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Huawei Lawyer Says CFO Meng A ‘hostage’ After US Presses Charges

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Huawei’s CFO “should not be a hostage” in Sino-U.S. relations, her lawyer said on Tuesday, after the United States announced criminal charges against herself and the Chinese firm just days before crunch trade talks with Beijing.

The Justice Department charged Huawei Technologies Co Ltd and its chief financial officer with conspiring to violate U.S. sanctions on Iran by doing business through a subsidiary it tried to hide and that was reported on by Reuters in 2012 reut.rs/2sRL7Veand 2013 reut.rs/2sUq8RT.

In a separate case, the Justice Department charged the telecommunications equipment maker with stealing robotic technology from T-Mobile US Inc. Huawei has said the companies settled their dispute in 2017.

CFO Meng Wanzhou, the daughter of Huawei’s founder, was arrested in Vancouver on Dec. 1, a move which was followed by China arresting two Canadians on national security grounds. She is scheduled in court on Tuesday to discuss her bail terms, and is subject to a U.S. extradition request.

Her lawyer Reid Weingarten, partner at Steptoe & Johnson, pointed to “complex” Sino-U.S. relations.

“Our client, Sabrina Meng, should not be a pawn or a hostage in this relationship. Ms. Meng is an ethical and honorable businesswoman who has never spent a second of her life plotting to violate any U.S. law, including the Iranian sanctions.”

Huawei said it had sought to discuss the charges with U.S. authorities “but the request was rejected without explanation”.

It said it “denies that it or its subsidiary or affiliate have committed any of the asserted violations” and “is not aware of any wrongdoing by Ms. Meng.”

China’s foreign ministry urged the United States drop the arrest warrant and end “unreasonable suppression” of Chinese companies. Spokesman Geng Shuang also said China had issued stern representations to both Canada and the United States after the U.S. formally issued its extradition request for Meng.

Canada’s Justice Minister has 30 days from receipt of the request to decide whether to grant authority to proceed. If granted, Meng’s case would be sent to the British Columbia Supreme Court for a hearing, which could take weeks or months.A woman walks past a Huawei shop in Beijing, China, January 29, 2019. REUTERS/Thomas Peter

The development is likely to upset talks between Beijing and Washington this week as part of negotiations intended to walk back trade tensions between the globe’s two largest economies.

U.S. President Donald Trump said in December he could intervene in Meng’s case if it would serve national security interests or help close a trade deal with China.

U.S. Commerce Secretary Wilbur Ross said the charges are “wholly separate” from the trade negotiations.

MARKET RESTRICTION

Huawei makes equipment including base stations, switches and routers, as well as consumer products such as smartphones, and derives nearly half of its total revenue outside China.

Its global reach has come under attack from the United States, which is trying to prevent U.S. companies from buying Huawei equipment and is pressing allies to do the same. U.S. security experts are concerned the gear could be used by China’s government for espionage – a concern Huawei calls unfounded.

Australia and New Zealand followed the U.S. lead in restricting market access over the past year. On Tuesday, TPG Telecom Ltd canceled the Huawei-based mobile phone network it was building, in the first commercial casualty of Australia’s move.

Huawei nevertheless said it is the world’s leading provider of 5G technology, winning 30 contracts globally – more than any of its competitors – including 18 in Europe.Slideshow (13 Images)

It is unclear how the U.S. charges would impact its business. Last year, Chinese peer ZTE Corp was prevented from buying essential components from U.S. firms after pleading guilty to similar charges, crippling its operations.

ZTE resumed normal business after paying up to $1.4 billion in fines and replacing its entire board, on top of a near $900 million penalty paid in 2017.

BANKING RELATIONS

U.S. Acting Attorney General Matthew Whitaker said the alleged criminal activity at Huawei “goes back at least 10 years and goes all the way to the top of the company.” The charges against Meng and Huawei cite the Reuters stories that said Huawei’s Skycom unit sought to sell goods to Iran.

The indictment noted that denials from Huawei in the stories were relied upon by financial institutions “in determining whether to continue their banking relationships with Huawei and its subsidiaries.”

The indictment featured a meeting in August 2013 between Meng and an executive from an unidentified bank. Sources told Reuters the bank is HSBC Holdings PLC, which paid $1.92 billion in 2012 for violating U.S. anti-money-laundering and sanctions laws.

During the meeting, Meng misrepresented Huawei operations in Iran and ownership and control of Skycom, the indictment showed.

The Justice Department has confirmed that HSBC is not under investigation in this case, HSBC said in a statement last month.

Also according to the indictment, in July 2007, the FBI interviewed Huawei founder Ren Zhengfei and U.S. authorities said he falsely told them Huawei did not violate U.S. export laws.

The indictment concerning trade secret theft alleged that Huawei had a formal policy instituting a bonus program to reward employees who stole confidential information from competitors.

