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Consider the current events (at the time of this post Dec. 11, 2018), as the CFO of Huawei is detained. Exactly what charged will be leveled against her have not yet been revealed, but there is already wide suspicion that she will face sanction violating charges.

When I first heard this story, I thought to myself: "what will we see here, the Streisand effect, whereby more and more people start to get curious about Huawei, or will we see the Franz Ferdinand effect whereby actions spiral into escalation of conflict?"

Then I thought to myself, let's not get too dramatic, let's just start with the basics. Even if the sanctions violations are true, who is implicated? While CFO is indeed a lofty position, she is not a banking institution herself. The technology products Huawei sells to whatever country is in question still needs to be facilitated by a bank, at some level anyway.

Question

So let me get to my question. Assuming she is found guilty, perhaps that would also implicate the bank. Or, maybe it could be that the individual and the bank going to take the rap for breaking sanctions. So which is it? In the context of international law, who should take responsibility (individual or bank)?

Side Note

My hunch is telling me to be dubious, seeing as in 2012, HSBC was merely fined $2 billion for facilitating billions of dollars worth of cartel money. 2 billion sounds like a lot, but it's estimated that was just 5 or 6 weeks worth of "work". So with the Huaiwei sanction issue, I wonder if the law will actually have teeth on the bank involved, or if it will be just a repeat of the 2012 fines. I think we can all see the moral hazard here; if the punishment is a small percentage of your profit, why not violate sanctions, whether you are an individual or an institution.

  • to close voters citing "put on hold as unclear what you're asking" -- this can be found under the Question heading: In the context of international law, who should take the responsibility, the individual or the bank? – Arash Howaida Dec 11 '18 at 14:27
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    @ArashHowaida It would be more effective to simplify the question itself than to leave a summary of it in the comments. – Sam I am says Reinstate Monica Dec 14 '18 at 15:14
  • @SamIam Well, I wasn't trying to summarize there, I was quoting a line from the Question heading word for word. Perhaps I should boldface that line in the original post though, just for robustness. – Arash Howaida Dec 14 '18 at 15:16
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It would appear that this question is based on an incorrect assumption. According to this article, https://www.theglobeandmail.com/canada/article-huawei-canada-china-5g-network-explainer/

It appears that:

In 2013, the CFO told a bank that there was no connection between her company and another company dealing with Iran. She said this to obtain the services of the bank: to assure the bank that the bank could serve her company without violating sanctions.

The US contends that this assurance was untrue, that the lie to the bank constitutes bank fraud, and the CFO should be tried for this alleged crime in US court.

  • Interesting article, but I still kind of see this as the bank failing to carry out due diligence, just because of the magnitude of the deals involved. And in 2012, did HSBC really not know where the cartel money was from? And are they going to try and show that they learned their lesson here in 2018? Nonetheless, your article does make me see things a little differently though. Thanks for the input – Arash Howaida Dec 11 '18 at 5:56
  • As CFO, she holds a high position as an officer, and is expected to exercise due diligence in any statement she makes, especially if that statement affects the company's operations. So unless she can prove that someone at Huawei deliberately hid the Iran dealings from her, then the law assumes that as CFO she would have had that knowledge and deliberately obscured it in the bank loan application. Otherwise known as bank fraud. – tj1000 Dec 11 '18 at 12:20
  • @tj1000 Point taken, but we could just as easily make the same argument for the opposite side. A huge bank facilitating billions of dollars worth of deals between state and non-state actors didn't take the due diligence necessary to ensure everything was legal. This is especially condemning given the previous black-eye on the bank with the cartel money. – Arash Howaida Dec 11 '18 at 14:37
  • Do you have any evidence that the bank won't be prosecuted? it's common for banks to be prosecuted over sanction-busting, but legal proceedings in free countries require both clear evidence of wrong-doing and having somebody to prosecute (either an individual to arrest/extradite or a company to fine). Since Meng doesn't travel with all her bankers, it's highly unlikely for them all to be arrested at the same time. – Stuart F Dec 11 '18 at 15:08
  • The bank that was defrauded (HSBC??) into acting for Huawei has a presence in the US, so the act of defrauding them can arguably be tried in the US. The question for the bank (due diligence vs wilful blindness) is indeed part of the mix... As well as who defines "due diligence" – DJohnM Dec 11 '18 at 22:14

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