US In Talks With Arrested Huawei CFO To Resolve Criminal Charges: Report

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by Tyler Durden
Thursday, Dec 03, 2020 - 07:32 PM

Is this the beginning of the end of the cold war between the US and China?

The WSJ reports that two years after she was arrested, Huawei's CFO Meng Wanzhou is discussing a deal with the DOJ that could allow her to return home to China from Canada, in exchange for admitting wrongdoing in a criminal case that has strained Beijing’s relations with the U.S. and Canada. According to the report, lawyers for Meng, who has been under house arrest in Canada since 2018 and is pending extradition for wire and bank fraud charges related to alleged violations of sanctions on Iran on Huawei’s behalf, have spoken to Justice Department officials in recent weeks about the possibility of reaching a deferred prosecution agreement.

Under such an agreement, which is usually offered to companies but rarely to people, Meng - who is the daughter of Ren Zhengfei, the founder of Huawei, China’s leading telecom companys which the U.S. has alleged engages in technology theft and may abet espionage by Beijing - would be required to admit to some of the allegations against her but prosecutors would agree to potentially defer and later drop the charges if she cooperated although so far, Meng has resisted the proposed deal, "believing she did nothing wrong."

David Laufman, a former Justice Department national-security official, told the WSJ that the case was a flagship prosecution and while prosecutors may be weighing geopolitical interests, he doesn’t expect a Biden Justice Department to drop the case.

"It would be exceptional for the Justice Department to forgo a criminal conviction. But there are times when law-enforcement interests reasonably give way to overarching foreign-policy interests of the United States," said Laufman, who now works at law firm Wiggin and Dana LLP. "Given the impact of the Meng prosecution on Canada as well as on U. S-Chinese relations, this may be one of those cases."

Meng was arrested in late 2018 while transferring planes in Vancouver, and has been confined to the city where she has a home. She has since fought extradition to the U. S. — a process allowing multiple appeals that can take years to resolve — and her situation has personified for many in China attempts by Washington to hinder "the country’s global ascent."

In addition to allowing her to return to China, a deal would also remove an issue that has caused Beijing’s relations with Ottawa to deteriorate and added to a downward spiral in ties with Washington. A deal could also pave the way for China to return two Canadian men who were detained there soon after Meng’s arrest, a factor that is in part motivating the discussions.

Yet while such a move would be expected by a Biden administration, it is surprising that it is Trump's DOJ that has taken initiative on this attempt to renormalize ties with Beijing. The report is even more perplexing since the Trump administration sees Huawei as a national security threat which has been hit with numerous sanctions in recent years, and says that Meng’s activities on behalf of Huawei’s work in Iran are part of a pattern of corporate wrongdoing. The U.S. actions have infuriated Beijing, which has accused Washington of discriminating against Huawei and has called on Canada to release Meng.

According to the WSJ, negotiators for Meng and the Justice Department are speaking again this week in hopes of reaching agreement before the end of the Trump administration, although it is certain that a resolution of this impasse would be far easier to achieve under a Biden admin. Indeed, as the Journal notes, "Huawei officials are also holding out hope that a Biden administration might be more lenient."

For now, Meng has argued that she has been wrongly accused and that the extradition request is improperly based on political motivations at a time when the U.S. was seeking the upper hand in prolonged trade and technology tensions with China.

Last May, a British Columbia judge ruled the U.S. had met a key test to extradite her, but additional hearings are expected to continue later this month and through next year. She is currently on bail and must wear an ankle monitor.

Her arrest touched off a major diplomatic standoff, during which two Canadians, including a diplomat on leave from his post, were detained and charged earlier this year with espionage. Canadian Prime Minister Justin Trudeau said in June that the detentions of Michael Kovrig and Michael Spavor are unacceptable and “deeply concerning not just to Canadians but to people around the world who see China using arbitrary detentions as a means to political ends."

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Perhaps not coincidentally, the news comes just hours after the Director of National Intelligence, John Ratclife wrote a stark op-ed in the WSJ, in which he said that "if I could communicate one thing to the American people from this unique vantage point, it is that the People’s Republic of China poses the greatest threat to America today, and the greatest threat to democracy and freedom world-wide since World War II."

He also discussed Huawei:

China is also developing world-class capabilities in emerging technologies. Its intelligence services use their access to tech firms such as Huawei to enable malicious activities, including the introduction of vulnerabilities into software and equipment. Huawei and other Chinese firms deny this, but China’s efforts to dominate 5G telecommunications will only increase Beijing’s opportunities to collect intelligence, disrupt communications and threaten user privacy world-wide. I have personally told U.S. allies that using such Chinese-owned technology will severely limit America’s ability to share vital intelligence with them.

His conclusion couldn't be more stark: "This is our once-in-a-generation challenge. Americans have always risen to the moment, from defeating the scourge of fascism to bringing down the Iron Curtain. This generation will be judged by its response to China’s effort to reshape the world in its own image and replace America as the dominant superpower."

Which is why it would be very surprising - and disturbing - if the Trump which escalated the conflict with China more than any previous US admin is now taking proactive steps to de-escalate. For one, it would certainly prompt the question: why now?