Two years ago, after being laid off by Huawei for
questionable reasons, I published a book about my experiences with the company:
Huidu
- Inside Huawei. I still stand by
most of the content in the book.
I stand by my arguments that Huawei has been treated unfairly by the
U.S. Government, in some cases for duplicitous cause. I stand by my assertions
that, despite its global success, Huawei is remarkably internally dysfunctional,
as well as prejudiced in terms of its treatment of and general lack of respect
for non-Chinese, whether employees or otherwise.
But, I would like to extend an apology for a section of one
chapter in the book, a chapter which re-captures a January 2013 blog post in which
I lambast one-time Wall Street Journal, current Reuters investigative journalist
Steve Stecklow. The blog post focused on Stecklow’s reporting on Huawei’s
alleged circumvention of U.S. sanctions on Iran, specifically Huawei’s
relationship with a Hong-Kong company called Skycom.
<Aside: I'm a tad torn on this. Not because I have come to
believe that I was misled by my employer and am now in part recanting past
positions, but, rather, because Stecklow gave a January 2019 presentation to an
Asia Society audience in he which dedicated a snarky half-hour to
deriding the blog-post section of the chapter referenced above and yet
simultaneously used it to frame his self-congratulatory review of his reporting
on Huawei and Skycom>.
Stecklow and I had multiple and substantive conversations related
to his reporting on the Huawei-Skycom-Iran topic back in 2011-2012. To the extent that he quoted me in his
reporting, it was in the context of for-the-record guidance either developed or
approved at Huawei HQ in Shenzhen, including the boilerplate statement that
Skycom was an independent company with which Huawei had a normal arms-length business
relationship.
The same applies to representations the Huawei D.C. Office may
have made to relevant government agencies or office in the Congress. We did not deliver such messaging blithely. Indeed, over my eight-year tenure with Huawei,
the Americans in the Washington Office took Iran and export control-related
matters very seriously, and we pushed hard to have Legal and Trade Compliance
leadership at HQ provide us with proof of Huawei compliance with U.S., EU, UN
or other relevant sanctions.
We were skeptical, even deeply so, for instance when we
learned that Huawei’s CFO had been a Board Member of Skycom in the late 2000’s.
But HQ seemed to have legitimate answers to our questions and genuine in their
reactions to our probes, and, well, we could not imagine that Huawei leadership
would dissemble about matters as critically important to Huawei’s global
business – it’s sustainability writ large – as U.S. export control and
sanctions policies.
Neither Stecklow nor the U.S. Government has yet produced –
publicly - any evidence that Huawei was indeed selling or has indeed sold sensitive,
sanctioned or export-controlled technology to Iran or elsewhere, directly or
indirectly. If the U.S. Government had such a smoking gun, given the pattern of
their behavior in all matters Huawei-related, they’d have long ago crucified
the company
<Notably, Stecklow’s early reporting on Huawei providing
network equipment with integrated law enforcement interfaces (not export-controlled
at that time) to Iran being somehow uniquely nefarious was silly: As explained
to him at the time, global network standards as approved by carriers and
governments require vendors to incorporate such interfaces, for instance under
the U.S. CALEA law>.
But, Stecklow’s 2011-2012 - and since - reporting on Huawei’s tangled relationships with Skycom seems to have a pretty strong basis in
fact, notwithstanding Huawei’s historical denials and attestations that such
entities were independent. Indeed, his
reporting has been cited as evidence in Iran sanctions-related Canadian and U.S.
legal cases against Huawei’s CFO, now two-years detained in Canada pending extradition
to the U.S., as well as related and broader U.S. charges against Huawei writ
large.
Grossly simplified, the U.S. believes that Huawei leveraged
a controlling relationship with Skycom to circumvent U.S. sanctions on
Iran. That said, the focus of U.S.
criminal charges is that Huawei’s CFO and other executives pursued a conscious scheme
to mislead banks about the company’s relationship with Skycom, and based on
those misrepresentations, HSBC for one may have inadvertently violated
sanctions or export controls by clearing funds related to illegal transactions out
of Iran.
Huawei maintains that it sold its interest in Skycom in 2007
and denies any wrongdoing, including in the context of presentations or representations
to banks or otherwise.
I have grown to believe that the U.S. may have a strong case.
Today, September 16, 2020, Stecklow and Reuters colleagues
ran a piece titled Top
Huawei executives had close ties to company at center of U.S. criminal case,
prompting this blog post and my apology to Steve for my January 2013 blog post and
its re-purposing in a section of a chapter in my 2018 book.
It seems that Stecklow and company have discovered that the
Huawei-Skycom relationship that Huawei maintains was severed in 2007 remained
alive and well in Brasil from 2007 to at least 2012.
While Skycom was sold off to Canicula Holdings – a holding company
registered in Mauritius in 2007 which the U.S. Government has suggested is
another Huawei-funded shell – Stecklow reports that previously unknown Skycom
shares in Huawei Brasil, dating back to 2002, were not sold until 2012 (and
that was to Netherlands-registered Huawei Technologies BV).
The nugget in their reporting that stood out to me was the fact
that two of Huawei’s three current CEOs – Ken Hu and Guo Ping – were directors
of Huawei affiliate Hua Ying Management Co Ltd that bought 100% of Skycom in
February 2007 and transferred those shares to Canicula nine months later. Oh, of note, Huawei’s CFO now under house
arrest was Hua Ying’s corporate secretary back in 2007 as well.
What bothered me when reading the article wasn’t that Huawei
may or may not (I now lean towards “may") have maintained control of Skycom well
beyond 2007 and, related, indirectly contributed to violations of U.S.
sanctions whether through Skycom or in the context of the more convoluted path
of briefings to banks. No, my concern was
much more parochial.
Over my years with the company, particularly in my early
years, I had a number of opportunities to interact with both Ken and Guo, one-on-one
(separately), whether on their visits to the U.S. or over lunch or coffee
during my visits to Shenzhen. Given the
importance of the U.S. market, the political environment, and U.S.-China
relations more broadly, such meetings were not unusual.
The thing is, I recall – perhaps incorrectly - raising
Stecklow/Skycom concerns with one or another or both of them at some
point in the 2011-2012 time frame. Iran-related concerns were a big
deal for us in the D.C. Office. American
emotions related to Iran are always high and any perception of Huawei wrongdoings
could have been devastating.
I had no idea at the time that they had both been intimately
involved with Skycom, as Reuters has now uncovered.
And yet, I have no recollection of either of them in any way
acknowledging having ever heard of Skycom when the topic was raised. Had we in the Washington Office had access to
the full Skycom and Iran histories as early as 2011-2012, we could have adjusted our
posture in D.C. At the very least, we might
have avoided potentially making fools of ourselves briefing U.S. Government
officials with details they may well have known to be, at best, “incomplete.”
Sadly, this pattern of behavior – compartmentalization of information
essentially based on nationality – is, in my experience, the Huawei norm, not the exception.
Is it any wonder Huawei has always been and remains trust-challenged
in D.C.?
