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By Karen Freifeld
Feb 18 (Reuters) - U.S. prosecutors overlooked apparent
violations of U.S. sanctions against Iran by HSBC Holdings
in exchange for the British bank's cooperation with a
government investigation of Huawei Technologies, lawyers for the
Chinese telecoms giant said.
"The government agreed to overlook HSBC's continued
misconduct, electing not to punish the bank, prosecute its
executives or even extend the monitorship," Huawei's lawyers
wrote in a Feb. 10, 2020 letter filed in U.S. District Court in
Brooklyn, New York. The letter was seen by Reuters on Tuesday.
In return, "HSBC agreed to cooperate with the government's
efforts to depict Huawei as the mastermind of HSBC's sanctions
violations and supply witnesses to the government's stalled
investigation of Huawei," the lawyers wrote.
In an indictment unsealed last year, Huawei was charged by
the United States with bank fraud and violating sanctions
against Iran. Federal prosecutors added more charges to the case
this month.
The indictment accuses Huawei and its chief financial
officer, Meng Wanzhou, of conspiring to defraud HSBC and other
banks by misrepresenting Huawei’s relationship with Skycom Tech
Co Ltd, a suspected front company that operated in Iran.
The new claims by Huawei relate to a five-year deferred
prosecution agreement HSBC agreed to in 2012 for disregarding
rules designed to prevent money laundering and processing
transactions that violated sanctions.
Huawei's lawyers say that, after HSBC obtained the deferred
prosecution agreement, the bank continued to process Iran
transactions through its New York branch and concealed the
conduct from a court-appointed monitor. It also failed as late
as 2017 to implement compliance measures it had promised in
order to secure the agreement.
"The Justice Department determined that HSBC met all of its
obligations, including its sanctions obligations, under its 2012
Deferred Prosecution Agreement," the bank said in a statement.
Huawei has pleaded not guilty. Meng, the daughter of
Huawei's founder, was arrested in Canada on a U.S. warrant in
connection with the case. She has said she is innocent and is
fighting extradition.
Reuters exclusively reported last February that HSBC
conducted an investigation into Huawei's connections with Skycom
that helped lead to the charges against the Chinese company.
Huawei is seeking documents from the HSBC investigation of
the company and reports from the monitor, which it says "appear
certain" to contradict the allegations in the indictment.
A spokesman for federal prosecutors in Brooklyn declined to
comment.
(Reporting by Karen Freifeld; Editing by Tom Brown)
