Huawei CFO quits Canada after US agreement on fraud charges
Sept. 24 (Reuters) – Huawei CFO Meng Wanzhou returned to China on Friday after reaching a deal with U.S. prosecutors to end the bank fraud case against her, easing a point of tension between China and the United States.
Hours after news of the deal was heard, two Canadians who were arrested shortly after Meng’s arrest in December 2018 were released from Chinese prisons and were on their way back to Canada. Beijing had denied that their arrests were related.
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.
The deal also opens up US President Joe Biden to critics 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 under a US warrant and charged with banking and electronic fraud for allegedly misleading HSBC (HSBA.L) in 2013 about the business dealings of the telecommunications equipment giant in Iran.
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.
China’s Foreign Ministry did not immediately respond to a request for comment on the release of Meng or the Canadians.
A Huawei spokeswoman declined to comment.
A person familiar with the matter said Meng – the daughter of Huawei founder Ren Zhengfei – left Canada on a flight to Shenzhen.
The two Canadians, businessman Michael Spavor and former diplomat Michael Kovrig, had been detained in China for more than 1,000 days. In August, a Chinese court sentenced Spavor to 11 years in prison for espionage. Read more
The International Crisis Group, where Kovrig works, said it was “delighted” with the “fairest decision” to release him, thanking Canada and the United States for their role. “The day we have been waiting for for 1,020 days has finally arrived,” the advocacy group said in a statement.
Prime Minister Justin Trudeau told reporters in brief remarks on Friday evening that the two had left Chinese airspace minutes earlier. He was not asked whether the two countries had entered into a bilateral agreement.
âI want to thank our allies and partners around the world within the international community who have remained steadfast in solidarity with Canada and with these two Canadians,â he said.
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 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. Read more
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”.
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. .
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 â¬ 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.
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 sluggishness 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, Michael Martina, Sarah Berman and Yew Lun Tian; Written by Sonya Hepinstall; Editing by Daniel Wallis and Clarence Fernandez
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