Meng Wanzhou is accused of violating Iran sanctions. Source: Nikkei

Canadian authorities have arrested the chief financial officer of Chinese telecoms giant Huawei. The action was taken at the request of the US. Meng Wanzhou is accused of violating Iran sanctions. She is the daughter of Ren Zhengfei, the founder of Huawei. Meng was arrested on Saturday in the city of Vancouver and is expected to be extradited to the US in the coming days. She will also be getting a chance to push against the extradition. A hearing has already been scheduled later in the week.

The Chinese government said that the US and Canada have not clarified the reason why Meng was arrested. Beijing added that the Chinese Consulate in Canada is providing all the assistance that she needs. Her detention has angered the Chinese government and this may hamper any goodwill after China and the US agreed to a 90 day cease-fire in the ongoing trade war.

The FBI is “deeply concerned” about Huawei exporting devices into the country. Source: Yahoo Finance

Huawei is the second largest phone maker in the world by volume. However, its efforts to make a mark in the US market have faced numerous challenges. US intelligence bodies have said that Huawei’s entry into the US telecoms market could have serious national security implications. The US Commerce Department, in fact, imposed a “denial of export privileges” directive on Huawei and ZTE, another Chinese telecoms company. This came days after FBI director Chris Wray told the Senate Intelligence Committee that the bureau was “deeply concerned” about the risks presented by Huawei and ZTE if they were to start exporting devices into the country.

In 2012, the Chinese company was accused of trying to sell restricted computer equipment to Iran in violation of US-led sanctions against the country. According to reports, Huawei had offered to sell HP computer equipment valued at $1.7 million through one of its partners. However, the company said that these allegations were false. In a statement released shortly after the news broke, Huawei said that it didn’t sell any such equipment to Iran nor did its partner Skycom.

The extradition to the US could run into many diplomatic challenges. Source: CNN

It’s not clear why it took so long for US authorities to act on the matter but the extradition of Meng into the US could run into many diplomatic challenges. Officials in China have already expressed their anger towards Meng’s detention. It’s very likely that any attempt to prosecute her in the US will be met with fierce resistance. The details of this arrest are still not clear. From what we know so far, Meng has been in police custody but hasn’t been formally charged with anything in the US or in Canada.

Nonetheless, if there will be a high profile legal process, no doubt it will hurt any small chance Huawei had in ever making a mark in the US market. US and Canadian authorities said that Huawei hasn’t responded on the matter and it’s yet to issue any statement on Meng’s arrest. The Chinese telecoms giants will probably wait and see how things play out first before issuing a response to the arrest and the possible extradition of Meng into the US in the coming days.