Huawei’s Meng Wanzhou’s Arrest Highlights Data, Security and Privacy Concerns in Canada
One of China’s largest tech giants, Huawei’s CFO, Meng Wanzhou, has been arrested in Vancouver while in transit to Mexico. She is facing extradition to New York at the request of the US authorities who allege she has violated Iranian sanctions through a Hong Kong based company, Skycom (who she once served on the board of). This issue has created a myriad of issues for both citizens and businesses in China, Canada and the US. I’m going to delve into the issues spanning everything from business, politics, privacy and security from the perspective of a Canadian, doing business abroad including in Hong Kong and Mainland China. In the end though, it’s really all ‘just politics’.
I fail to understand how in a world where Kashoggi’s killers walk free (well they have a travel ban but they won’t be arrested if they arrive in Vancouver), and their superiors walk free and without punishment despite proof of guilt and acknowledgement by the US, why the CFO of Huawei gets arrested for allegations against her employer (for what they allegedly did while she was not serving as board member). Now they’re alleging that she committed fraud- it seems, this is just grabbing at loose strings trying to salvage a situation that the public and internet was flat out outraged by, in all 3 countries.
“One key question it raises: What are the limits of American coercion?”
I’m Scared And You Should Be Too
I’ll get into the details but regardless of the facts of the case, this could end up costing citizens in all related countries a lot of money and a lot of harm. Any sort of war usually has serious consequences and creates chaos for everyone involved- usually the citizens who carry the heavier burden. I am very nervous of what steps the US or Canada may take next to make the situation worse. If the US and Canada are targeting Chinese businesses for trade or political reasons,it’s going to put Canadians and Canadian business in all of Asia at risk. China has strong connections to almost every business hub in the world, and this move on Canada’s part is going to cost us “FACE” and “HONOR” which is a big part of business in not just China, but all of Asia- they won’t say it, but they’ll think it and it’s going to reflect on how they develop partnerships now with Canada.
Canada’s already feeling the wrath of the Chinese government who isn’t like the past governments. This President Xin Jingping is very patriotic and frankly, he’s had enough of ‘western boogeyman tactics’. Weibo also has boycotted D&G for a racist ad, and now they’re targeting Canada Goose (which went down 20 points) over Meng’s arrest. There are 1 billion consumers in China, and gone are the days of poverty, a lot of the country is RICH and a lot of their youth run world markets in many industries. Korea recently had a bite of how it feels when China banned Kpop and Kdrama- this hit their industry hard.
The financial markets have been rocked by this news as it is so clear to anyone that this is more about a trade war than legitimate claims. And if the trade war is the real reason, it marks a serious escalation in the conflict that the US has engaged China in, and one that we could only expect will result in countermeasures. Countermeasures whether in tariffs or a tit-for-tat response to Canadian or US businesses in China could be imminent if Canada continues on this trajectory. They’ve now arrested a 2nd Canadian man over this…you can complain that it’s retaliation and they know it, but they simply don’t care because they perceive what Canada has done the bigger betrayal- and I can’t say I disagree with them.
Don’t understand my reason’s for saying this? Well keep reading, I hope to put all this into context and connect the dots for you.
On that note our country has, in the past, complained about our own citizens being arrested in China despite iron-clad proof of their guilt and to make it even more absurd, those arrested in China are often warned in advance and even given a chance to resolve the issue which is far different from how Canada deals with international criminals. How can Canada say that China is bad for arresting actual Canadians doing fraud (there is no such thing as high quality fine wine being worth 10RMB), but they arrested Meng over trumped up charges laid by US officials. We are not the US’s little brother and we shouldn’t be arresting people on remote charges- this amounts to what the Chinese call kidnapping. They obviously found no evidence of Iranian sanctions being violated by Meng and now they’re changing it to say it’s ‘over fraud’…this is actually looking worse for us as we try to save face.
Canada Arrests’ Meng But Not Chinese Gangsters
Many Chinese citizens have been found to be laundering millions of dollars in BC casinos and I am not aware of any of them being arrested at the airport. It looks like they were allowed to proceed straight to the latest ‘Canadian state run BC Casino‘ and the RCMP and the Canadian government both looked the other way – even going as far as moving the cameras. Neither our government or other governments cared about this obvious, rampant and illegal money laundering by Chinese citizens, which caused a housing affordability issue for Canadians across BC and Canada.
I think there is an argument that law enforcement and the government were aware of it and a blind eye was turned to it (for obvious reasons). Vancouver was becoming a high-flying Miami, enjoying the economic boom based off illicit proceeds. This is something I am fairly certain that Canadians are more concerned about. Recently, some charges were inexplicably dropped just before trial on the only Chinese nationals our government tried to prosecute for laundering money. No explanation on why it was dropped over some documents not handled correctly. What was our Prosecution team doing that such a high profile and solid case could be just dropped over such reasons?
