Business News

August 21, 2019 / 3:31 AM / 4 months ago

Citigroup, BNP caught up in U.S. case against Huawei CFO: documents
Karen Freifeld

NEW YORK (Reuters) - U.S.-based Citigroup Inc and French bank BNP Paribas are caught up in the U.S. criminal case against the chief financial officer of China’s Huawei Technologies, according to newly available documents.

FILE PHOTO: Huawei CFO Meng Wanzhou is escorted by Canada Border Services Agency (CBSA) staff during her arrival at Vancouver International airport in which she was arrested on a U.S. warrant, in a still image from video taken in Richmond, British Columbia, Canada December 1, 2018 and released August 21, 2019. CBSA/Handout via REUTERS

The banks were named in documents released on Tuesday after a hearing in British Columbia Supreme Court, where Huawei CFO Meng Wanzhou is fighting extradition to the United States on bank fraud charges.

The two are among at least four financial institutions that had banking relationships with Huawei when Meng and others allegedly misled them about its business dealings in Iran despite U.S. sanctions.

Two others, HSBC Holdings Plc and Standard Chartered, have been previously reported.

The banks are considered “victim” institutions in the 13-count indictment the United States brought against Meng and Huawei, which includes charges of bank and wire fraud, violating sanctions against Iran and obstructing justice.

Both she and Huawei have denied wrongdoing.

Spokespeople for Citigroup, BNP Paribas, Standard Chartered, and HSBC all declined to comment, as did a spokesman for U.S. prosecutors. Huawei did not immediately respond to a request for comment on the newly public information.

The British Columbia court made public hundreds of pages of documents and other materials, including video of Meng’s detention, in advance of a hearing scheduled to begin Sept. 23 in Vancouver.

Meng, the daughter of Huawei’s billionaire founder Ren Zhengfei, was arrested at Vancouver’s airport in December on a U.S. warrant and her lawyers argue she was unlawfully detained. They claim Canadian authorities delayed her arrest to allow the border patrol to gather evidence for the United States as part of a “covert criminal investigation.”

In the video, Meng can be seen moving through the Vancouver airport customs and immigration area, escorted by border agents, and being questioned.

In a transcript, Meng repeatedly asks why she was being detained and is eventually told she can contact a lawyer, but not her family.

“My family members will be worried if they can’t find me,” she says.

Meng was searched and interrogated for hours in violation of her constitutional rights, her lawyers say. She spent more than a week in detention before being granted bail.


Diplomatic relations between Canada and China turned icy after Meng was detained and China subsequently arrested two Canadian citizens, charging them with espionage. It has also blocked imports of some Canadian commodities.

Meng and Huawei also have become part of the escalating U.S. and China trade war.

U.S. President Donald Trump told Reuters in December he would intervene in her case if it would help secure a deal with China, leading her lawyers to argue the extradition proceedings are being used for economic and political purposes.

In Tuesday’s court documents, they describe Trump’s comments about Meng as “corrosive of the rule of law.”

The United States also has made a broader push against Huawei, the world’s largest telecommunications maker, which it maintains is involved in activities contrary to U.S. national security or foreign policy interests.

Huawei was placed on a U.S. trade blacklist in May that bans the sale of U.S. parts and components to the company without special licenses. So far, the licenses have not been granted except to allow the repair and maintenance of existing products and networks.

Besides alleged sanctions-busting, the United States says the company’s smartphones and network equipment could be used by China to spy on Americans, allegations the company also has repeatedly denied.

In one document released on Tuesday, the United States describes the evidence against Meng, including articles published by Reuters in 2012 and 2013 about a company in Iran called Skycom Tech that had tried to sell computer equipment from a U.S. firm to a customer in Iran.

The reporting detailed links between Huawei and Skycom, including that Meng had served on Skycom’s board of directors between February 2008 and April 2009.

The articles were “concerning” to at least four financial institutions that banked for Huawei, according to the document, which was drafted by a U.S. federal prosecutor in Brooklyn, New York, where the case was brought against Meng and Huawei.

U.S. laws and regulations generally prohibited the banks from providing U.S. dollar transactions tied to Iran through the United States.

Meng and others defrauded HSBC and other banks by misrepresenting Huawei’s relationship with Skycom, according to U.S. prosecutors who claim Skycom’s operations in Iran were controlled by Huawei from at least 2007 until 2014.

