Huawei has been gradually cutting its Washington lobbying fund as its troubles with the United States government grew more numerous over the course of the last half a decade, new reports indicate. Whereas the Shenzhen, China-based technology juggernaut spent approximately $1.2 million on lobbying in the U.S. capital back in 2012, it only invested a fraction of that sum this year; public records show Huawei currently has a sole lobbyist in Washington and has spent only $120,000 on lobbying U.S. legislators in the first three quarters of 2018. The full-year sum is unlikely to be significantly higher, especially given new controversies stemming from the fact the company’s Chief Financial Officer Meng Wanzhou was arrested in Canda on December 1 following an official request from the stateside Department of Justice.
An international incident
While Ms. Meng was released on bail amounting to some $6.5 million earlier this week, she’s currently under limited house arrest and has had her passport taken due to being a perceived flight risk. The Justice Department has yet to formally request her extradition but is expected to do so shortly, well ahead of its early February deadline to do so. The 46-year-old executive previously won a publication ban, limiting the media’s ability to investigate and report details about her case, though initial hearings and the DOJ’s comments on the matter already revealed the gist of the ordeal. Based on that information, Ms. Meng is suspected of secretly forging ties with Skycom Tech, a Hong Kong company operating in Iran. While autonomous on paper, investigators suspect Skycom of actually being a subsidiary of Huawei. The firm attempted selling American technologies to an Iranian smartphone company and while it’s presently unclear whether it managed to do so, such a move stands in direct violation of the Commerce Department’s trade sanctions imposed on the Middle Eastern country.
Ms. Meng is accused of actively concealing the Huawei-Skycom connection from banks, consequently organizing an illegal banking scheme that broke U.S. fraud legislation. Based on the currently applicable federal law, she could be facing up to 30 years in prison. While it remains to be seen what kind of evidence the Justice Department has at its disposal, it’s unlikely it would have opted to move against one of the most senior executives of China’s largest private company and cause additional friction in the already troubled Washington-Beijing relations had it not uncovered some significant indicators of wrongdoing. Regardless, the arrest sparked an international incident that already saw the communist government condemn U.S. actions and threaten retaliation, demanding Ms. Meng’s immediate and unconditional release. Given how the DOJ suggests Ms. Meng is personally implicated in the scandal, it would appear it can somehow prove she herself claimed Skycom and Huawei are entirely separate and unaffiliated entities in her dealings with banks.
Fear and uncertainty on the rise
Huawei itself said it wasn’t aware of any illegal acts allegedly committed by Ms. Meng and expressed disappointment with how little it was told about the case. State-owned media in China are already accusing Ottawa of being a U.S. puppet, arguing any extradition of Huawei’s CFO would constitute a violation of international law that forbids such actions if they’re politically motivated. Both the Trump and Trudeau administrations dismissed that notion last week, claiming their law enforcement agencies coordinated Ms. Meng’s arrest on their own, based on hard evidence collected by stateside investigators. The arrest itself happened just as President Trump agreed to a 90-day truce with Chinese leader Xi Jinping following a full-blown trade war that lasted for months and placed a massive strain on the economy of the Far Eastern country.
Shortly following Ms. Meng’s arrest, China detained two Canadian businessmen in relation to officially unrelated wrongdoings in the Far Eastern country, claiming there’s no connection between the two. U.S. President Donald Trump sparked additional controversy earlier this week after stating he would personally intervene in the case if doing so would help Washington gain additional leverage in its ongoing trade talks with China. Beijing interpreted the comments as evidence that the arrest was illegal and politically motivated, with state-sponsored media arguing his belief of being able to affect the judicial proceedings that await Ms. Meng prove the U.S. judicial system isn’t independent and only serves to further the government’s agenda. High-profile technology executives in both the U.S. and China are now reportedly fearful of traveling between two countries due to concerns they themselves might get caught in the political crossfire that’s now escalating with the DOJ’s attempts to extradite one of Huawei’s top executives.
Washington sending a strong message
Ms. Meng has been with the Chinese company since its startup phase in 1993 and is perceived to be an even more important figure than her title alone would suggest given how she’s one of three children of Huawei founder Ren Zhengfei. The 74-year-old multi-billionaire is at the root of most claims that Huawei has been compromised by the Chinese government as he’s a former engineer and official of the People’s Liberation Army. His past affiliations notwithstanding, the existing regulatory framework in China allows Beijing’s intelligence agencies to easily force companies into collecting and/or yielding access to information on virtually anyone. Given that legislative context, it’s not about what Huawei did in the past to warrant scrutiny from Western governments but what it could be compelled to do at any point in the future, as numerous intelligence officials previously argued.
And while Washington remains adamant Ms. Meng’s arrest is not a political ploy but a natural extension of a valid criminal investigation, the move still sends a strong message; one that shows no one is safe when it comes to violating trade sanctions imposed by the federal government. A similar sentiment was already observable from ZTE’s 2018 troubles with the Commerce Department that nearly brought down the state-owned company from China. However, politics intervened and President Trump personally pushed for a lighter punishment as a sign of goodwill in the White House’s ongoing trade talks with Beijing, the very same ones that China now claims were the true reason behind Huawei CFO’s arrest.