Pariah Company

Huawei CFO Meng Wanzhou arrested in Canada, faces extradition to United States
By Julia Horowitz

Meng Wanzhou, CFO of Huawei

New York -- The chief financial officer of Chinese tech giant Huawei has been arrested in Canada. 

She faces extradition to the United States.

Meng Wanzhou, also known as Sabrina Meng and Cathy Meng, was apprehended in Vancouver on December 1, according to Canadian Justice Department spokesman Ian McLeod. 

In addition to her role as CFO, Meng serves as deputy chairwoman of Huawei's board. 

She's the daughter of Huawei founder Ren Zhengfei.
Meng "is sought for extradition by the United States, and a bail hearing has been set for Friday," McLeod said in a statement, which was first reported by The Globe and Mail.
McLeod said the Canadian Justice Department can't share details of the case. 

Meng was granted a publication ban after a judge agreed to bar both police and prosecutors from releasing information about the case.
A Huawei spokesperson said Meng was detained by Canadian authorities on behalf of the United States when she was transferring flights in Canada. 

Huawei said she faces unspecified charges in the Eastern District of New York. 

The Wall Street Journal reported in April that the US Justice Department was investigating whether Huawei violated US sanctions on Iran.

The US Justice Department declined to comment Wednesday.
China's Ministry of Foreign Affairs on Thursday called for Meng to be released and urged the United States and Canada to explain why she had been detained.
The Chinese company, which sells smartphones and telecommunications equipment around the world, has been facing increased scrutiny in the United States and other countries, where officials have warned of national security risks from using Huawei products. 

The United States is concerned that the Chinese government is using Huawei's networking technology to spy on Americans.
Huawei's 5G ambitions suffer another big setback

Senator Ben Sasse, a Republican from Nebraska, said Americans are grateful to Canadian authorities for arresting Meng.
"Chinese aggression is explicitly state-sponsored and sometimes it's laundered through many of Beijing's so-called 'private' sector entities that are in bed with Xi's communist party," he said.
Senator Chris Van Hollen — a Democrat from Maryland — said Chinese telecommunications companies represent a fundamental risk to American national security.
"We need a comprehensive plan to hold the Chinese and their state-sponsored entities accountable for gross violations of the law and threats to our security," he said.
The Pentagon in May ordered stores on American military bases to stop selling smartphones made by Huawei and Chinese rival ZTE. 

And in February, top officials from the CIA, NSA, FBI and the Defense Intelligence Agency told a Senate committee that those firms' smartphones posed a security threat to American customers.
New Zealand prevents mobile carrier from buying Huawei 5G tech over security fears

The Trump administration launched an extraordinary campaign, urging America's allies to stop using Huawei telecommunications equipment because the Chinese company poses a security threat, according to the Wall Street Journal. 

Over the past several weeks, New Zealand and Australia have prevented telecommunications companies from using Huawei equipment for their 5G mobile networks.
UK telecom company BT (BT) said Wednesday that it would not buy equipment from the Chinese tech company for the core of its next generation wireless network. 

The company also said it would remove existing Huawei technology from the heart of its 4G network within two years.
China's ZTE also faced accusations of illegal dealings with Iran. 

In April, the United States blocked ZTE from buying US parts because ZTE had lied to US officials about punishing employees who violated US sanctions against North Korea and Iran. 

But the Trump administration lifted the export ban on ZTE in July after striking a deal with the company.

“Freedom democracy for China; end one-party dictatorship”

Activists target China’s human-rights record with new ad campaign in Vancouver

By XIAO XU

Louis Huang sits next to an ad he designed at a bus stop in Richmond, B.C., on Aug. 11, 2018.
An activist group made up largely of Chinese immigrants is launching an advertising campaign in the Vancouver region to criticize China’s human-rights record, with an aim to raise awareness among people from that country who are now living in Canada.
The campaign began in late July with a bus shelter ad, located along one of the busiest roads in Richmond, B.C., but the Vancouver Chinese Human Rights Watch Group plans to purchase billboards and other forms of advertising to bring attention to poor human-rights conditions in China.
“The ad may raise awareness among people from the Chinese community and make them realize, in our country of birth, the human-rights situation is getting worse and worse," Louis Huang, co-ordinator with the group, said in an interview. 

"They may pay more attention to it in the future, which could push China’s human rights to improve.”
The Richmond bus ad features a picture of an eagle flying in the sky. 

It says “Freedom democracy for China; end one-party dictatorship” in English, and “End one-party system; build democratic China,” in Chinese.
Mr. Huang said he and his group’s more than 20 members, mostly immigrants from China, covered the cost of the ad. 

He said future ads will touch on topics ranging from jailed dissidents to the Chinese government’s foreign influence.
“We hope more overseas Chinese will have courage to express their opinions when they see these ads. Because they’re still afraid to discuss politically sensitive topics related to China, even though they are living abroad,” he said.
The Chinese consulate in Vancouver didn’t respond to The Globe and Mail’s interview request.
Mr. Huang, who moved to Canada in 2002, has been fighting for China’s human rights for about a decade. 

