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(Adds Chinese foreign ministry comment, Huawei suppliers share
price moves)
By Karen Freifeld
Dec 4 (Reuters) - U.S. prosecutors are discussing a deal
with lawyers for Huawei finance chief Meng Wanzhou to resolve
criminal charges against her, a person familiar with the matter
said, signaling a potential end to a case that has strained ties
between the United States, China and Canada.
Negotiations between Meng's attorneys and the U.S. Justice
Department picked up after the U.S. presidential election a
month ago, the person said, but it is still unclear what kind of
deal could be struck.
Meng, 48, was arrested in Canada in December 2018 on a U.S.
warrant. She faces bank fraud charges for allegedly misleading
HSBC Holdings Plc about Huawei Technologies Co Ltd's
business dealings in Iran, which was subject to U.S. sanctions.
Meng does not think she did anything wrong and so is
reluctant to make admissions that she does not think are true,
the person said. Further negotiations are expected to take place
on Friday, the person said.
The Wall Street Journal first reported on a possible deal.
It said the case might be resolved with a "deferred prosecution
agreement" under which Meng would admit to some of the
allegations against her and prosecutors would defer and later
drop the charges if she cooperated.
In the case, which was filed in New York, Huawei and Meng
are accused 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.
Huawei has said Skycom was a local business partner, but
U.S. prosecutors said it was an unofficial subsidiary used to
conceal Huawei's Iran business.
U.S. authorities say Huawei used Skycom to obtain embargoed
U.S. goods, technology and services in Iran, and to move money
via the international banking system. The charges against the
company include violating U.S. sanctions on Iran.
The source said the negotiations do not appear to be part of
a larger deal with Huawei, which was hit with additional charges
in the case in February, including conspiring to steal trade
secrets from six U.S. technology companies.
U.S. Justice Department spokesman Marc Raimondi declined to
comment. Huawei also declined to comment, as did a spokeswoman
for Canadian Foreign Minister Francois-Philippe Champagne.
Chinese foreign ministry spokeswoman Hua Chunying told a
regular briefing that Meng was innocent and that the U.S. had
"choreographed" the case to contain Chinese high-tech companies,
without commenting directly on the reports.
"We urge the U.S. to drop this extradition warrant and
arrest order on Ms Meng and we urge the Canadian side to release
her and allow her to return to China at an early date," she
said.
Shares in Huawei's greater China suppliers, such as Wus
Printed Circuit Kunshan, Shennan Circuits
and Hon Hai Precision Industry, rose after
the news, bucking a broader retreat in the market.
'END THIS NIGHTMARE'
The Trump administration has targeted Huawei's business
worldwide in an effort to thwart its ambitions to supply next
generation 5G networks.
In pressuring other countries to bar Huawei from their
cellular networks, the United States said it was worried its
equipment could be used by Beijing for spying. The company has
repeatedly denied the allegation.
Meng is due back in British Columbia Supreme Court on Monday
as she fights extradition to the United States.
If she were to admit wrongdoing, the Trump administration
could claim victory in a thorny dispute with China, and relieve
the pressure on Canada, which has found itself in the cross fire
of the U.S.-China trade war.
After Meng's arrest, China cut off imports of canola seed
from Canada and detained two Canadian citizens, Michael Kovrig
and Michael Spavor, for alleged spying. They remain behind bars.
"Ottawa has been pressing Washington to try to come and help
us in any way possible, and this would be a great way to end
this nightmare," former Canadian ambassador to China Guy
Saint-Jacques told the Canadian Broadcasting Corporation.
Reuters broke news of the bank fraud charges two years ago
and exclusively reported last year on how an internal HSBC probe
helped lead to the charges against Huawei and Meng.
The U.S. sanctions investigation was spurred by Reuters
reports more than six years ago that detailed the close ties
between Huawei and Skycom.
? U.S. President Donald Trump told Reuters after Meng's
arrest in 2018 that he would intervene in the case if it would
serve national security interests or help close a trade deal
with China. Meng's lawyers expressed concern at the time that
she was a pawn.
(Reporting by Karen Freifeld in New York; Additional reporting
by David Shepardson in Washington, Steve Scherer and David
Ljunggren in Ottawa, Brenda Goh in Shanghai and Cate Cadell in
Beijing, Bhargav Acharya in Bengaluru; Editing by Peter
Henderson, Daniel Wallis and Alexander Smith)