FBI Director Christopher Wray said the Huawei cases, filed in New York and Washington state, “expose Huawei’s brazen and persistent actions to exploit American companies and financial institutions, and to threaten the free and fair global marketplace.” -Reuters

-Diane Bartz, Sarah N. Lynch, and Sijia Jiang; Additional reporting by David Shepardson, Karen Freifeld, Chris Bing, Joseph Menn and Andy Sullivan, and Michael Martina and Ben Blanchard

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Quarantine Reflections: How Businesses Must Lead From The Heart Now

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Bisila Bokoko, born in the Equatorial Guinea, raised in Spain and now resident in New York as a businesswoman, communications consultant and motivational speaker, is a global citizen like no other.

Straddling these regions for her wine and sports retail businesses and a library project she is spearheading in Senegal, Bokoko has been on self-quarantine for the last four weeks in her Manhattan apartment, after a recent work trip to Spain.

Here, she sheds light on the Covid-19 crisis that she says has made her more reflective of how she needs to rethink her businesses. “It is an extremely confusing and challenging time with such a huge impact on everything,” she says. “Life is never going to be the same again.”

The coronavirus outbreak has changed the way we eat, shop and consume, she adds, with the most dramatic change happening in retail, because of changing values and new priorities.

“The center is going to be the human being, and the wellbeing of the human,” says Bokoko. “And this will not be from an individual perspective, but in relation to each other. We have to be a more collaborative economy, because how we are, will affect everyone else. As leadership, we now need to lead from the heart.”

In this FORBES AFRICA interview, Bokoko speaks to Managing Editor Renuka Methil, also about how the current crisis will throw up new opportunities for local African art and the fashion business.     

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New York On Lockdown

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As I walk through Brooklyn Bridge Park, gazing at the magnificent Manhattan skyline on the East River, at first glance it looks as crowded as it usually does. However, if you look closer, it’s not your typical mixture of tourists with their cacophony of foreign languages, photographers with tripods, or teenagers on skateboards. The park is filled with lone joggers, parents in yoga pants pushing double strollers and carefully guarding kids on scooters. No one plays volleyball in the sand by the river. No one picnics in the barbecue area. Everyone keeps a friendly and polite distance, some people wear face masks. And yet, it doesn’t really look like social distancing, or the lockdown that it is–ordered by the mayor and the governor of New York in an effort to contain the spread of the Coronavirus.   

That peaceful picture of joggers and children playing shouldn’t fool anyone. The five boroughs of New York City – Brooklyn, Queens, Manhattan, Staten Island and the Bronx  — are hit hard by the rapidly spreading Coronavirus. With the death toll rising – 678 patients had died in overcrowded New York City hospitals by March 28, and the number of cases in New York state has surpassed 53,000; the five boroughs of New York have become the epicenter of the pandemic. 

The healthcare system is overwhelmed. I spoke with four medical professionals in the city and they all confirm the disturbing reality that is in the news. The hospitals don’t have enough protective gear, single use masks have been reused, hospitals do not have enough beds and ventilators. Medical personnel intubate patients non-stop, assisting them with breathing. The city hospitals have set up makeshift tents to triage COVID-19 patients as well as to act as morgues. The government’s delayed response to the virus’s spread is costing many, many lives. 

One thing that is striking about New Yorkers – my home of seventeen years – is how people come together and support each other. After the terrorist attack on September 11, 2001; during the power outage in 2003, when the entire city went dark for hours; and after the devastating hurricane Sandy in 2012. 

On the day when Donald Trump was elected president in 2016, New Yorkers, predominantly liberal democrats, were especially sensitive with each other, calmly sharing their sadness and expressing worry for the future of their country. Today, when schools, non-essential stores, bars and restaurants are closed, and many people are isolating and trying to follow social distancing guidelines, members of communities come together to help each other: buying food for older neighbors, helping with disinfecting door knobs and elevator buttons. Mental health professionals volunteer their services to the anxious and scared. At grocery stores and pharmacies only a few people are allowed in at a time, people are waiting outside, standing about two meters apart, and the doormen pour out hand sanitizer into people’s palms. 

Besides solidarity and respect, there is also fear and anxiety. Service and food industry workers are out of work, facing months of hardships. According to the New York State Labor department, during the first days of the lockdown, in some parts of the state, there was a 1,000% increase in unemployment claims as 1.7 million people called to file for benefits. Well over a million children from financially strained families relied on school lunches, and those are now provided at meal sites. But that also means the disparity in incomes in New York has been underscored by the Covid 19 impact, and the inequality between the haves and have-nots will continue to be exposed.

Forbes headquarters in New Jersey has been working remotely since the first week of March. We quickly re-organized: the entire company of 400 people has migrated into a virtual workplace, with a highly mobilized virtual newsroom. Besides holding daily meetings and video calls, our teams get together for virtual hangouts to keep each other’s spirits up. 

