Analysis-Huawei CFO’s admissions likely won’t help U.S. in case against company

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(C) Reuters. FILE PHOTO: Huawei Technologies Chief Financial Officer Meng Wanzhou speaks to media outside the B.C. Supreme Court following a hearing about her release in Vancouver, British Columbia, Canada September 24, 2021. REUTERS/Jesse Winter

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By Karen Freifeld

(Reuters) -The admission by Huawei’s chief financial officer that she misled a bank about the company’s business dealings in Iran likely won’t help the United States as it continues to prosecute Huawei for the same charges.

While Meng Wanzhou’s admissions last week https://www.reuters.com/technology/huawei-cfo-meng-appear-court-expected-reach-agreement-with-us-source-2021-09-24 go to the heart of the financial fraud charges, legal experts say it will be difficult and perhaps impossible for prosecutors to use them against Huawei Technologies Co Ltd at trial.

And if the government were to try to use her admissions as leverage in any negotiations aimed at avoiding a trial, experts said, Huawei would likely say what she admitted was the result of extortion, or even a fabrication.

A spokesman for the U.S. Attorney’s office in Brooklyn declined to comment, as did a Huawei spokeswoman.

A U.S. judge in Brooklyn on Friday accepted a deferred prosecution agreement between Meng and U.S. prosecutors to end the case against her. Meng appeared via video from Canada, where she had been fighting extradition since her arrest in 2018 on a U.S. warrant.

Meng’s arrest was a key source of discord between Beijing and Washington https://www.reuters.com/world/china/white-house-xi-raised-case-huawei-cfo-recent-call-with-biden-2021-09-27, and also had repercussions for Canada. Within hours of the U.S. agreement and Meng’s release, two Canadians who were detained shortly after Meng was taken into custody were freed from Chinese jails and flown home.

As part of the agreement, Meng acknowledged that Huawei controlled a company that operated in Iran, that its employees were Huawei employees, and that she had made false statements about the company at a 2013 meeting with an executive at a global bank, earlier reported as HSBC Holdings (NYSE:HSBC) PLC.

CROSS-EXAMINATION

The statement of facts laid out in the agreement could be seen as an admission by a high-level officer of Huawei, said Roland Riopelle, a New York white-collar defense lawyer not involved in Meng’s case, “but if she is not available for cross-examination, it is almost certainly not admissible.”

Meng https://www.reuters.com/business/huawei-heir-apparent-prepares-life-after-three-years-canada-court-battle-2021-09-24 flew home to China on Friday and is unlikely to return to the United States to help the government in its case against the company founded by her father, Ren Zhengfei.

In other cases, prosecutors typically call individuals like Meng to the witness stand to testify about their agreements with the government. But if Meng does not appear in court, Huawei cannot exercise its right to confront her as provided by the 6th Amendment of the U.S. Constitution. “If she does not come back, and no one has the opportunity to cross-examine her, it is inadmissible,” said Charles Stillman, another New York defense lawyer.

The statement of facts identified Skycom Tech Co Ltd as a Hong Kong company that operated in Iran but was controlled by Huawei. It noted that Skycom was not a business partner, as Meng had claimed, and that Meng had falsely stated Huawei operated in compliance with applicable laws, regulations and sanctions.

Prosecutors said the deception by Meng and colleagues was intended to obtain banking services from global financial institutions in violation of U.S. sanctions against Iran.

The statement of facts also could be raised by the U.S. Department of Justice in talks with the company’s lawyers in an effort to avoid trial, experts said, even if it would not be allowed in as evidence.Washington lawyer Juan Morillo, who often handles high-profile white collar and cross-border cases, said it “gives them some additional leverage in negotiations with Huawei.”

But Morillo said the company could argue Meng’s agreement was also the “product of extortion” because she may have felt forced to sign it to gain her freedom. So ultimately, he said, the value would be minimal.

Huawei can also note that it did not sign the agreement and is not bound by it. In fact, a Chinese foreign ministry spokesperson on Saturday said “the so-called ‘fraud’ charges against” Meng were “purely fabricated.” “I’ve been in cases similar to this, and that’s what the strategy is going to be with Huawei,” said Morillo. “They’ll say, ‘This is a fabrication. This is the product of extortion and it has no binding effect on us at all.'”

Huawei faces wire fraud, bank fraud and conspiracy charges that included Meng. It also faces other charges, including for violating sanctions on Iran, obstructing justice, and conspiring to steal trade secrets from U.S. technology companies. It has pleaded not guilty.

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