Sunday, September 26, 2021

Huawei's Meng Wanzhou resolves legal case brought by U.S.

Wanzhou Meng, Chief Financial Officer of Huawei Technologies, reached an agreement with the United States Attorney’s Office for the Eastern District of New York, the Counterintelligence and Export Control Section of the Justice Department’s National Security Division (CES), and the Money Laundering and Asset Recovery Section of the Justice Department’s Criminal Division (MLARS). As a result, the U.S. Department of Justice withdrew its request to the Ministry of Justice of Canada that Meng be extradited to the United States. This clears the way for her to return to China after having been under house arrest in Vancouver since December 2018.

Meng pleaded not guilty to fraud charges but agreed to a four-page statement of facts regarding the case.

At the Supreme Court of British Columbia, Associated Chief Justice Heather Holmes released Meng from all bail conditions set by the Canadian justice system.

Hours after Meng was freed, Prime Minister Justin Trudeau of Canada announced that Michael Kovrig and Michael Spavor had likewise been released from detention in China and were on their way back to Canada.

The United States Attorney’s Office for the Eastern District of New York and the U.S. Department of Justice issued the following statements:

“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,” stated Acting U.S. Attorney Boeckmann.  “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.  The truth about Huawei’s business in Iran, which Meng concealed, would have been important to the financial institution’s decision to continue its banking relationship with Huawei.  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.” 

Some notes according to court filings, and as agreed to by Meng in the DPA’s statement of facts as recorded by the United States Attorney’s Office for the Eastern District of New York:

"Between 2010 and 2014, Huawei controlled Skycom’s business operations in Iran, and Skycom was owned by an entity controlled by Huawei.  All significant Skycom business decisions were made by Huawei.  Moreover, Skycom’s country manager—the head of the business—was a Huawei employee.  Individuals employed by Skycom believed they worked for Huawei. 

In December 2012 and January 2013, various news organizations, including Reuters, reported that Skycom offered to sell “embargoed” equipment from a U.S. computer equipment manufacturer in Iran in potential violation of U.S. export controls law, and that Huawei had close ties with Skycom.  

In 2013, when questioned by financial institutions in Hong Kong, Huawei employees, including Meng, asserted that Skycom was just a local business partner of Huawei in Iran and that Skycom had not conducted Iran-related transactions using its accounts at the financial institutions. Meng also told the financial institution that Huawei “operates in Iran in strict compliance with applicable laws, regulations and sanctions” and that “there has been no violation of export control regulations” by “Huawei or any third party Huawei works with.”  

Between 2010 and 2014, Huawei caused Skycom to conduct approximately $100 million worth of U.S.-dollar transactions through Financial Institution 1 that cleared through the United States, at least some of which supported its work in Iran in violation of U.S. law, including $7.5 million for Iran-based contractors from the U.K. staffing company to do work in Iran.

For its part, Huawei has yet to comment on the agreement.