He said since Xi Jinping took power five years ago, the country’s human-rights situation has been worsening.
The group has previously protested outside the Chinese consulate in Vancouver, urging the government to release activists and rights lawyers who have been held in custody since the nationwide crackdown in 2015 and then-imprisoned Chinese Nobel Peace Prize laureate Liu Xiaobo, who died in jail last year.
Pitman Potter, a law professor at the University of British Columbia, said China has tightened its grip on freedom of expression, religious freedom and people’s private rights under Eleven’s leadership.
“There has been a dramatic increase of oppression in East Turkestan in particular, but also in Tibet," Dr. Potter said. 

“When you look at the social-credit system that basically keeps track of people’s behaviour electronically and create files on them … all those are recent indicators of very serious declines in human-rights conditions.”
Shawn Zhang, a Chinese-born UBC law student, has been using satellite images to track down suspected locations of camps in the East Turkestan colony of China, where scholars estimate hundreds of thousands of mainly Muslim people have been forced to undergo political indoctrination.
Mr. Zhang said the overseas Chinese community cannot be apathetic towards human-rights issues in China.
“If the overseas Chinese community did nothing to address the human rights conditions in our home country, we are communicating that we don’t care about the importance of human rights in our own," he said in an e-mail. 

"It is dangerous because when other people realize that you do not care about human rights, why should they protect you when your own human rights are violated?”
Guo Ding, a current-affairs commentator in the B.C. Chinese community, said Canada should champion human rights, but any foreign country can hardly change the human-rights condition in China.
“The change of a [country’s] system and social value has to happen within its own society,” he said.
Alex Neve, secretary-general at Amnesty International Canada, said members of Canada’s Chinese community who are actively involved in human-rights protection in China can play a significant role in improving such issues in China.
“The Chinese government clearly understands that their voices can be very powerful within the community," he said.
"It’s something very different to have your own neighbours and some of the community members who are speaking out of these concerns than it is to hear those criticisms or concerns raised from the outside of the community.”

China Dream

A Tech Guru Captivated Canada. Then He Fled to China.

By Dan Levin

The offices of Istuary Innovation Group in Vancouver were emptied by an auction house late last year. A British Columbia provincial employment department has ordered the company to pay around $2.2 million in back wages to more than 150 employees.

VANCOUVER, British Columbia — Sun Yian was living the Canadian dream.
The Chinese immigrant found fortune harnessing Canadian talent to develop cutting-edge technology, everything from semiconductors to facial recognition, to take back to China. 

His company grew to more than 1,500 employees across China and North America, and was lauded by Canadian officials as a model for unlocking the Chinese market to create homegrown prosperity.
Then Sun stopped paying his Canadian workers and fled to China. 

Left behind are lawsuits from angry investors and Canadian employees who are wondering whether their work could be used to help China’s growing domestic surveillance state.
Canada has long benefited from close business ties to China, and lawmakers have courted the country as a new market for Canadian companies as well as a source of investment. 

Now, Sun’s story is fueling calls for heightened skepticism of Chinese money.
“Canadian officials have to some degree been blinded by China’s incredible economic growth and waves of capital spreading worldwide,” said Michael Byers, a professor of global politics and international law at the University of British Columbia in Vancouver. 

“They’re certainly naïve to China’s approach to acquiring high tech from other countries, and they haven’t pushed hard on getting answers before allowing deals to go through.”
In March 2017, the government of Prime Minister Justin Trudeau approved the sale of a Montreal laser company to a firm partly owned by the Chinese government, despite objections from security officials in the previous Canadian government. 

In June 2017, Canada waived a security review for a Chinese takeover of Norsat International, a Vancouver high-tech company that provided satellite technology to the United States military.
Sun’s company, Istuary Innovation Group, initially appeared to represent the positives of Chinese investment. 

His company brought jobs and high-tech business to Vancouver. 

But a review of the company’s finances and interviews with former employees reveal a murky web of financial and previously undisclosed ties to the Chinese government.
Sun, 45, who goes by the name Ethan, founded Istuary in 2013 in a Vancouver Starbucks, just as the Canadian government was welcoming greater Chinese investment. 

At its peak, the technology incubator and venture fund occupied two floors of a downtown Vancouver office building, where engineers toiled on semiconductors, robotics, big data analytics and facial recognition. 

By 2017, Istuary had 24 offices in places around the world, including Beijing, Shanghai, Los Angeles and Toronto.
Manivannan Gajendran and Eric Hsu are former Istuary employees. “Chinese clients had lots of ideas for ways they would use our applications. Some of those raised red flags,” Mr. Hsu said.

