HSBC’s struggle to balance its global role with protecting its huge business in China is getting even more difficult.
The London-based bank was drawn this weekend into issuing a denial of renewed claims that it “framed” Huawei to help the US government. In a statement posted on Chinese social media platform WeChat, the company stressed that it does not harbor any “hostility” against the Chinese tech giant.
HSBC issued its statement this weekend after Chinese state media revived a longstanding allegation that HSBC had been “setting traps to ensnare Huawei” in its legal fight with the United States. The bank’s decision to respond by appealing directly to the Chinese people shows just how much is at stake — it makes more than half its profits in China and Hong Kong.
Huawei CFO Meng Wanzhou was arrested in Vancouver, Canada, in late 2018 at the behest of the US government, which charged her and the company with bank fraud and evasion of sanctions against Iran. The United States alleges that Huawei and Meng misrepresented their relationship with the Iranian telecom firm Skycom to HSBC in order to circumvent those sanctions. A Canadian court is considering whether to extradite Meng to the United States to stand trial for the charges, which she and Huawei have denied.
Chinese state media has for the last year been hitting HSBC — which has its roots in Hong Kong and Shanghai — for its role in Meng’s arrest.
Allegations that HSBC conspired with the US government resurfaced last week after new legal documents submitted by Meng’s attorneys were made public. The attorneys are trying to prove that HSBC knew Huawei was operating in Iran and that Huawei and Skycom did business in the country.
Meng’s lawyers accuse US authorities of cherry picking information from a Power Point presentation that Huawei gave to HSBC in 2013. The lawyers submitted the full presentation, which they say clearly demonstrates Huawei’s relationship to Skycom and its business in Iran, according to the court filings. The presentation also stated that Huawei “operates in Iran in strict compliance with applicable laws, regulations and sanctions.”
“HSBC thus knew Skycom and Huawei were operating together in Iran,” according to the filings.
State-run newspaper China Daily on Friday labeled HSBC as an “accomplice” in the case. And the People’s Daily, the official mouthpiece of the Communist Party, asserted that HSBC had “exaggerated data and hid facts.”
In its response, HSBC said it was not involved in the US decision to charge Huawei or to request Meng’s arrest in Canada.
“Recently, we noted some media updates which carried misinterpretation of the facts,” HSBC said in its WeChat statement, which was provided to CNN Business. “The timeline in the Huawei case makes it absolutely clear that HSBC did not prompt the investigation of Huawei. US government scrutiny of Huawei began long before HSBC got caught up in the case in late 2016.”
It went on: “HSBC does not have any hostility toward Huawei and did not ‘frame’ Huawei.”
The bank also said that following “negative media coverage about Huawei’s relationship with Skycom in December 2012 and January 2013, HSBC made standard enquiries of Huawei, which was part of the bank’s normal … process.” It did not go into further detail.
Huawei declined to comment for this story, referring CNN Business to the legal documents made public last week.
Tensions between HSBC and China have been rising since Meng’s arrest, putting HSBC in a tough spot. The bank, which began life as the Hongkong and Shanghai Banking Corporation, makes most of its money in Asia, even though its global headquarters is in the United Kingdom.
Chinese state media has previously suggested that the bank could appear on a long-rumored list of “unreliable” foreign companies that China could blacklist. And even though HSBC’s Asia Pacific CEO publicly supported a controversial national security law Beijing imposed on Hong Kong, Chinese state media has continued to criticize the bank.
In its weekend statement, HSBC highlighted its decades-long support of China’s economic and social development.
“We will continue investing in our business, services, talents and technology in China and contributing to the sustainable development of the country,” the bank said.
But that didn’t appear to quell criticisms in China. The Global Times called HSBC’s defense of its actions “a deathbed struggle.”
“The lender could face a dead end for conspiring with the US against Huawei,” the publication wrote, citing Chinese analysts and observers.