Beijing frees Canadians after Huawei CFO reaches deal with US prosecutors

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Meng Wanzhou, Huawei’s chief financial officer who has been held in Vancouver for almost three years on criminal fraud charges, walked free on Friday while two Canadians detained in China shortly after her arrest were due to return home.

A Canadian judge ordered Meng’s release after US prosecutors announced a deferred prosecution agreement during a federal court hearing in Brooklyn before Judge Ann Donnelly. Meng, 49, attended the hearing by video.

US authorities had sought to extradite Meng from Canada to face charges of bank and wire fraud, alleging she misled banks into processing transactions for Huawei that breached US sanctions against Iran. As part of the deal announced on Friday, Meng admitted to deceiving lenders but pleaded not guilty to the charges.

“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 Nicole Boeckmann, acting US attorney for the eastern district of New York. 

Following Meng’s release, Xinhua, China’s official news agency, said that “through the unremitting efforts” of Beijing, the Huawei executive “left Canada on a plane chartered by the Chinese government and is about to return to her motherland and reunite with her family”.

Just hours after the Vancouver hearing, Justin Trudeau, Canada’s prime minister, announced that Canadian citizens Michael Spavor and Michael Kovrig would return home by Saturday morning. Ottawa viewed the detention of the “two Michaels” as retaliation for Meng’s arrest at Vancouver airport in December 2018.

“These two men have gone through an unbelievably difficult ordeal,” Trudeau said on Friday night. “For the past 1,000 days, they have shown strength, perseverance, resilience and grace.”

The events marked the conclusion of a fraught stand-off between China and the US and Canada. Meng’s detention became a diplomatic flashpoint in former US president Donald Trump’s efforts to challenge Huawei’s growing global dominance in 5G mobile technology. Washington has alleged Beijing can use Huawei equipment to spy on the west.

Meng Wanzhou was afforded a fair process before the courts in accordance with Canadian law. This speaks to the independence of Canada’s judicial system

Antony Blinken, US secretary of state, said in a statement that Washington “stands with the international community in welcoming” Beijing’s decision to release Spavor and Kovrig “after more than two-and-a-half years of arbitrary detention”.

A Chinese court jailed Spavor, who ran cultural exchanges with North Korea, for 11 years in August after finding him guilty of illegally providing state secrets to foreigners. Kovrig, a former diplomat and adviser for the International Crisis Group, also faced espionage charges.

“I’m very emotional right now. I’m stunned,” said Jacco Zwetsloot, a Seoul-based friend of Spavor who has campaigned for his release. 

Spavor’s sentencing came a day after a Chinese court upheld a death sentence for Robert Schellenberg, another Canadian citizen, who had been found guilty of planning to send 225kg of methamphetamine to Australia. Schellenberg denies the charges.

Beijing maintains that the trials of Schellenberg, Spavor and Kovrig were separate from Meng’s case and handled in accordance with Chinese law. Progress in the Canadians’ cases often matched developments in Meng’s extradition hearings, prompting human rights groups and former diplomats to accuse Beijing of “hostage diplomacy”.

Meng’s release in Vancouver came after the US justice department rescinded its request for her extradition. If she complies with the terms of the agreement — under which she acknowledged misleading HSBC about Huawei’s relationship with Hong Kong-based company Skycom, which operated in Iran — the charges against her will be dismissed by December 2022, prosecutors said.

The daughter of Huawei founder Ren Zhengfei, Meng had been living in her Vancouver mansion under electronic surveillance. In a statement outside the courthouse, she said: “Over the past three years my life has been turned upside down. It was a disruptive time for me as a mother, a wife and a company executive.”

She added: “But I believe every cloud has a silver lining.”

Meng admitted to misrepresenting Huawei’s relationship with Skycom, which the Chinese tech company controlled until at least 2014, in a presentation to HSBC in Hong Kong the previous year, according to court documents.

Huawei later “caused Skycom to conduct” about $100m in transactions via HSBC that cleared through the US, some of which supported work in Iran, the court said. Prosecutors said they would continue to prepare for a trial on related charges against Huawei. The company did not immediately respond to a request for comment.

Alan Kohler, assistant director at the FBI’s counter-intelligence division, described Meng’s admission as “evidence of a consistent pattern of deception to violate US law”.

Sina Weibo, China’s microblogging Twitter-like platform, blocked search results related to Meng’s admission of misleading HSBC. “We need to portray this as a complete success for China,” said a person familiar with the situation.

Canada’s justice department said the withdrawal of the US extradition request meant Meng was “free to leave Canada”, adding: “Canada is a rule of law country. Meng Wanzhou was afforded a fair process before the courts in accordance with Canadian law. This speaks to the independence of Canada’s judicial system.”

Additional reporting by Ryan McMorrow in Beijing