The company’s growth helped give Sun access to Canada’s political elite, relationships that were nurtured through political donations and corporate sponsorships. 

Photos he posted online show him smiling with Mr. Trudeau during a trade mission in China. Government officials in British Columbia praised Sun for creating Canadian jobs.
A Vancouver government agency signed a contract with Chinese industrial parks to expand Istuary’s operations. 

Istuary joined publicly funded Canadian organizations to do research. 

Canada’s immigration ministry approved the company for a federal start-up visa program that lets foreign entrepreneurs obtain permanent residency.
“The government gave us really good support,” Sun told a Canadian business conference in 2015, according to a video of his speech posted online.
Yet some of Istuary’s work provoked concern among employees.
Eric Hsu, 39, an American data scientist hired by Istuary’s Vancouver office in 2016, said he worked on artificial intelligence capable of recognizing a person’s face across multiple surveillance feeds or detecting specific human behavior, like fighting. 

“A lot of these security applications were both humanitarian and ethically troubling,” he said in an interview. 

“Chinese clients had lots of ideas for ways they would use our applications. Some of those raised red flags.”
An Istuary customer presentation reviewed by The New York Times highlighted the services its technology could offer in Chinese cities. 

They included the ability to recognize faces through security cameras and run them through databases, as well as track people’s personal relationships. 

It also highlighted other services, like tracking crowds and land records.
Mr. Hsu said he attended trade shows in China where Sun pitched Istuary’s artificial intelligence technology to potential customers interested in products designed to prevent prisoner suicides or for detecting criminal activity.
Chinese authorities have been zealously using big data collection, A.I. and facial-recognition technology to upgrade Beijing’s mass surveillance efforts.

Ethan Sun, the founder of Istuary Innovation Group, at the Canadian Association of Business Incubation Leadership Summit in 2015.

Sun enjoyed ties to the Chinese government that his Canadian workers and investors say he did not disclose.
Kuang’en Network Technologies, a cybersecurity company he founded in Beijing in 2014, specialized in industrial control systems for some of China’s biggest state-owned enterprises.
State Grid, China’s national power distributor, said it banned Kuang’en, among other companies, in 2016 from bidding on public contracts because of collusion, without offering details. 

But that year, Kuang’en formed a joint venture with another cybersecurity firm, BeijingVRV, whose powerful Chinese government clients include the National People’s Congress, the finance and foreign ministries, military contractors and public security agencies.
According to corporate documents and Sun’s employees in China, Istuary and Kuang’en shared funding, workers, technology, office space and shareholders, including Sun’s wife, Hu Yulan.
Former Istuary employees in Vancouver said the company’s collapse began last spring with a series of missed payrolls and final paychecks in May 2017. 

Many stayed at their jobs anyway.
“Sun kept giving us false hopes,” said Manivannan Gajendran, who led an Istuary quality testing team in Vancouver. 

He said he took out a $15,000 line of credit to cover his daily expenses while he waited for money that never came.
By then, Sun had gone back to China. 

In August, Istuary investors in British Columbia sued Sun and his wife, accusing the couple of illegally using funds to purchase two multimillion-dollar homes in Vancouver.

At one point, Istuary had 1,500 employees across China and North America.

Canada’s immigration ministry suspended Istuary from the start-up visa program after learning of the allegations. 

In an email, a ministry spokeswoman said it had gathered information on Istuary after the company was recommended by an industry association, and “found no reason to reject the designation recommendation at that time.”
Sun did not respond to interview requests made through his Vancouver lawyer. 

But he denied the allegations in a letter posted on Istuary’s now-defunct website in October. 

“We are NOT a Ponzi scheme,” he wrote.
A British Columbia provincial employment department has since ordered Istuary to pay around $2.2 million in unpaid wages to more than 150 employees and has begun collection proceedings in order to seize Sun’s residential properties, a spokeswoman from the province’s labor ministry said in an email.
The fallout, and Sun’s broken promises, soon reached the company’s operations in China. 

According to Laura Fan, an Istuary employee in Guangdong Province, Sun claimed the company’s cash crunch was because of poor management and Chinese regulatory changes. 

He also blamed Chinese investors and their “political mission” for pressuring him into striking deals with American chip companies, she said.
In December, Istuary and Kuang’en’s offices began closing across China, without employees being paid for months of work. 

“These people never got any of their salaries,” Ms. Fan said.
Just before Christmas, former employees said, two people from a Chinese technology firm that had invested in Kuang’en camped out in the Beijing office, hoping to catch Sun. 

A few weeks later, debt collectors locked the doors with a heavy chain. 

On a recent visit to the shuttered office, trash covered a rickety cot and chairs visible in the entryway.
Someone had scrawled a large handwritten message across the glass doors: “The fraudster network fakes bankruptcy, maliciously owes salaries and cons its employees.”
Underneath was an ultimatum: “Pay us the money and we’ll unlock the place.”