Huawei’s ‘Unofficial’ Skycom Allegedly Used to Break Sanctions

(Bloomberg) -- Skycom Tech Co., a little known Hong Kong telecom equipment seller, was thrust into the global limelight Friday when Canadian prosecutors said it played a central role in helping Huawei Technologies Co. evade U.S. sanctions against Iran.

"Huawei used an unofficial subsidiary named Skycom to transact business in Iran for Iranian telecommunication companies," Crown attorney John Gibb-Carsley alleged in a Vancouver courtroom.

The U.S. alleges that Huawei's chief financial officer, Meng Wanzhou, hid ties between Huawei and Skycom, according to Gibb-Carsley. Canada was presenting the case against Meng on behalf of the U.S., which wants to extradite her. Meng was arrested in Vancouver Dec. 1 at the behest of U.S. authorities and on Friday she was charged with conspiracy to defraud banks. A decision on bail was not reached, and the case continues on Monday.

Skycom was part of Huawei's company in Iran that worked on a contract with mobile operator MTN Irancell Telecommunications Services Co., according to a former employee who asked not to be identified discussing the private matter. Skycom contracts in Iran were in the local rial currency, whereas Huawei contracts were in U.S. dollars, the person said. In the past, Huawei had sold telecom equipment to MTN Irancell, Bloomberg has reported. Skycom was dissolved last year, according to Hong Kong filings.

Skycom employees worked for Huawei, the U.S. alleged. Meng was said to have been a director of Skycom at one point, Reuters reported in 2013. Another director of Skycom, Hu Mei, appeared to have a Huawei email address and was listed in that company's employee directory, Reuters reported. Skycom tried to sell 1.3 million euros ($1.7 million) worth of Hewlett-Packard Co. computer gear in late 2010, according to Reuters.

Former employees of Skycom have stated that it was not distinct from Huawei, and that Skycom employees had Huawei email addresses and badges, according to a Canadian court filing. Documents obtained through an investigation by U.S. authorities show that multiple Skycom bank accounts were controlled by Huawei employees, the filing said.

--With assistance from Kevin Orland and Selina Wang.

To contact the reporters on this story: Nico Grant in San Francisco at ngrant20@bloomberg.net;Natalie Obiko Pearson in Vancouver at npearson7@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Emily Biuso, Mark Milian

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