Huawei’s CFO Leaves Canada after Settling Fraud Charges in the US

Sept 24 (Reuters) – Huawei Chief Financial Officer Meng Wanzhou flew home to China on Friday after reaching an agreement with U.S. prosecutors to end the bank fraud case against her, relieving a point of tension between China and the United States.

Two Canadians, who were taken into custody shortly after Meng’s arrest in December 2018, were released from Chinese prisons and sent back to Canada within hours of the announcement. Beijing denied that the arrests of Meng and Meng were connected.

Huawei Technologies Chief Financial Officer Meng Wanzhou leaves her home to attend a virtual court hearing in Vancouver, British Columbia, Canada September 24, 2021.  REUTERS/Taehoon Kim

The decades-old extradition drama has been a source of discord in increasingly rocky relations between Beijing and Washington. Chinese officials signaled that they needed to drop the case to end a diplomatic deadlock.

The deal also exposes U.S. President Joe Biden’s administration to criticism from China hawks. They claim that his administration is bowing to China and one its top companies in the midst of a global rivalry in technology between the two countries.

Meng was detained at Vancouver International Airport by the United States and indicted for wire and bank fraud charges. The charges relate to Meng’s alleged misleading of HSBC (HSBA.L), in 2013, about Iran’s telecoms equipment giant.

Reuters exclusively reported on Friday that the United States reached a deferred prosecution deal with Meng.

Nicole Boeckmann, the acting U.S. attorney in Brooklyn, said that in entering into the agreement, “Meng has taken responsibility for her principal role in perpetrating a scheme to defraud a global financial institution.”

The agreement pertains only to Meng, and the U.S. Justice Department said it is preparing for trial against Huawei and looks forward to proving its case in court.

China’s foreign ministry didn’t immediately respond to a request to comment on Meng’s release or that of the Canadians.

Assistant United States Attorneys arrive for a hearing for Huawei Chief Financial Officer Meng Wanzhou at the Brooklyn Federal District Courthouse in Brooklyn, New York, U.S., September 24, 2021. REUTERS/Angus Mordant

A Huawei spokeswoman declined to comment.

According to a source familiar with the matter, Meng, the daughter of Ren Zhengfei, had traveled from Canada to Shenzhen.

The Canadians Michael Spavor, a businessman, and Michael Kovrig (a former diplomat) had been held in China for over 1,000 days. Spavor was sentenced by a Chinese court to 11 years for espionage in August. read more

The International Crisis Group, where Kovrig works, said it was “overjoyed” at the “most just decision” to release him, thanking Canada and the United States for their roles. “The day we have been waiting for 1,020 days has finally arrived,” In a statement, the advocacy group stated.

Justin Trudeau, Prime Minister, made brief remarks to reporters late Friday night. He said that the men had just left Chinese airspace minutes earlier. He was not asked if they had made a bilateral deal.

“I want to thank our allies and partners around the world in the international community who have stood steadfast in solidarity with Canada and with these two Canadians,” He stated.

Meng, who was present virtually from Canada at Friday’s hearing in Brooklyn federal Court, was informed by Assistant U.S. Attorney David Kessler that the government would seek to dismiss the charges against Meng if she fulfills all her obligations under the agreement. This agreement runs until December 2022. He stated that Meng will be released under a personal recognizance bond and that the United States intends to withdraw its request to Canada to extradite her.

Huawei Technologies Chief Financial Officer Meng Wanzhou leaves her home to attend a virtual court hearing in Vancouver, British Columbia, Canada September 24, 2021.  REUTERS/Taehoon Kim

Meng pleaded no guilty to the charges during the hearing. Meng sighed out loudly after U.S. district court Judge Ann Donnelly accepted the deferred prosecutor agreement.

Meng Wanzhou, chief financial officer at Huawei Technologies, is forced to leave her home in order to attend a Vancouver court hearing in British Columbia, Canada on September 24, 2021. REUTERS/Taehoon Kim

A Canadian judge later signed Meng’s order of discharge, vacating her bail conditions and allowing her to go free after nearly three years of house arrest. read more

She was emotional after the judge’s order, hugging and thanking her lawyers.

Speaking to supporters and reporters on the steps of the court afterward, Meng thanked the judge for her “fairness” and talked of how the case had turned her life “upside down”.

Meng was kept in her Vancouver home at night, and was monitored by private security she had paid for as part her bail agreement. 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 it hung above her designer shoes.

Huawei Technologies Chief Financial Officer Meng Wanzhou returns to a court hearing in Vancouver, Canada, August 18, 2021. REUTERS/Jennifer Gauthier/File Photo

‘HUAWEI CONFIDENTIAL’

Articles published by Reuters in 2012 and 2013 about Huawei, Hong Kong-registered company Skycom and Meng figured prominently in the U.S. criminal case against her. Reuters reported that Skycom offered to sell at most 1.3 million euros worth embargoed Hewlett-Packard computer hardware to Iran’s largest mobile-phone company in 2010.

Reuters also reported that Huawei and Skycom had many financial and personnel connections, including Meng having served on Skycom’s board of directors from February 2008 to April 2009. HSBC questioned Meng about the Reuters stories.

Huawei (HWT.UL), was placed on a U.S. Trade Blacklist in 2019. This list restricts sales to the company for activities that are contrary to U.S. foreign policy and national security interests. The company has been hit hard by the restrictions. It suffered its largest revenue drop in the first six months of 2021 after U.S. supply constraints forced it to sell a large portion of its once-dominant handset division before new growth areas were developed.

The blacklisting includes Meng and Huawei’s criminal cases. Huawei is accused of operating as a criminal organization, stealing trade secrets and fraudming financial institutions. It has pleaded guilty.

An official from Canada stated that Ottawa would not comment until U.S. court proceedings were completed.

CHINA VS USA

Huawei has become a dirty word in Washington, with China hawks in Congress quick to react to any news that could be construed as the United States being soft, despite Huawei’s struggles under the trade restrictions.

Trump, the former President, politicized the case shortly after Meng was arrested. He told Reuters that he would intervene if it served national security or helped secure a trade deal. Meng’s lawyers claim that she was a pawn during the political battle between two superpowers.

Huawei Technologies Chief Financial Officer Meng Wanzhou speaks to media outside the B.C. Supreme Court following a hearing about her release in Vancouver, British Columbia, Canada September 24, 2021.  REUTERS/Jesse Winter

Republican China hardliners in Congress called Friday’s deal a “capitulation.”

“Instead of standing firm against China’s hostage-taking and blackmail, President Biden folded,” Republican Senator Tom Cotton said in a statement.

Senior U.S. officials stated that Meng’s case was being handled only by the Justice Department, and had no bearing on U.S. policy to maintain strained relations with China.

During the July visit of U.S. Deputy Secretary-of-State Wendy Sherman to China, Xie Feng, the Chinese Vice Foreign Minister, insisted that the United States drop its extradition against Meng.

Officials from the United States acknowledged that Meng’s case had been linked to the case of two Canadians being held in detention, but said that Washington would not accept them as bargaining chips.

An Air China flight bound for Shenzhen, believed to be carrying Huawei CFO Meng Wanzhou, takes off from Vancouver International Aiport in Richmond, British Columbia, Canada September 24, 2021. REUTERS/Jennifer Gauthier

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