U.S. authorities claim Huawei used Skycom to obtain embargoed U.S. goods, technology and services in Iran, and to move money via the international banking system.

According to the newly available document about the evidence, witnesses for the prosecution of the U.S. case will include executives from HSBC, Standard Chartered and Citigroup, and an FBI forensic accountant is expected to testify about documents showing BNP Paribas provided banking services for Huawei between at least 2013 and 2018.

In February, when Reuters exclusively reported that HSBC conducted a probe that helped bring the case against Meng and Huawei, a spokesman said the bank was legally obligated to provide the information it did to the U.S. Department of Justice.

All four banks have resolved their own sanctions issues with U.S. authorities in recent years. The agreements range from BNP Paribas paying $8.9 billion in 2014 and pleading guilty in U.S. court to Citigroup agreeing to pay $217,841 the same year over potential civil liability for its apparent violations of sanctions programs.

Reporting by Karen Freifeld in New York; Editing by Amran Abocar, Muralikumar Anantharaman and Tom Brown

Our Standards:The Thomson Reuters Trust Principles.



Business News

July 9, 2019 / 9:13 AM / 3 months ago

U.S. to approve sales it deems safe to blacklisted Huawei

Alexandra Alper, Karen Freifeld
6 Min Read

WASHINGTON (Reuters) - The U.S. government will issue licenses to companies seeking to sell goods to China’s Huawei where there is no threat to national security, Commerce Secretary Wilbur Ross said on Tuesday, leaving industry observers unsure about which products will pass muster.

A Huawei signage is pictured at their booth at Interpol World in Singapore July 2, 2019. REUTERS/Edgar Su

Seeking to revive trade talks with China, President Donald Trump announced last month that American companies would be allowed to sell products to Huawei Technologies Co Ltd, the world’s largest telecommunications equipment maker.

Trump’s comments came after the United States placed Huawei on the Commerce Department’s so-called Entity List in May over national security concerns. U.S. parts and components generally cannot be sold to those on the list without special licenses.

While American chipmakers welcomed Trump’s announcement, many industry and government officials were confused about the new policy.

Speaking at a conference in Washington, Ross affirmed that Huawei would remain on the Entity List, meaning winning licenses would require overcoming a presumption of denial, and said the scope of items requiring licenses would not change. However, he opened the door to some approvals.

“To implement the president’s G20 summit directive two weeks ago, Commerce will issue licenses where there is no threat to U.S. national security,” Ross said, referring to Trump’s announcement at the meeting of world leaders in Japan.

“Within those confines, we will try to make sure that we don’t just transfer revenue from the U.S. to foreign firms,” he said.

After Huawei was added to the Entity List, the semiconductor industry lobbied the U.S. government to be allowed to sell nonsensitive items that Huawei could easily buy abroad, arguing that a blanket ban would harm American companies.

Industry observers said Ross’ comments lacked the clarity and relief many hoped for after Trump’s announcement.

“The actual policy, of what is not going to endanger U.S. security, is not clear,” Washington trade lawyer Doug Jacobson said. “The only way that industry can determine the line is by submitting (license) applications and knowing what types will be approved and which types will be denied.”

Separately, White House economic adviser Larry Kudlow told an event hosted by CNBC that relaxed U.S. government restrictions on Huawei could help the technology giant but would only be in place for a limited time.

He said U.S. government purchases of Huawei parts, components or systems would remain off-limits, as would any transactions involving 5G, but the licensing requirements had been relaxed for so-called general merchandise that involved “no national security influences or consequences.”

That meant some chip companies would be permitted to sell to Huawei, on a limited basis, items generally available on the global market, including from vendors in South Korea, Taiwan and Vietnam, he said.

“We are opening that up for a limited time period,” Kudlow said. “So that’s important and, I guess, does provide some relief to Huawei.” He did not specify how long the relaxed licensing guidelines would be in effect.

Speaking at the same conference as Ross, Nazak Nikakhtar, Commerce’s assistant secretary for industry and analysis and nominee to lead the department’s Bureau of Industry and Security, said the agency hoped to have decisions soon on export license requests from companies seeking to sell to Huawei.

The United States has accused Huawei of stealing American intellectual property and violating Iran sanctions.

