Huawei CFO Meng Wanzhou admits lying about Iran deal, gets to go home

US puts charges on ice, extradition attempt halted

Updated Huawei finance chief Meng Wanzhou has reached a deal with the US Justice Department to drop the fraud and conspiracy charges against her in exchange for admitting that she made false statements about her company's business dealings with Iran.

The deferred prosecution agreement will end Uncle Sam's attempt to extradite Meng to the United States. It will allow her to depart Canada, where she has been detained since 2018, and return to China, easing a major source of diplomatic tension between Canada, China, and the US.

After Canadian authorities arrested Meng at the Vancouver airport in December, 2018, on behalf of the Americans, the US Justice Department indicted her and her manufacturing giant for violating US sanctions on Iran by misrepresenting Huawei's relationship with Hong Kong-based Skycom, which operated in Iran.

In entering into the deferred prosecution agreement, Meng has taken responsibility for her principal role in perpetrating a scheme to defraud a global financial institution

According to US prosecutors, Huawei has controlled Skycom, which did business primarily in Iran, since February 2007. After a series of Reuters reports in late 2012 and early 2013 about Huawei's ties to Skycom, Huawei and Meng made statements to the press and to financial institutions asserting the two companies were simply business partners.

"Those statements were untrue because, as Meng knew, Skycom was not a business partner of, or a third party working with, Huawei; instead, Huawei controlled Skycom, and Skycom employees were really Huawei employees," the US Justice Department said.

For those and related statements, Meng was charged in the US with bank fraud, conspiracy to commit wire fraud, bank fraud, and wire fraud. Though on Friday she pleaded not guilty in an online hearing with a New York City court, under the terms of her deferred prosecution agreement, she has affirmed the accuracy of a four-page statement of facts that acknowledges lies made to an unidentified bank – understood to be HSBC – and she has agreed not to commit further crimes.

"In entering into the deferred prosecution agreement, Meng has taken responsibility for her principal role in perpetrating a scheme to defraud a global financial institution,” said Acting US Attorney Nicole Boeckmann, in a statement. "Her admissions in the statement of facts confirm that, while acting as the Chief Financial Officer for Huawei, Meng made multiple material misrepresentations to a senior executive of a financial institution regarding Huawei’s business operations in Iran in an effort to preserve Huawei’s banking relationship with the financial institution."

Huawei, founded by Meng's father Ren Zhengfei, was charged with racketeering conspiracy and conspiring to steal trade secrets in February 2020 [PDF], along with Skycom and other subsidiaries. Those charges are not part of the deferred prosecution agreement.

"Our prosecution team continues to prepare for trial against Huawei, and we look forward to proving our case against the company in court," said Assistant Attorney General Kenneth Polite of the Justice Department’s Criminal Division, in a statement.

Back in 2018, Huawei said it had every confidence the Canadian and US legal systems would reach a just conclusion with regard to Meng Wanzhou's detention, and denied any wrongdoing took place. We're still awaiting a response from Huawei to today's developments.

The technology goliath's legal team previously questioned the United States' jurisdiction in this matter, given it was seemingly between Shenzhen-headquartered Huawei, UK-based HSBC, Skycom in Hong Kong, and Iran.

Skycom, for what it's worth, was accused of selling American Hewlett Packard gear to Iran in the late 2000s, which is equipment that should not have been imported, and serving as a funnel for sanctions-busting financial transactions using US dollars.

Huawei remains on the list of foreign technology companies whose electronics and software is designated a threat to US national security. And while the Trump administration made a show of baiting China and ostracizing Huawei, the Biden administration has stayed the course, albeit with more subtlety.

In July, for example, the FCC voted to finalize its $1.9bn program to reimburse rural telecom providers that rip and replace equipment from five Chinese companies, one of which is Huawei. Huawei remains on the Commerce Department's Entity List, expanded in July with the addition of 14 Chinese entities. And in June, the US Treasury Department added Huawei to a list of companies subject to investment prohibitions targeting Chinese firms involved with surveillance technology that facilitates repression or human rights violations.

Citing unnamed sources, The Wall Street Journal reports that there's hope the resolution of the case against Meng will lead to the release of Michael Spavor and Michael Kovrig, two Canadians imprisoned in China. It's widely believed Chinese authorities persecuted the two Canadians to punish Canada for arresting Meng and to deter Canadian officials from approving her extradition to the US.

Last month, the Chinese Embassy in Ottawa, Canada, insisted that claims made by Canadian Prime Minister Justin Trudeau and others about Spavor and Kovrig being used as political pawns were groundless and also that Meng's detention was arbitrary and political. ®

Updated to add

Well, well, well: what a coincidence. Following today's agreement, Meng flew from Vancouver to her home nation, and China released two Canadians.

Meng’s lawyer William Taylor, III, in a statement emailed to The Register, said, “I’m very pleased that Sabrina Meng and the US Department of Justice have reached a deferred prosecution agreement (DPA) and it has been approved by Judge Donnelly. Under the terms of this agreement, she will not be prosecuted further in the United States and the extradition proceedings in Canada will be terminated. She has not pleaded guilty and we fully expect the indictment will be dismissed with prejudice after fourteen months. Now, she will be free to return home to be with her family.”

Huawei also celebrated the agreement. “We look forward to seeing Ms. Meng returning home safely to be reunited with her family,” said a Huawei spokesperson. “Huawei will continue to defend itself against the allegations in the US District Court for the Eastern District of New York.”

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