It should also be pointed out that the Chinese media and government have not denied the issue of their citizens having an impact on our real estate. In fact, to the contrary, China has often fought to have Chinese launderers assets seized here in Vancouver and for the return of those individuals to face trial in China for money laundering & other crimes. The process for China has almost always been a long and difficult one. So when China is trying to protect or extradite their citizens from Canada, the response from our side is that “we are a rule-of-law country”. It’s honestly absurd to me but it’s a game of politics and not a game of facts and reality. Canada in this case seems disinterested in sending back criminal Chinese citizens and yet they arrested Meng on what appear to be remote and loose charges at the request of the US, the very country that has engaged in a NAFTA tiff with us, putting Canadians and Canadian business at risk. What exactly is our government doing right now?
I fear this says more about our local and federal government than it does for China. It’s not good, and this seriously hits our international credibility in 2 ways.
- We bend to the will of the US despite having our own laws (we bend to the will of the US but not China so is it the highest bidder or highest stakes?)
- We will put the American interest over our own Canadian interest.
But going back to the issue at hand, China is strongly protesting Meng’s arrest here and not the ones of other known criminals- who Canada seems to be protecting instead by sheltering their money laundering and illicit crimes. Thus showing us that China has a legitimate claim that Meng has not done anything wrong, and I think judging from the Internet’s response, the rest of the world knows that these charges are ‘trumped up’ and without merit. Which again greatly slashes our credibility. At the very least it is outrageous that a foreign country (the US in this case) has asked that a visitor is arrested in transit at YVR ,when it is clear they have not violated any law in Canada and they are not wanted by interpol.
Do The Accusations Hold Weight?
From what I’ve read the charges against Meng sound like they are extremely remote if you were to compare the Chinese money launderers have more evidence of laundering than Meng has for breaking any sanctions. The charges relate to a Hong Kong company named “Skycom” that Meng was once on the board of (of course Skycom has had numerous board members). The allegation is that Skycom illegally sold restricted US based technology/ equipment to Iran, in violation of the sanctions that have been slapped on Iran.
According to our (Canadian) Attorney General (so no one gets it confused with what the US is saying) has said the following:
Ms. Meng had “direct involvement” with Huawei’s representations to banks, said John Gibb-Carsley, an attorney with Canada’s Justice Department.
The timing of these charges smells of a putrid political move, one that I wouldn’t want to play a role in.
Huawei’s and Meng’s defense is that not only did they not own Skycom, but the supposed sanction violating transactions occurred when she no longer had any role in the company. I also have to ask that if Skycom is the offender here (even if they say it was a “Hong Kong Shell Company”) then why isn’t the most recent ownership and board of Skycom being arrested or warrants issued through Interpol for their arrest? That fact alone to me is very telling of the nature of this arrest.
What’s more crazy here is why is Iran being sanctioned when they have time and time again complied with everything the UN wanted from them? Why are Canadians accepting sanctions that have never worked and have only harmed people. This nuclear issue is absurd considering Iran has never invaded a country, while the US has in the last decade toppled, invaded illegally and slaughtered more than 4 million people, funded and support multiple terrorist groups and have more nuclear weapons than most countries combined. And more than that, why are we allowing Nukes to be made? This is 2018, we’re trying to build AI tech, make blockchain tech, make the world more climate friendly and peaceful and yet we have all these governments playing a game with our lives and our planet. Does any of this make any sense?
Hong Kong is politically separate from China. China and Hong Kong don’t have to observe any US sponsored sanctions on Iran, and Canada isn’t supposed to be policing for the United States. Meng was in Canada, not the US.
Either way I am personally not buying the story anymore than the WMD’s in Iraq (my default response when such wild claims are touted against another individual or country). The United States is a great and grand country, but right now, all these things happening from the US makes me extremely nervous about the state of technology and trade. Politics affect business, which affect people.
Why Blame Hong Kong?
