. 1 and a court hearing has been set for Friday, a Canadian Justice Department spokesman said.

Huawei confirmed the arrest in a statement and said that it has been provided little information of the charges, adding that it was "not aware of any wrongdoing by Ms. Meng."

China's embassy in Canada said it resolutely opposed the arrest and called for Meng's immediate release.

The arrest could drive a wedge between China and the United States just days after President Donald Trump and President Xi Jinping held a meeting in Argentina where they agreed to steps to resolve a trade war.

The sources said in April the U.S. Justice Department probe is being run out of the U.S. attorney's office in Brooklyn.

The U.S. Justice Department on Wednesday declined to comment. A spokesman for the U.S. attorney's office in Brooklyn also declined to comment.

The probe of Huawei is similar to one that threatened the survival of China's ZTE Corp , which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran.

Earlier this year, the United States banned American firms from selling parts and software to ZTE, which then paid $1 billion this summer as part of a deal to get the ban lifted.

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

Meng, who also has gone by the English names Cathy and Sabrina, served on the board of Skycom between February 2008 and April 2009, according to Skycom records filed with Hong Kong's Companies Registry.

Several other past and present Skycom directors appear to have connections to Huawei.

The news about the arrest comes the same day Britain's BT Group said it was removing Huawei's equipment from the core of its existing 3G and 4G mobile operations and would not use the Chinese company in central parts of the next network.

The handset and telecommunications equipment maker said it complies with all applicable export control and sanctions laws and U.S. and other regulations.

The Huawei statement said Meng was detained when she was transferring flights in Canada.

Her arrest drew a quick reaction in Washington.

U.S. Senator Ben Sasse praised the action and said that it was "for breaking U.S. sanctions against Iran." He added: "Sometimes Chinese aggression is explicitly state-sponsored and sometimes it's laundered through many of Beijing’s so-called 'private' sector entities."

U.S. stock futures and Asian shares tumbled as news of the arrest heightened the sense a major collision was brewing between the world's two largest economic powers, not just over tariffs but also over technological hegemony.

While investors initially greeted the trade ceasefire that was agreed in Argentina with relief, the mood has quickly soured on skepticism that the two sides can reach a substantive deal.

S&P500 e-mini futures were down almost 2 percent at one point in thin Asian morning trade on Thursday.