The city authorities were slow to respond to the Covid-19 spread. For weeks, when it was clear the crisis was imminent, eight million New Yorkers commuted in crowded subways, went to crowded restaurants and bars, and also traveled to and from crowded international airports, breathing in each other’s air. 

In the absence of the pandemic team, fired by Trump in 2018, the federal government’s response was slow to respond to the disaster. The Trump administration failed to prevent this crisis underestimating the danger of Covid-19: “We have it totally under control,” he said in January, when the virus was already spreading. “It’s one person coming in from China, and we have it under control.” The government failed to test people in a timely manner. In New York,  Mayor Bill De Blasio and the governor Andew Cuomo stepped in and tried to help the hospitals secure supplies and additional testing stations. They are still trying.

Meanwhile, the city is contemplating closing parks and other public places. Maybe even prohibiting people from leaving their homes, or perhaps prohibiting them from leaving New York itself. For the next few weeks, the Big Apple will stay confined indoors. Stay home, don’t spread, save lives.

Katya Soldak, Forbes Staff, Business

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Here’s How Much It Could Cost If We Stop Social Distancing

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Topline: This week, President Trump floated the idea of easing up on social distancing measures on the theory that the damage caused by shutting down the economy might be greater than the cost of letting the virus run its course—some models suggest, however, that reopening the economy too soon could be exponentially more expensive.

  • If the United States were to abandon aggressive social distancing measures after 14 days, more than 125 million people will contract the virus, some 7 million could be hospitalized, and 1.9 million people will die (accounting for other factors like infectiousness and hospitalization rates), according to a model built by the New York Times
  • If social distancing goes on for two months, the model predicts that 14 million will contract the virus, with fewer than 100,000 deaths.
  • There’s no debate that the broader economy is going to suffer even at the current rate of spread. Morgan Stanley is predicting a 30% drop in GDP next quarter. U.S. GDP is currently $21.43 trillion. A drop of 30% would mean a value-loss of more than $6.4 trillion (for context, the economic relief bill signed by President Trump this afternoon is worth about $2 trillion). 
  • If the outbreak worsens due to relaxed social distancing measures, it’s not unreasonable to anticipate even greater economic losses.
  • Economists can calculate the average value of one life saved using a model called the value of a statistical life. It’s a fuzzy metric used by some government agencies that is based on how much a person is willing to pay to reduce the risk of death. Right now, that figure hovers around $10 million.
  • “If we could prevent a million deaths, at the usual way we value [them] of around $10 million each, that’s $10 trillion, which is half of GDP,” says James Hammitt, a professor of economics in Harvard’s health policy department. 
  • University of Chicago economists have arrived at a similar conclusion: they’ve found that under “moderate” social distancing measures, 1.7 million lives and at least $7.9 trillion could be saved. 

Big number: The average cost of a hospital stay for a mild case of pneumonia is $9,763, according to Peterson-KFF analysis (pneumonia is commonly associated with COVID-19, the disease caused by the coronavirus). The median total cost balloons to $88,114 for the most severe cases that require more than four days of ventilator support. Seven million hospitalizations for patients with mild cases would cost more than $68 billion. If 17% of those patients required ventilator support, as was the case in one Chinese study, the cost of hospitalizations alone could add up to a staggering $161 billion, and that’s before the cost of other health complications related to the virus is accounted for. 

Crucial quote: “Anything that slows the rate of the virus is the best thing you can do for the economy, even if by conventional measures it’s bad for the economy,” University of Chicago economist Austan Goolsbee told the New York Times

Key background: In some ways, all of this discourse is more than a century old. A new paper released yesterday found that during the1918 flu pandemic—the closest historical analogue for the current coronavirus outbreak—cities that intervened earlier and more aggressively to slow the spread of the virus through social distancing and isolation of cases suffered no greater economic damage than those that didn’t. “On the contrary,” the authors write, “cities that intervened earlier and more aggressively experience a relative increase in real economic activity after the pandemic.” Seattle, Oakland, Omaha, and Los Angeles, for instance, implemented stronger containment measures than Pittsburgh, Nashville, and Philadelphia and all saw a much larger surge in job growth after the crisis was over in 1920. 

Tangent: Texas Lieutenant Governor Dan Patrick suggested earlier this week that grandparents might be willing to die to preserve the economy for their grandchildren. “No one reached out to me and said, ‘as a senior citizen, are you willing to take a chance on your survival in exchange for keeping the America that all America loves for your children and grandchildren?’” he said. “And if that’s the exchange, I’m all in.” His and Trump’s comments sparked a backlash among progressives on social media on Tuesday, when the hashtag #NotDying4WallStreet trended on Twitter as users voiced their fears of the pandemic, and of the government’s response to it. “I’ll let Wall Street flat line before my grandma does,” wrote one Twitter user. 

Sarah Hansen, Forbes Staff

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