As the owner of a Hong Kong company I take great offense and concern with the fact that the US and Canadian portrayal of this matter paints Mainland China and Hong Kong as a lawless place where “anything goes”. I don’t think this could be further from the truth, in fact, most people and businesses in Hong Kong cannot even open a bank account, and a Chinese gangster was arrested in Hong Kong for money laundering. Hong Kong isn’t one of the world’s financial hubs because “anything goes” but because of the rule-of-law, administration and competent governance. In Canada a Chinese citizen can fly over for the weekend, purchase multiple multi-million dollar homes and then fly back home. In China, you can’t just do that. There are tight controls to make sure you’re not wanted in another country- especially in your home country and that you don’t have a criminal record, that you can provide proof of your finances and where it’s coming from etc etc
And as we can see, in Canada the governments basically given a free pass to Chinese criminals to come as they please and launder as they please. But for Meng, who wasn’t on the board at the time of these so called violations, they arrested her, detained her, and are prepared to send her to the US without even batting an eye of the consequences of what this says to Canadians, to China and the world. We have just made a stupid mistake, and now the internet on a global scale is calling us the ’51st state’…as a proud Canadian, this hits me hard.
Should Visitors To Canada Be Arrested Based On Untested / Foreign Warrants?
I’m not a lawyer but certainly it doesn’t look like Canada was obliged to comply with the US request. Meng hasn’t been accused of any crime in Canada and as far as I know she wasn’t wanted by Interpol.
But from a practical perspective, not only for Chinese citizens but to the world, this doesn’t look good that a foreigner was arrested on untested charges which appear to be politically motivated. It is even more alarming that Meng is not wanted for any crime at all in Canada.
There was a lot of rhetoric in Canada over the Kinder Morgan Pipeline issue of “what if foreigners think Canada is a bad place to do business if we don’t let a Texas based company run an oil pipeline?”. I don’t think many people come to Canada to run oil pipelines so it is a very niche market and from a business standpoint I found to be laughable they made such an excuse. And even more laughable when the Canadian government used taxpayer money to acquire this multi-billion dollar Texas oil project.
Shouldn’t we be more concerned if countries around the world feel that Canada has no sovereignty and is just the 51st state? That would take away any business case for doing business in Canada since “we might as well do it in the US if Canada has the exact same policies”? Or they may pick a more neutral country than Canada to do their business or even to visit. It also raises severe questions about the competence or foresight of our government to handle such a case this way and is the latest embarrassment since a horrible NAFTA agreement : Trudeau let the US decide that they can veto any deals we make with China as part of the agreement.
I think we should be more worried about all of this rather than if “we are pipeline friendly”. What government would harm its own citizens and one of its largest trading partners is the question I would think many foreign investors would be looking at. Genuine worries would include concern that political and trade disputes from around the world whether the US, or Iran could end up in their company or personnel being wrongly accused or detained on behalf of a foreign government (eg. in this case the US)? A lack of sovereignty and unclear jurisdiction is something that makes me concerned as a Canadian citizen.
If a foreign country claims someone has done something wrong even though no law in Canada has been violated how can we feel safe and considered a “rule of law country”? I think the the term at the moment should be moreso “the rule of law on behalf of the USA”. Our government has not only complied with the US arrest request but our Attorney General is almost reciting the US position in verbatim to justify the detention and possible extradition of Meng and they keep saying “our judiciary is separate and independent unlike China”. I think this one arrest alone is proof that not only is our judiciary not independent but our government has no sovereignty or independence.
Travelers may think twice about if Canada is a better place to visit or even fly through if our government will comply with foreign arrest warrants regardless of the legality or merits of the request. It is even more chilling from the perspective of data security and privacy where we already have seen cases of the RCMP raiding datacenters in Canada at the request of the US. The real question to me is “what’s next?” and “how can I protect myself as a citizen or business?”. This article basically outlines what I have been saying for years, your business is not safe in the US or Canada.
The Timing and the Trade Wars
This comes as the US and China have been involved in a very nasty trade war with the US’s Trump Administration. It’s true that the US has been targeting Huawei just as they have targeted ZTE for a long time with concerns of “security” and “ties to the Chinese government”. At the end of the day the US nearly killed ZTE and stopped their inroads into the US market over the allegations of Iranian sanctions violations. I believe this to be an even worse and more extreme case because the stakes with Huawei are higher, they have a global reach and they are not just into cell phones and consumer electronics but also networking gear for the enterprise.
