Canadians released from China after Huawei CFO resolves charges with US

The company's CFO had been indicted on bank and wire fraud charges but will do no time in jail

Meng Wanzhou has reportedly reached a deferred prosecution agreement with US prosecutors. Bloomberg

Two Canadians detained in China on spying charges have been released from prison and flown out of the country, Prime Minister Justin Trudeau announced on Friday, hours after a top executive of Chinese communications giant Huawei Technologies resolved criminal charges against her in a deal with the US Justice Department.

Canadians Michael Kovrig and Michael Spavor were arrested in China in December 2018, shortly after Canada arrested Meng Wanzhou, Huawei’s chief financial officer and the daughter of the company’s founder, on a US extradition request. Many countries labeled China’s action “hostage politics.”

The deal with Ms Meng calls for the Justice Department to dismiss fraud charges late next year in exchange for Ms Meng accepting responsibility for misrepresenting her company’s business dealings in Iran. Mr Trudeau called a news conference Friday night about an hour after Ms Meng’s plane left Canada for China.

The two "left Chinese airspace, and they're on their way home," Mr Trudeau told a news conference in Ottawa.

Ms Meng, Huawei's chief financial officer, reached an agreement with US prosecutors to end the bank fraud case against her, sources familiar with the matter said.

The US government said representatives will appear in Brooklyn federal court to discuss a resolution of charges against Ms Meng, a Friday court filing read.

Ms Meng was arrested at Vancouver International Airport in December 2018 on a US warrant and was indicted on bank and wire fraud charges for reportedly misleading HSBC about the telecoms equipment company's business dealings in Iran.

Reuters reported on Friday that the US had reached a deferred prosecution agreement with Ms Meng. The agreement pertains only to Ms Meng herself and US charges remain against the company, two people familiar with the matter said.

In August, a Chinese court sentenced Spavor to 11 years in prison for espionage.

A spokeswoman for Huawei declined to comment as did a spokesman for the US Attorney's Office in Brooklyn. A lawyer for Ms Meng could not be immediately reached for comment.

Ms Meng, who has also used the English first names "Cathy" and "Sabrina", has said she is innocent and has been fighting extradition to the US from Canada. She is confined to Vancouver and monitored 24/7 by private security that she pays for as part of her bail agreement.

Meng Wanzhou leaves her Vancouver home to attend her extradition hearing in Vancouver, Canada. AFP

Articles published by Reuters in 2012 about Huawei, Hong Kong-registered company Skycom and Ms Meng figured prominently in the US criminal case against her. Reuters reported that Skycom had offered to sell at least 1.3 million euros worth of embargoed Hewlett-Packard computer equipment to Iran's largest mobile-phone operator in 2010. At least 13 pages of the proposal were marked "Huawei confidential" and carried Huawei's logo.

Numerous financial and personnel links between Huawei and Skycom were also discovered, including that Ms Meng had served on Skycom’s board of directors between February 2008 and April 2009.

Huawei was placed on a US trade blacklist in 2019 that restricts sales to the company for activities contrary to US national security and foreign policy interests. The restrictions have hobbled the company, which suffered its biggest ever revenue drop in the first half of 2021, after the US supply restrictions drove it to sell a chunk of its once-dominant handset business and before new growth areas have matured.

The criminal case against Ms Meng - daughter of Huawei founder Ren Zhengfei - and Huawei is cited in the blacklisting. Huawei is charged with operating as a criminal enterprise, stealing trade secrets and defrauding financial institutions. It has pleaded not guilty.

Judicial hearings in her extradition case in Vancouver wrapped up in August, with the date for a ruling to be set on October 21.

A man protests outside Meng Wanzhou's court appearance at the British Columbia Supreme Court in Vancouver, Canada. AFP

Huawei has become a dirty word in Washington, with a knee-jerk reaction by China hawks in Congress to any news that could be construed as the US is going soft, despite Huawei being severely affected by US trade restrictions.

Then-president Donald Trump politicised the case when he told Reuters soon after Ms Meng's 2018 arrest that he would intervene if it would serve national security or help secure a trade deal. Ms Meng's lawyers have said she was a pawn in the political battle between the two superpowers.

Senior US officials have said that Ms Meng's case was being handled solely by the Justice Department and the case had no bearing on the US approach to ties with China.

During US Deputy Secretary of State Wendy Sherman’s July trip to China, Chinese Vice Foreign Minister Xie Feng insisted that the US drop its extradition case against Ms Meng.

US officials have acknowledged that Beijing had linked Ms Meng's case to the case of the two detained Canadians, but insisted that Washington would not be draw into viewing them as bargaining chips.