US in talks over deal to resolve case of arrested Huawei finance chief

US prosecutors are discussing a deal with lawyers for the Huawei finance chief, Meng Wanzhou, to resolve criminal charges against her, a person familiar with the matter said, signaling a potential end to a case that has strained ties between the United States, China and Canada.

Negotiations between Meng’s attorneys and the US justice department picked up after the US presidential election a month ago, the person said, but it is still unclear what kind of deal could be struck.

Case to extradite Huawei executive Meng Wanzhou to US resumes

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Meng, 48, was arrested in Canada in December 2018 on a US warrant. She faces bank fraud charges for allegedly misleading HSBC Holdings Plc about Huawei Technologies Co Ltd’s business dealings in Iran, which was subject to US sanctions.

Meng does not think she did anything wrong and so is reluctant to make admissions that she does not think are true, the person said. Further negotiations are expected to take place on Friday, the person said.

On Friday, Canada’s prime minister Justin Trudeau declined to comment on the reports, but told reporters that his “top priority” was the return of two Canadian citizens who were detained in China shortly after Meng’s arrest.

“We will continue working hard for the return of the two Michaels,” he said, referring to Michael Kovrig and Michael Spavor. “Two years is a very long time to be in prison in China, or anywhere. We will continue to do all the work that’s necessary to get them back.”

The Wall Street Journal first reported on a possible deal. It said the case might be resolved with a “deferred prosecution agreement” under which Meng would admit to some of the allegations against her and prosecutors would defer and later drop the charges if she cooperated.

In the case, which was filed in New York, Huawei and Meng are accused of conspiring to defraud HSBC and other banks by misrepresenting Huawei’s relationship with Skycom Tech Co Ltd, a suspected front company that operated in Iran.

Huawei has said Skycom was a local business partner, but US prosecutors said it was an unofficial subsidiary used to conceal Huawei’s Iran business.

US authorities say Huawei used Skycom to obtain embargoed US goods, technology and services in Iran, and to move money via the international banking system. The charges against the company include violating US sanctions on Iran.

The source said the negotiations do not appear to be part of a larger deal with Huawei, which was hit with additional charges in the case in February, including conspiring to steal trade secrets from six US technology companies.

A US justice department spokesman, Marc Raimondi, declined to comment. Huawei also declined to comment, as did a spokeswoman for the Canadian foreign minister, François-Philippe Champagne

The Trump administration has targeted Huawei’s business worldwide in an effort to thwart its ambitions to supply next generation 5G networks.

In pressuring other countries to bar Huawei from their cellular networks, the United States said it was worried its equipment could be used by Beijing for spying. The company has repeatedly denied the allegation.

Meng is due back in British Columbia supreme court on Monday as she fights extradition to the United States.

If she were to admit wrongdoing, the Trump administration could claim victory in a thorny dispute with China, and relieve the pressure on Canada, which has found itself in the crossfire of the US-China trade war.