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Summary
- In response to the reports published in the Chinese media, the UK-based HSBC bank took to the Chinese social media platform, WeChat, and posted that it did not frame the company in any manner.
- Chinese media accused that HSBC bank lied about Huawei during an inquiry conducted by the US DoJ leading to the arrest of its chief financial officer.
- HSBC bank is pressurised due to souring relations between the US and China.
A day after reports published in the Chinese media on 25 July 2020 which includes the People’s Daily, considered to be the mouthpiece of the country’s ruling communist party, the London-based bank, HSBC Holdings Plc (LON: HSBA), released a statement to deny that it provided any proof on the Chinese telecommunication company, Huawei, leading to the arrest of its chief financial officer (CFO). The media reports have blamed the lending institution that it lied about the telecom company during an inquiry conducted by the US department of justice (DoJ).
HSBC posts statement on Chinese social media platform, WeChat
The bank wrote its statement on WeChat, a Chinese messaging application and stressed that neither it holds any hatred for Huawei nor has it framed the company in any manner. Emphasising that it has not produced any sort of evidence or hidden any facts, the bank will never misrepresent facts or bring damage to any customer for gaining any sort of advantage for the institution. Without providing any explanation, the Chinese internet censors blocked the statement by HSBC within hours of posting to make it inaccessible.
HSBC’s role in the matter is seen amid the fight between the US and China over Huawei’s global expansion plans. The US has said that Huawei has close relations with the Chinese military and pose a significant threat to the national security. It does not want the telecom company to build its 5G network around the globe.
US DoJ arrested Huawei CFO in 2018
It is to be noted that in December 2018, the US DoJ had arrested Ms Meng Wanzhou, Huawei’s CFO, in Vancouver, Canada on charges of bank and wire fraud. Ms Meng who also happens to be the daughter of the company’s founder, is fighting extradition to the US. In 2012, the US imposed sanctions on doing business with Iran. Accusing Ms Meng of hiding Huawei's alleged dealing with Iran from banks including the HSBC, the US claimed that she had hidden facts.
The lawyers for Huawei CFO’s mentioned earlier this month that in order to evade punishment by the US, HSBC acted as ignorant while still having the knowledge regarding Huawei's plans for Iran. The lawyers earlier last week filed petition in the Vancouver, Canada court to stop the extradition proceedings against Ms Meng and blamed the US President, Donald Trump of interfering in the case for political motives. The lawyers also claimed that Canada’s Prime Minister, Justin Trudeau, was supporting the use of Ms Meng’s case to bargain for trade negotiations.
Amid worsening relations between the US and China, the present accusations by the Chinese media have emerged as a latest controversy for the HSBC Bank. The lender has been forced to keep a low social media profile in China as for last one year it has been facing online condemnations.
The arrest of Ms Meng has added to the several issues that have led to the collapse in US-China relations. HSBC has been under the radar of the Chinese media since it responded to the request sought from the department of justice (DoJ) to provide details regarding alleged violation of sanctions by her.
HSBC came out with its initial public remarks regarding Huawei's legal scuffle in North America on 25 July 2020 itself and pointed out that the US began its probe into Huawei for its suspected violations of the American sanctions on Iran before it started engaging with the telecom major only in late 2016.
HSBC’s operations in China
Stating that an examination from the Chinese people will damage foreign banks operational in the country, Global Times, another state-controlled nationalist newspaper from China, in its effort to show HSBC’s involvement in the Huawei case, commented that the bank has struggled to put across its views. HSBC’s Asian operation is quite huge with the bank generating majority of its profits from the continent and has a wide retail and corporate banking operations in China.
Despite the given Huawei dispute, the bank has continued to work with various Chinese government functionaries, including the finance ministry and China Development Bank, to keep its relations intact. HSBC is known to have supported the strict national security law on Hong Kong that permits China to curtail political freedom in the Asian financial hub. Hong Kong is supposedly one of the biggest markets and HSBC’s decision has brought resentment in the UK.
The rift in US-China relations
In a related development, in line with the US administration’s campaign against Huawei, the UK and Australia have restricted the telecom company to build their 5G telecoms networks. The relations between the US and China have suffered considerably in recent times due to trade related disputes, security issues in Hong Kong, suspicion of human rights abuse in Xinjiang, and origin of Coronavirus from Wuhan in China.
Finally, the US had charged Ms Meng with fraud and said that she had misled the UK-based bank, HSBC, about its ties with a subsidiary operating in Iran. The US authorities argued that this distortion of facts put the bank at the risk of violating US sanctions against Iran because of its work in US dollar-clearing transactions. In the meantime, Ms Meng, who has been in house arrest in Vancouver since her detainment and fighting extradition to the US, has claimed innocence. Her detention is known to impact relations between China and Canada as well. While, there are reports that China has jailed two Canadians on charges of espionage, several people in Canada feel that this incident of arrest by China is nothing but a retribution for Ms Meng’s arrest. The court hearings on her extradition would most probably continue till April 2021, given the provisions that both sides will be able to appeal on the final decision. It would be interesting to see how the event unfolds itself in coming times.
