Huawei CFO signs fraud deal with US, allowing him to return to China
Sept. 24 (Reuters) – Huawei chief financial officer Meng Wanzhou has reached a deal with U.S. prosecutors to end the bank fraud case against her, officials said on Friday, a move that allows her to leave the Canada, thereby relieving a point of tension between China and the United States.
The years-long extradition drama has been a central source of contention in the increasingly rocky relationship between Beijing and Washington, with Chinese officials signaling the case must be dropped to help end a stalemate diplomatic relations between the two greatest powers in the world.
The deal also exposes US President Joe Biden to criticism from Chinese hawks in Washington who claim his administration is capitulating to China and one of its major companies at the center of a global tech rivalry between the two countries.
Meng was arrested at Vancouver International Airport in December 2018 under a U.S. warrant and charged with bank and wire fraud for allegedly misleading HSBC (HSBA.L) in 2013 about the business dealings of the telecommunications equipment giant in Iran.
His arrest sparked a diplomatic storm and dragged Canada into the fray when China arrested two Canadians, a businessman and a former diplomat, shortly after Meng’s arrest. Beijing has publicly denied that the arrests were related.
On Friday exclusively, Reuters reported that the United States had reached a deferred prosecution agreement with Meng. Nicole Boeckmann, the acting US lawyer in Brooklyn, said that in entering into the deal, “Meng assumed responsibility for his lead role in the commission of a scheme to defraud a global financial institution.”
The deal only concerns Meng, and the US Department of Justice has said it is preparing for a lawsuit against Huawei and is eager to prove its case in court.
A Huawei spokeswoman declined to comment.
A person familiar with the matter said Meng was returning to China on Friday evening.
At a hearing in federal court in Brooklyn on Friday, which Meng attended virtually from Canada, Assistant U.S. Attorney David Kessler said the government would decide to dismiss the charges against her if she complied with all of her obligations under the agreement, which ends in December 2022. He added that Meng will be released on personal bail and that the United States plans to withdraw their extradition request to Canada.
Meng – the daughter of Huawei founder Ren Zhengfei – pleaded not guilty to the charges during the hearing. When United States District Court Judge Ann Donnelly later agreed to the deferred prosecution agreement, Meng audibly sighed.
A Canadian judge then signed Meng’s release order, overturning his bail conditions and allowing him to free himself after nearly three years of house arrest.
She was emotional after the judge’s order, hugging and thanking her lawyers.
Then speaking to supporters and reporters on the steps of the courthouse, Meng thanked the judge for her “fairness” and explained how the case had turned her life “upside down”.
Beyond resolving a dispute between the United States and China, the deal could also pave the way for the release of the two Canadians, businessman Michael Spavor and former diplomat Michael Kovrig, detained in China. In August, a Chinese court sentenced Spavor to 11 years in prison for espionage.
Meng was confined to her beloved Vancouver home overnight and monitored 24/7 by private security that she paid for as part of her bail deal. Referred to by Chinese state media as the “Princess of Huawei,” she was required to wear an electronic ankle bracelet to monitor her movements, which became fodder for the tabloids when hung over her designer shoes. .
In contrast, Canadians had no access to the outside world beyond occasional consular visits, and their trials were held behind closed doors.
Articles published by Reuters in 2012 and 2013 about Huawei, Hong Kong-registered company Skycom and Meng featured prominently in the US criminal case against her. Reuters reported that Skycom had offered to sell at least € 1.3 million in embargoed Hewlett-Packard computer hardware to Iran’s largest mobile operator in 2010.
Reuters also reported numerous financial and personal ties between Huawei and Skycom, including the fact that Meng served on Skycom’s board between February 2008 and April 2009. The stories prompted HSBC to ask Meng about the Reuters findings.
Huawei (HWT.UL) was placed on a U.S. commerce blacklist in 2019 which restricts sales to the company for activities contrary to national security and U.S. foreign policy interests. The restrictions hampered the company, which suffered its biggest drop in revenue in the first half of 2021, after U.S. supply restrictions pushed it to sell off some of its once-dominant handset business before new areas growth matured.
The criminal case against Meng and Huawei is cited in the blacklist. Huawei is accused of operating as a criminal enterprise, stealing trade secrets and defrauding financial institutions. He pleaded not guilty.
A Canadian government official said Ottawa would not comment until the end of the US court proceedings. Kovrig’s wife declined to comment. Representatives for Spavor could not be reached immediately for comment.
CHINA VS UNITED STATES
Huawei has become a dirty word in Washington, with Chinese hawks in Congress reacting quickly to any news that could be interpreted as soft from the United States, despite Huawei’s struggles under trade restrictions.
Then-President Donald Trump politicized the case when he told Reuters shortly after Meng’s arrest that he would step in if it served national security or helped secure a trade deal. Meng’s lawyers said she was a pawn in the political battle between the two superpowers.
Republican Chinese hard-line supporters in Congress called Friday’s deal a “surrender.”
“Instead of standing firm against China’s hostage-taking and blackmail, President Biden has bowed,” Republican Senator Tom Cotton said in a statement.
Senior US officials said Meng’s case was being handled only by the Justice Department and that the case had no bearing on the US approach to strained relations with China.
During US Deputy Secretary of State Wendy Sherman’s July trip to China, Chinese Vice Foreign Minister Xie Feng insisted the United States drop its extradition case against Meng.
U.S. officials acknowledged that Beijing linked Meng’s case to the case of the two detained Canadians, but insisted Washington would not be made to view them as bargaining chips.
Reporting by Karen Freifeld, Kenneth Li, Jonathan Stempel, David Shepardson and Michael Martina; edited by Chris Sanders and Edward Tobin
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