© Reuters. FILE PHOTO: A Huawei logo appears on a phone screen in their Vina del Mar store
By Karen Freifeld
(Reuters) – US prosecutors are discussing a criminal complaint settlement agreement with lawyers for Huawei chief financial officer Meng Wanzhou, said a person familiar with the matter, signaling a possible end to a case that strains US-China relations hat and Canada.
Negotiations between Meng's attorneys and the U.S. Department of Justice began a month ago after the U.S. presidential election, the person said, but it is still unclear what type of agreement could be reached.
Meng, 48, was arrested in Canada in December 2018 on a US arrest warrant. She is charged with allegedly misleading actions of bank fraud HSBC Holdings Plc (LON 🙂 on Huawei Technologies Co Ltd's business relationships in Iran for which US sanctions have been imposed.
Meng doesn't believe she's done anything wrong and is reluctant to make confessions she doesn't believe to be true, the person said. Further negotiations are due to take place on Friday, the person said.
The Wall Street Journal first reported on a possible deal. It said the case could be resolved with a "deferred law enforcement arrangement" under which Meng would admit some of the allegations made against her and prosecutors would postpone the charges and later drop them if they cooperated.
In the case filed in New York, Huawei and Meng are accused of conspiring to defraud HSBC and other banks by misrepresenting Huawei's relationship with Skycom Tech Co Ltd, an alleged front-line company operating in Iran .
Huawei said Skycom was a local business partner, but US prosecutors said it was an unofficial subsidiary that was hiding Huawei's Iran deal with.
According to US authorities, Huawei used Skycom to receive US goods, technology and services embargoed in Iran and to move money through the international banking system. The charges against the company include violating US sanctions against Iran.
According to the source, the negotiations don't appear to be part of a larger deal with Huawei, which was burdened with additional fees in February, including a conspiracy to steal trade secrets from six U.S. tech companies.
The US Department of Justice spokesman Marc Raimondi declined to comment. Huawei declined to comment, as did a spokeswoman for Canadian Foreign Minister Francois-Philippe Champagne.
Chinese Foreign Ministry spokeswoman Hua Chunying said in a regular briefing that Meng was innocent and that the US had "choreographed" the case to contain Chinese high-tech companies without directly commenting on the reports.
"We urge the US to drop this extradition warrant and the arrest warrant for Ms. Meng, and we urge the Canadian side to release her and allow her to return to China early," she said.
Shares in Huawei's larger Chinese suppliers like Wus Printed Circuit Kunshan, Shennan Circuits and Hon Hai Precision Industry rose after the news, resisting a wider market retreat.
"End this nightmare"
The Trump administration has targeted Huawei's global business to thwart its ambitions to deliver next-generation 5G networks.
When the US pressured other countries to ban Huawei from their cellular networks, it feared that their equipment could be used by Beijing for spying. The company has repeatedly denied the allegation.
Meng is expected in the British Columbia Supreme Court on Monday as she battles extradition to the United States.
If admitted to wrongdoing, the Trump administration could win a delicate dispute with China and ease pressure on Canada, which is caught in the crossfire of the US-China trade war.
After Meng's arrest, China stopped importing canola seeds from Canada and arrested two Canadian citizens, Michael Kovrig and Michael Spavor, for alleged espionage. You stay behind bars.
"Ottawa has urged Washington to try to help us in every possible way and this would be a great way to end this nightmare," former Canadian Ambassador to China Guy Saint-Jacques told the Canadian Broadcasting Corporation.
Reuters broke the news of the bank fraud charges two years ago and last year reported exclusively on how an internal HSBC investigation led to the charges against Huawei and Meng.
The US sanctions investigation was fueled by Reuters reports more than six years ago, which detailed the close ties between Huawei and Skycom.
After Meng's arrest in 2018, US President Donald Trump told Reuters that he would intervene in the case if it served national security interests or contributed to the conclusion of a trade deal with China. Meng's lawyers at the time expressed concern that she was a farmer.