It also has launched a lobbying effort to persuade U.S. allies to keep Huawei out of next-generation 5G telecommunications infrastructure, citing concerns the company could spy on customers. Huawei has denied the allegations.


Shortly after Huawei was added to the Entity List, the Commerce Department issued a temporary general license allowing the company to buy equipment to maintain existing networks and provide software updates to existing Huawei handsets. That license expires on Aug. 19, but may be extended.

Any further relief granted on Huawei’s entity listing still may not spell the end of troubles for the company. In May, Trump signed an executive order barring U.S. firms from using telecommunications equipment made by companies posing a national security risk.

The move, which required the Commerce Department to draw up an enforcement plan, was seen as paving the way to ban U.S. companies from buying from Huawei, at a time when U.S. wireless carriers are looking for partners as they roll out 5G networks.

On Tuesday, Ross said Commerce would issue an “interim final rule” in mid-October to implement the executive order. Interim final rules go into effect immediately, even as they seek public comment that could be used to modify regulations going forward.

The United States has engaged Beijing in a tit-for-tat trade war over accusations that China steals American intellectual property (IP) and forces U.S. companies to transfer their technology to Chinese firms to gain access to markets.

The United States last year passed a law that required Commerce to draft new rules to beef up oversight of certain foundational technology sales abroad. Commerce will “very soon” seek formal comment on that rulemaking, Nikakhtar said.

Additional reporting by Andrea Shalal; Editing by Marguerita Choy, Jonathan Oatis, David Gregorio and Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.



United States Securities and Exchange Commission

Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549

Attention: Mr. Kevin Kuhar

Re: Qorvo, Inc.

Form 10-K for the Fiscal Year Ended April 2, 2016
Filed May 31, 2016
Form 10-Q for the Fiscal Quarter Ended October 1, 2016
Filed November 7, 2016
File No. 001-36801

Dear Mr. Kuhar:

This letter is submitted in response to the comments of the staff (the “Staff”) of the Securities and Exchange Commission on the above-referenced filings made in your letter dated December 29, 2016, to Mark J. Murphy, the Chief Financial Officer of Qorvo, Inc. (the “Company” or “Qorvo”). Set forth below are the Staff’s comments (in italics), followed by Qorvo’s response.

Form 10-K for the Fiscal Year Ended April 2, 2016


Comment 1: You state on page 12 of the 10-K that Huawei Technologies accounted for 12% of your total revenue in fiscal year 2016 and that Samsung Electronics accounted for approximately 14% and 25% of your total revenue in fiscal years 2015 and 2014, respectively. We are aware of publicly available information indicating that Huawei does business in Sudan and Syria. Recent news articles indicate that Samsung customers may take Samsung Galaxy smartphones to the official Samsung Electronics Service center covering Syria, many Samsung smartphones are in Sudan and Samsung provides a warranty for its mobile handsets to customers in Sudan.

Sudan and Syria are designated by the Department of State as state sponsors of terrorism, and are subject to U.S. economic sanctions and export controls. Please describe to us the nature and extent of any past, current, and anticipated contacts with Sudan and Syria, whether through

subsidiaries, affiliates, distributors, partners, customers or other direct or indirect arrangements. You should describe any services, products, information or technology you have provided to Sudan or Syria, directly or indirectly, and any agreements, commercial arrangements, or other contacts you have had with the governments of those countries or entities they control.

Response 1:

Qorvo has no known past, current or anticipated contacts with Sudan or Syria through subsidiaries, affiliates, distributors, partners, customers or other direct or indirect arrangements. To Qorvo’s knowledge, it does not provide, directly or indirectly, any services, products, information or technology to those countries, whether involving Huawei Technologies Co., Ltd. (“Huawei”), Samsung Electronics, Co., Ltd. (“Samsung”) or any other Qorvo customer. Further, Qorvo has no known past, current or anticipated agreements, commercial arrangements or other contacts with the governments of Sudan or Syria or entities they control.

Qorvo is committed to compliance with U.S. export control regulations and trade and economic sanctions and has policies and procedures in place that are consistent with parameters established by the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”), the U.S. Department of State’s Directorate of Defense Trade Controls (“DDTC”) and the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). Qorvo’s policies and procedures include standard terms and conditions in purchase orders and other agreements with customers, which inform its customers that its products are subject to U.S. export control and may not be transferred to any embargoed countries (including Sudan and Syria) in violation of U.S. export control laws and regulations. Additionally, Qorvo has screening procedures designed to ensure that it does not do business with an embargoed country or with a prohibited entity.

