(Bloomberg) — Almost three years after she was arrested at a Vancouver airport, Huawei Technologies Co. Chief Financial Officer Meng Wanzhou was freed from Canadian home confinement on Friday after reaching a deal to end U.S. criminal charges against her.
Under an agreement with federal prosecutors, Meng, 49, admitted she misled HSBC Holdings Plc about the telecom company’s business with Iran, in violation of U.S. sanctions on that nation. Meng will face no further prosecution and could see the charges against her dismissed by December 2022 if she complies with the terms of the deal.
But a larger racketeering indictment is still pending against Huawei, which grinds on even as a broader rivalry between Washington and Beijing sees relations between the two powers at their lowest point in years.
The Justice Department said Meng’s admissions “confirm the crux of the government’s allegations in the prosecution of this financial fraud — that Meng and her fellow Huawei employees engaged in a concerted effort to deceive global financial institutions, the U.S. government and the public about Huawei’s activities in Iran.”
The company has pleaded not guilty.
Preparing for Trial
“Our prosecution team continues to prepare for trial against Huawei, and we look forward to proving our case against the company in court,” Assistant Attorney General Kenneth Polite said in a statement Friday.
David Bitkower and Michael Levy, lawyers for Huawei in the U.S., didn’t immediately return voicemail and email messages seeking comment on Meng’s accord and the impact it might have on their case.
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Meng’s arrest in December 2018 sparked a diplomatic crisis and retaliatory trade measures by China, which has called her prosecution a politically motivated attack on one of its chief tech champions. Meng has spent the last few years fighting extradition to the U.S. With the bank fraud, conspiracy and wire fraud charges against her, she faced as many as 30 years in prison if convicted in the U.S.
Given the tensions around the case and the number of other unresolved issues between the U.S. and China, Friday’s deal spurred speculation that it was part of some broader agreement or that the U.S. got something in return.
“If this individual from Huawei is able to go home, I would expect there are other pieces to some type of an arrangement, whether there is a quid pro quo, whatever. China has made this a priority,” Richard Haass, president of the Council on Foreign Relations, said on “Balance of Power” on Bloomberg TV on Friday.
The Two Michaels
China has frequently linked Meng’s case with that of jailed Canadian citizens Michael Spavor and Michael Kovrig. The two Michaels, as they are known in Canada, were detained in China within days of Meng’s arrest. If the deal with Meng is followed by a reciprocal agreement by Beijing to release them, it would represent a political win for Prime Minister Justin Trudeau, just days after a national election in which he faced stiff criticism from the rival Conservatives over his handling of relations with Beijing.
The return of Meng would represent a win for Chinese President Xi Jinping, who is banking on a tough stance with countries including the U.S., Canada and Australia to deliver him kudos at home as he heads into a key leadership meeting of the ruling Communist Party next year.
Officials at China’s embassies in Washington and Ottawa didn’t immediately respond to requests for comment. Spokespeople for Huawei in Canada also didn’t respond to requests for comment.
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Appearing by video on Friday from her lawyer’s office in downtown Vancouver, Meng pleaded not guilty in federal court in Brooklyn. U.S. government lawyers said they would defer prosecution in the matter and dismiss the charges entirely by Dec. 1, 2022, if Meng complies with the agreement, which bars her from contradicting a four-page statement of facts that recites the U.S. case against her.
In the hearing she admitted she made “knowing false statements” to a financial institution not identified by the U.S. In earlier court proceedings HSBC has been identified as the institution.
The U.S. said it would withdraw its extradition request for Meng and “promptly notify” Canadian authorities about releasing her, a government lawyer said at the hearing. That led to Meng’s release on Friday afternoon.
Prosecutors alleged that Huawei and Meng lied to HSBC about Huawei’s relationship with a third company that was doing business in Iran, as part of a scheme to violate the trade sanctions. Meng was accused of personally making a false presentation in August 2013 about those ties. U.S. prosecutors raised the stakes last year by adding racketeering conspiracy charges against Huawei, alleging it had won international standing by stealing trade secrets in a 20-year pattern of corporate espionage.
While the indictment doesn’t name the businesses from which Huawei allegedly stole intellectual property, details of the allegations match descriptions of companies including Cisco Systems Inc., Motorola Inc. and Cnex Labs Inc.
China had long argued that the U.S. was using Meng as a bargaining chip to achieve other demands. That suspicion appeared to be affirmed in December 2018, when then-president Donald Trump told Reuters in an interview he would intervene in U.S. efforts to extradite Meng if it would help him reach a trade deal.
As Meng’s case appeared to languish, pressure on Trudeau’s government grew. Last month, a Chinese court jailed Spavor for 11 years on spying charges. But while that decision left the door open for Spavor’s eventual deportation, it sparked more international criticism.
‘Absolutely Unacceptable’
Trudeau condemned the verdict as “absolutely unacceptable and unjust” while David Meale, the top U.S. diplomat in Beijing, called the proceedings a “blatant attempt to use human beings as bargaining leverage.” In a separate statement, U.S. Secretary of State Antony Blinken condemned Beijing’s sentencing and called for the immediate release of all people “arbitrarily” detained in China.
The conviction of Spavor, along with that of Kovrig — a Hong Kong-based analyst at the International Crisis Group and former Canadian diplomat — fed criticism of the expansion of “hostage diplomacy.” China has repeatedly linked the cases to Meng’s, with a Foreign Ministry spokesman saying last year that halting her extradition “could open up space for resolution to the situation of the two Canadians.”
Trudeau’s incumbent Liberals won a third term this week, but the prime minister was unable to regain majority control of the legislature. The continued detention of the two Michaels remains a central foreign policy issue for his government.
The case is U.S. v. Huawei Technologies Co. Ltd. et al., 18-cr-457, U.S. District Court, Eastern District of New York (Brooklyn).
(Updates with Meng’s release.)
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