Huawei’s Cancelled Bond Offering

The Wall Street Journal carried a story today on Huawei’s offering of bonds, which was suddenly withdrawn as it neared issue.  The cause, as the article says, is a Justice Department criminal investigation over whether Huawei was involved in violating nuclear sanctions against Iran.

There has been speculation for several years about this since ZTE was the only named country in the original case of violations, but the existence of another company doing the same things was clear from the documents that were filed with the notice of accusations against ZTE.  That occurred during the Obama Administration, which less than three weeks after naming ZTE, seemed to back quickly away from any criminal charges, letting ZTE agree to discipline its own employees.  The Obama White House allowed a consent decree in lieu of going any further, and the named person who enforced that agreement had little power to much of anything.  Now, we know ZTE took action against the three senior officials in the company but not any of the employees.  The inaction was named in the reason for reviving actions against the company this month.  Now, it looks like the other shoe will drop.

This goes back to sanctions which China voted for in the UN.  It then turned to state-owned companies to violate them by selling computers and other electronics to Iran.  Why not vote for sanctions and then violate them within the year?  ZTE even issued elaborate instructions on how to set up front companies to avoid export controls.  And, by the way, they were trading with about all of the criminal countries in the world - not just Iran.

The fact that the Obama Administration was quick to squelch the cases in the Justice Department was not surprising.  Now that the trade war is on, lots of things that were hidden will be dragged out and revived.  This is just one of them.