Comment 2: Please discuss the materiality of any contacts with Sudan and Syria you describe in response to the comment above, and whether those contacts constitute a material investment risk for your security holders. You should address materiality in quantitative terms, including the approximate dollar amounts of any associated revenues, assets, and liabilities for the last three fiscal years and the subsequent interim period. Also, address materiality in terms of qualitative factors that a reasonable investor would deem important in making an investment decision, including the potential impact of corporate activities upon a company's reputation and share value. Various state and municipal governments, universities, and other investors have proposed or adopted divestment or similar initiatives regarding investment in companies that do business with U.S.-designated state sponsors of terrorism. You should address the potential impact of the investor sentiment evidenced by such actions directed toward companies that have operations associated with Sudan and Syria.

Response 2:

As indicated in the Company’s response to Comment 1, Qorvo has no known contacts with Sudan or Syria. Accordingly, Qorvo is not aware of any such contacts that could be considered to be a material investment risk in quantitative or qualitative terms.


Comment 3: We are aware of news articles stating that Huawei is effectively barred from selling telecommunications network equipment in the U.S. and that the Department of Commerce is investigating Huawei for its alleged export or re-export of U.S. technology to Iran, Sudan and Syria in violation of U.S. export control laws. Please address for us the possibility that this information will have adverse reputational and other effects upon you because of your business relationship with Huawei.

Response 3:

The Company is aware that Huawei is subject to heightened scrutiny by the U.S. government and of wide publicity relating to Huawei on the subject of export controls. As discussed in the Company’s response to Comment 1, Qorvo is committed to compliance with U.S. export control regulations and trade and economic sanctions and has policies and procedures in place that are consistent with parameters established by BIS, DDTC and OFAC. Qorvo has received no information from Huawei, the U.S. government or any other source indicating that any Qorvo products have been diverted to Iran, Sudan or Syria, whether by Huawei, any of its customers or through any other channel. Qorvo is not aware of any concerns from investors, customers or suppliers regarding the resale of Qorvo products by its customers, including Huawei, to sanctioned countries. Accordingly, Qorvo does not anticipate any material adverse impact on its reputation or other material effects on Qorvo from doing business with Huawei.

Business, page 4

Customers, page 12

Comment 4: Please revise future applicable filings to identify your “largest end customer.” See Item 101(c)(1)(vii) of Regulation S-K. Please ensure that such revised disclosure is for each segment, to the extent material, as well as your overall business.

Response 4:

The Company acknowledges the Staff’s comment and respectfully informs the Staff that it will identify, in future applicable filings, its largest end customer for each segment, as well as its overall business.

Comment 5: Please revise future applicable filings to clarify the end products to which material amounts of your revenues relates. For example, your disclosure on page 5 indicates your MP segment supplies products for smartphones, tablets, wearables and computers. Your disclosure here indicates that a “majority” of revenue from your major customers relates to “mobile products.” However, it is unclear to what “mobile products” you are referring and what you mean by a “majority” of your revenue.


Response 5:

The Company acknowledges the Staff’s comment and respectfully informs the Staff that it will further clarify, in future applicable filings, the end products associated with the revenue of its Mobile Products operating segment.

Form 10-Q for the Fiscal Quarter Ended October 1, 2016

Management’s Discussion and Analysis, page 28

Results of Operations, page 32

Comment 6: Please revise future filings to clarify the reasons underlying the changes to your gross margin to which you refer in the third paragraph on page 32. For example, clarify the reasons for the “higher demand” for your smartphone-related products. Please also clarify the “quality issues,” “lower than expected manufacturing and assembly yields,” and how product mix changed, thus affecting your gross margin. While we note the reference to a shift to “lower margin products,” it is unclear to what products you are referring.

Response 6:

The Company acknowledges the Staff’s comment and respectfully informs the Staff that in future filings, the Company will further clarify its narrative discussion of any material changes in gross margin, including the reasons underlying such changes.

We hope that the above responses will be acceptable to the Staff. If you have any questions regarding the foregoing, kindly contact the undersigned at 336.678.8989. Thank you for your time and attention.



Mark J. Murphy

Mark J. Murphy
Chief Financial Officer