DOJ Ends Deadlock and Agrees DPA with Huawei CFO Wanzhou Meng | Michael volkov

The long political and judicial standoff between the US government / DOJ and Huawei / China came to an abrupt end last week when Wanzhou Meng, chief financial officer of Huawei Technologies Co., Ltd. appeared in Brooklyn Federal District Court and entered into a Deferred Prosecution Agreement (DPA) and admitted misleading global financial institutions. Meng was immediately released and returned to China.

The resolution of Wanzhou Meng’s case resolved a major point of contention between China and the United States. Shortly after announcing the resolution of the Meng case, China released two Canadians who were arrested shortly after Meng’s arrest in December 2018.

China opposed Wanzhou Meng’s arrest and his potential extradition from Canada to the United States. The disagreement had blocked Wanzhou Meng’s extradition for more than two years while she was detained in Canada.

Meng was arrested at Vancouver Airport on a United States warrant after being charged in the United States with bank and wire fraud for misleading HSBC in 2013 about Huawei’s business dealings in Iran.

The DPA only applies to Meng, and the Justice Department is expected to pursue its lawsuits against Huawei in federal court in Brooklyn.

As part of the DPA, Meng accepted a narrative in which she took responsibility for her role in the commission of a scheme to defraud HSBC. In particular, Meng made several false statements to an HSBC executive regarding Huawei’s business operations in Iran. His misleading statements were aimed at maintaining Huawei’s banking relationship with HSBC.

The pending indictment accuses Huawei of a financial fraud scheme it implemented to deceive HSBC and other global financial institutions about its activities in Iran.

As stated in the Statement of Facts, Skycom Tech. Co., was a Hong Kong company that operated in Iran. In February 2007, Skycom was a wholly owned subsidiary of Huawei and Hua Ying Management. In November 2007, Hua Ying transferred its shares to another entity controlled by Huawei, Canicula Holdings. At that time, Meng was Hua Ying’s secretary.

In February 2008, Meng joined Skycom’s board of directors, which is made up of Huawei employees. Meng remained on the board until April 2009. After his departure, the Skycom board continued to be controlled by Huawei employees, Canicula was controlled to own Skycom and Canicula remained under the control of Huawei. In August 2021, Skycom was listed as a subsidiary of Huawei in its corporate documents. All of Skycome’s important decisions were made by Huawei.

Huawei employees hired a UK recruiting company to provide engineers to support Skycom’s work in Iran. Huawei paid for these services by sending around US $ 8 million from Skycom bank accounts in Asia.

In late 2012 and early 2013, news organizations reported that Skycom was selling “embargoed” hardware from a US computer hardware maker to Iran in violation of US export control laws. Huawei has denied any involvement in Skycom and claimed it was a local partner in Iran. Huawei has claimed it is in full compliance with US, EU and United Nations trade compliance laws.

In a 2013 article, it was reported that Meng served on Skycom’s board of directors and identified other links between the directors of Skycom and Huawei. After this report, HSBC and other global banks that previously provided international banking services to Huawei, including U.S. dollar transactions, made inquiries to Huawei regarding the reports. In early 2013, a Huawei representative reiterated his statement that Skycom was only a local partner in Iran.

In a presentation to HSBC in Hong Kong in 2013, Meng said Skycom is a business partner of Huawei and a third party that Huawei “works” with in Iran. These statements were false. Meng knew that Skycom was controlled by Huawei employees and that Skycom employees were Huawei employees. Meng further falsely claimed that Huawei was once a shareholder of Skycom, when in fact Huawei had sold its shares to Canicula which Huawei controlled.

Between 2010 and 2014, Huawei tricked Skycom into making roughly $ 100 million in illegal US dollar transactions through HSBC, which violated OFAC’s US sanctions against Iran.

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