(Edits headlines, adds related content)
By Karen Freifeld, Kenneth Li, Moira Warburton and David
Ljunggren
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.
Within hours of the news of the deal, two Canadians who were
arrested shortly after Meng was taken into custody in December
2018 were released from Chinese jails and were on their way back
to Canada. Beijing had denied that their arrests were linked.
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.
The deal also opens U.S. President Joe Biden 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 on a U.S. warrant, and
indicted on bank and wire fraud charges for allegedly misleading
HSBC in 2013 about the telecommunications equipment
giant's business dealings in Iran.
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.
China's foreign ministry did not immediately respond to a
request for comment on the release of Meng or the Canadians.
A spokeswoman for Huawei declined to comment.
A person familiar with the matter said 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
- had left Canada on a flight to Shenzhen.
The two Canadians, businessman Michael Spavor and former
diplomat Michael Kovrig, had been held in China for more than
1,000 days. In August, a Chinese court sentenced https://www.reuters.com/article/china-canada-spavor-idCNL1N2PI07Y
Spavor to 11 years in prison for espionage.
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," the
advocacy group said in a statement.
Prime Minister Justin Trudeau told reporters in brief
remarks late on Friday the two men had left Chinese airspace
just minutes before. He was not asked whether the two countries
had struck 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 said.
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 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".
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.
'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.
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.
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, Michael Martina, Sarah Berman and Yew Lun
Tian; Writing by Sonya Hepinstall; Editing by Daniel Wallis and
Clarence Fernandez)
HSBC Holdings (HSBA)