(Adds Canadian hearing, Republican reaction, source on her
expected return to China, context)
By Karen Freifeld, Kenneth Li and Moira Warburton
Sept 24 (Reuters) - Huawei Chief Financial Officer Meng
Wanzhou has reached an agreement with U.S. prosecutors to end
the bank fraud case against her, officials said on Friday, a
move that allows her to leave Canada, relieving a point of
tension between China and the United States.
The years-long extradition drama has been a central source
of discord in increasingly rocky ties between Beijing and
Washington, with Chinese officials signaling that the case
needed to be dropped to help end a diplomatic stalemate between
the world's top two powers.
The deal also opens U.S. President Joe Biden up to criticism
from China hawks in Washington who argue his administration is
capitulating to China and one of its top companies at the center
of a global technology rivalry between the two countries.
Meng was arrested https://www.reuters.com/article/us-usa-china-huawei/top-huawei-executive-arrested-on-u-s-request-clouding-china-trade-truce-idUSKBN1O42S1
at Vancouver International Airport in December 2018 on a U.S.
warrant, and was indicted on bank and wire fraud charges for
allegedly misleading HSBC in 2013 about the
telecommunications equipment giant's business dealings in Iran.
Her arrest sparked a diplomatic storm and drew Canada into
the fray when China arrested two Canadians, a businessman and a
former diplomat, shortly after Meng was taken into custody.
Beijing has denied publicly that the arrests are linked.
In an exclusive https://www.reuters.com/technology/huawei-cfo-meng-appear-brooklyn-federal-court-2021-09-24
on Friday, Reuters reported that the United States had reached
a deferred prosecution agreement 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.
A spokeswoman for Huawei declined to comment.
A person familiar with the matter said Meng was flying back
to China on Friday night.
At a hearing in Brooklyn federal court on Friday, which Meng
attended virtually from Canada, Assistant U.S. Attorney David
Kessler said the government would move to dismiss the charges
against her if she complies with all of her obligations under
the agreement, which ends in December 2022. He added that Meng
will be released on a personal recognizance bond, and that the
United States plans to withdraw its request to Canada for her
extradition.
Meng - the daughter of Huawei founder, Ren Zhengfei https://www.reuters.com/business/huawei-heir-apparent-prepares-life-after-three-years-canada-court-battle-2021-09-24
- pleaded not guilty to the charges in the hearing. When U.S.
District Court Judge Ann Donnelly later accepted the deferred
prosecution agreement, Meng sighed audibly.
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.
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".
Beyond solving a dispute between the United States and
China, the agreement could also pave the way for the release of
the two Canadians, businessman Michael Spavor and former
diplomat Michael Kovrig, who have been held in China. In August,
a Chinese court sentenced https://www.reuters.com/article/china-canada-spavor-idCNL1N2PI07Y
Spavor to 11 years in prison for espionage.
Meng was confined to her expensive Vancouver home at night
and monitored 24/7 by private security that she paid for as part
of 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.
By contrast, the Canadians' have had no access to the
outside world beyond occasional consular visits, and their
trials were held behind closed doors.
"HUAWEI CONFIDENTIAL"
Articles published by Reuters in 2012 https://www.reuters.com/article/us-iran-huawei-hp/exclusive-huawei-partner-offered-embargoed-hp-gear-to-iran-idUSBRE8BT0BF20121230
and 2013 https://www.reuters.com/article/uk-huawei-skycom/exclusive-huawei-cfo-linked-to-firm-that-offered-hp-gear-to-iran-idUKBRE90U0CA20130131
about Huawei, Hong Kong-registered company Skycom and Meng
figured prominently in the U.S. criminal case against her.
Reuters reported that Skycom had offered to sell at least 1.3
million euros worth of embargoed Hewlett-Packard computer
equipment to Iran's largest mobile-phone operator in 2010.
Reuters also reported numerous financial and personnel links
between Huawei and Skycom, including that Meng had served on
Skycom's board of directors between February 2008 and April
2009. The stories prompted HSBC to question Meng about Reuters
findings.
Huawei was placed on a U.S. trade blacklist in 2019
that restricts sales to the company for activities contrary to
U.S. national security and foreign policy interests. The
restrictions have hobbled the company, which suffered its
biggest revenue drop in the first half of 2021, after the U.S.
supply restrictions drove it to sell a chunk of its
once-dominant handset business before new growth areas have
matured.
The criminal case against Meng and Huawei is cited in the
blacklisting. Huawei is charged with operating as a criminal
enterprise, stealing trade secrets and defrauding financial
institutions. It has pleaded not guilty.
A Canadian government official said Ottawa would not comment
until the U.S. court proceedings were over. ?Kovrig's wife
declined to comment. Representatives for Spavor could not be
reached immediately for comment.
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 as being soft, despite Huawei's
struggles under the trade restrictions.
Then-President Donald Trump politicized the case when he
told Reuters soon after Meng's arrest that he would intervene if
it would serve national security or help secure a trade deal.
Meng's lawyers have said she was a pawn in the political battle
between the two super powers.
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 have said that Meng's case was being
handled solely by the Justice Department and the case had no
bearing on the U.S. approach to strained ties with China.
During U.S. Deputy Secretary of State Wendy Sherman's July
trip to China, Chinese Vice Foreign Minister Xie Feng insisted
that the United States drop its extradition case against Meng.
U.S. officials have acknowledged that Beijing had linked
Meng's case to the case of the two detained Canadians, but
insisted that Washington would not be drawn into viewing them as
bargaining chips.
(Reporting by Karen Freifeld, Kenneth Li, Jonathan Stempel,
David Shepardson and Michael Martina; editing by Chris Sanders
and Edward Tobin)
HSBC Holdings (HSBA)
