Meng Wanzhou, the chief financial officer of Huawei and daughter of the company’s founder, appeared for a bail hearing in Vancouver on Friday, where the reasons for her arrest were finally made public.
Wanzhou was arrested in Canada on the request of the US on charges of fraud.
According to the charges, Wanzhou may have been involved in tricking financial institutions into making transactions that violated US sanctions against Iran.
The charges relate to Hong Kong-based company, Skycom Tech, which could have been used by Huawei between 2009 and 2014 to make transactions in Iran and do business with telecom companies there, in violation of American sanctions.
US-based banks cleared transaction for Huawei that it is believed were really for Skycom.
When banks queried the Huawei-Skycom relationship, Wanzhou met with HSBC officials to reassure them that operations were is strict compliance with US sanctions.
However, it is argued that Skycom operated as an unofficial subsidiary of Huawei at the time.