Reuters alleges Huawei covered up ownership of Iranian affiliate

The Chinese tech giant reportedly moved one of its employees into the affiliate 'to urgently avoid the risks of media hype'.
Written by Campbell Kwan, Contributor

A series of documents reportedly reveal that Huawei covered up its ownership and control of an Iranian affiliate, Skycom, as part of a scheme to sell prohibited US technology in Iran.

Reported by Reuters, a series of documents claim that Huawei effectively controlled Skycom by performing actions such as shutting down Skycom's Tehran office, forming a separate business in Iran to take over millions of dollars worth of Skycom contracts, and having its employees manage Skycom "to urgently avoid the risks of media hype". 

Huawei has long described Skycom as a separate local business partner that it sold over 10 years ago, and has denied accusations from the US that it sold technology in Iran illegally by using Skycom as a false subsidiary.

The Chinese tech giant currently faces indictments based on these accusations, with the US alleging that Huawei lied about its sale details of Skycom to claim it was in compliance with US-Iran sanctions, which then resulted in banks working with the company also violating the sanctions. 

"Huawei employees allegedly told banking partners that Huawei had sold its ownership in Skycom, but these claims were false," United States then Attorney-General Matthew Whitaker said last year.

Huawei and its CFO Meng Wanzhou, who has also been accused in the indictment, have so far denied the criminal charges, which include bank fraud and wire fraud, among other allegations. Skycom, which was registered in Hong Kong and was dissolved in 2017, is also a defendant. 

The US is currently seeking the extradition of Meng from Canada, where she is currently released on bail in Vancouver, for her to face the charges. 

Huawei is not the only Chinese tech giant to have found itself in hot water for doing business in Iran. ZTE was previously investigated by US authorities and eventually found to have broken US sanctions by shipping $32 million worth of products containing US-made equipment to Iran without proper licensing from 2010 to 2016. 

This led to ZTE paying over $892 million in fines to settle the sanctions allegations. Following the payment of these fines, ZTE suffered a net loss of 2.36 billion yuan in 2016.

Both Huawei and ZTE equipment have since been banned from US networks where the kit is purchased with federal money, and are designated as national security threats by the US Federal Communications Commission. The two companies are also in the US' Entity List, which prevents them from buying parts and components from US companies without government approval.

Washington also recently clamped down on Huawei's semiconductor supply, with companies now needing an export licence to sell to the Chinese giant.


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