I am quoting the “security” concerns because it could get very nasty very fast for both Canadian and American firms. Let’s be realistic, all large tech companies in the US are regulated and have a very close relationship with the US government. We know this because of the “Snowden Leaks”, vault 7 shows us exactly the extent and reach of spying on citizens and of allies. The PRISM network would not be possible without such ties and co-operation. What if Beijing suddenly decides that foreign tech companies like Apple and Amazon are a national security risk which I think there is a legitimate case to be made for? What if they ban Apple and Amazon– do you know what that will do to Apple and Amazon? It will butcher them over night, and cost jobs for us here in Canada and the US. The bigger Canadian question would be, why are we allowing NSA spying and monitoring of Canadians? Because we’re allies and we need to keep the peace, even at the cost of our own national security…
Iranian Sanctions
Speaking again as a citizen of Canada and resident of the Vancouver area we are more concerned about other issues than someone transiting YVR who has untested allegations of violating sanctions imposed on Iran via the US. It is puzzling to me from a common sense approach, I thought the sanctions were going to be lifted since Iran did what the US asked? I understand the US pulled out of the agreement but as I’ve talked about before, tech companies are lining up waiting for the sanctions to be removed. It doesn’t make sense that Iran would be sanctioned while Myanmar or Saudi Arabia or even the US itself is not being sanctioned. But politics are what they are and we can only hope that common sense and wisdom will be contagious at some point because an open market to Iran would stimulate the world economy significantly in my opinion.
Iran has generational wealth, meaning the picture painted that Iran is a poor place is not 100% correct. They have gold and oil…which, lets face it, is the end goal of the US. They can’t just invade Iran because China and Russia, both nuke ready, would do the all out war the US has promised since Iraq…I’m worried, because business is one thing but the US and China are tinkering for war here and Canada needs to stay out of it and remain peace keeping neutrals, and not engage one side or the other in this.
So let me say this again, I just fail to understand how in a world where Kashoggi’s killers walk free (well they have a travel ban but they won’t be arrested if they arrive in Vancouver), and their superiors walk free and without punishment despite proof of guilt and acknowledgement by the US, why did the CFO of Huawei get arrested for allegations against her employer and now allegations of fraud.
Data Security and Privacy in Canada, the US and Countries That Honor US “Requests”
Many of us think the Five-Eyes and the US when we talk about data security and privacy for obvious reasons. But as I’ve always said these issues extend beyond simply spying. Those familiar with world events over a long period of time know that if the US or a Five-Eyes partner wants you or your data, that you will never be safe and the issue here with Meng is another example. It doesn’t matter if you’ve done nothing wrong, if they want your data, your bank accounts to be frozen, or for you to be jailed on behalf of an alley, they will do it. This is scary for both the Canadians citizens but also to foreign travelers.
And on that note why are any countries sanctioned it appears to me that sanctions just harm innocent people while human rights abusers like Myanmar never get sanctioned. It’s geopolitics at its finest but we all have a job to do and we have to understand that our data as citizens or the data of clients cannot ever be expected to be safe if it is stored in a country that co-operates with the US in such a matter. It’s a fact proven over and over.
There are a few countries where I think your data can be safe but it’s a question of knowledge and will. It’s not enough to use a company owned and based in the US that has facilities in a safe country. Why? Because the parent company being located in the US places overseas data in their jurisdiction whether it is legal or not. The only way to deal with threats to privacy, security and data is to deal with a firm that is registered and protected in a country that is able to withstand pressure from the Five-Eyes countries.
Conclusion
There can be no denying that the timing of this and the facts behind the arrest look to be completely politically motivated. Regardless of the relevant facts behind the accusations, this situation could have severe and dire consequences for the average person. It is also a stark reminder that whatever country honors any US requests is a country that neither you or your data can ever be considered safe in. It would be wise for any law abiding citizen or company to consider having their IP and data assets in a secure country or city like Hong Kong which is known to refuse such requests.
Phew that was long. Thanks for making it to the end, and hopefully this has given you some perspective, and from what I see online, it seems the world isn’t completely blind to what has happened here in the Meng case. In fact, if anything, this has only made the US look utterly hypocritical and now Canada as well.
My only hope is that the Canadian legal system will stop this now and just send Meng back home and we can salvage whatever thread of a relationship we have with China to be intact. Also, as a Canadian I don’t appreciate what the US has done here with our country. I respect America, I think it’s still the land of dreams and I still think small business is much better in the US, so is the tech and work ethic compared to Canada (I’m being blatantly honest), but what they have done is caused the world a lot of chaos in a time where we should all be building for the future.
We are all humans at the end of the day and politics will have you believe that laws were broken here, when it seriously wasn’t. Why are we turning a blind eye to flat out criminals who have done great harm to our housing market and the drug crisis while we punish those who have remote connections on behalf of another country.
We are Canadians, and the world really needs more Canadians. Right now I want to make a plea to our Government, please do not do anything more with the US interest in mind. Do it for Canadian interest in mind.
I do not intend to get into the politics of this, but more so the affect this has on Canadian business and the Canadian image with potential 1 billion consumers in China. I also do not intend to fan and flames of hate, I feel that only when we are honest can we make the right decision when it comes to global business. I do not intend to also insult or hurt anyone by my thoughts. The only aim of this article was to put things into context.
Cheers,
A.Yasir
