Thread by @charlesarthur

I’ve written about the Huawei CFO arrest, and its implications. They’re big. Very, very big. (Let me thread a bit.) theguardian.com/technology/201…

First, grateful to @CRTejada who pointed back to a key article he did in 2016 about the US sanctions on ZTE. As you surely know, ZTE broke US sanctions on selling telecoms kit to Iran during the Obama presidency. It said sorry. #huawei

One of the things to came out of the ZTE fine was that the US released a number of documents, apparently from inside ZTE, where its executives discussed the problem sanctions posed to their business. They’re at the Bureau of Industry and Security #huawei bis.doc.gov

So if we go to the specific file (PDF), it’s at bis.doc.gov/index.php/form… and is marked “Secret” and “not for external dissemination”. #huawei

If you begin reading it, you realise why it’s secret. ZTE, a growing Chinese network systems company which also sells handsets, is realising its about to get dinged for selling kit to US-sanctioned countries. It’s already been dinged three times. Others have too. #huawei

But now the Iran sanctions are about to bite. And ZTE is right in the firing line. It discusses how to get around them: “cut-out” companies (middlemen secretly owned by the parent) which sell on the kit. We’re clean! It wasn’t us! #huawei

However, cut-out companies can be tricky to organise; they need capital to keep running.
But hey what’s this? In para 4, ZTE talks about “F7”, an unnamed company which has been doing similar cut-outs. Sanction-busting, maybe? But who is F7? #huawei

Read on a little further, and a couple of clues emerge. “F7” seems to be better capitalised than ZTE - ie it’s bigger. But F7 has also attracted the attention of the US. And in (V)(1) we have “F7′s proposal to acquire US 3leaf company was opposed by US gov”. Oh really? #huawei

That’s interesting because Huawei bid to acquire a Californian company called 3leaf - but gave up in February 2011 because CFIUS disapproved. theregister.co.uk/2011/02/21/hua… #huawei

Now, maybe other companies known to ZTE for which it employed codewords attempted to buy 3leaf and were warned off by the US Gov, and we just didn’t notice.
But on its own, this document offers circumstantial evidence that Huawei broke US sanctions on Iran, maybe others. #huawei

I asked Huawei, which said in a statement: “Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU.” #huawei

Be that as it may, but I can believe that US investigators who found that ZTE document would have put some of their financial investigators onto discovering where those cut-out companies belonging to “F7” were. You know, this sort of guy. #huawei

Oh hang on - I meant this guy #huawei

Now, it might have taken a couple of years to get that stuff together. But at some point, US investigators might feel they have enough to at least indict the CFO of Huawei on charges of sanctions-busting. Which led to the arrest yesterday at a Canadian airport. #huawei

What happens next is anyone’s guess. But clearly the US hasn’t given up chasing Huawei. And this isn’t just about “trade wars”. //end #huawei