HONG KONG -- Huawei Technologies has stepped up its finger-pointing against HSBC Holdings, alleging that its former bankers made false claims about the telecommunications company's dealings with Iran in order to get out of trouble with U.S. prosecutors for their own actions in the country.
Lawyers for Huawei made the allegations in a letter to U.S. prosecutors filed in federal court in New York last week shortly before the prosecutors filed new charges against the company, accusing it of engaging in a pattern of racketeering, which it denied. HSBC on Wednesday rejected Huawei's allegations.
U.S. prosecutors originally charged Huawei and Meng Wanzhou, its chief financial officer and daughter of founder Ren Zhengfei, last year with fraudulently misleading HSBC and other banks to evade sanctions against Iran and with obstructing justice.
The company was also alleged to have conspired to steal trade secrets. It pleaded not guilty to all charges and has also rejected the new charges. Meng has been detained in Canada pending extradition to New York, which her legal team is fighting.
Last week's letter, sent by attorneys from Sidley Austin and Jenner & Block, demands that prosecutors release documents that the lawyers claim would show HSBC was not misled or defrauded by Huawei.
HSBC reached a $1.92 billion settlement, called a deferred prosecution agreement, in 2012 over U.S. Department of Justice charges it had overlooked Mexican drug-money laundering and violated American sanctions against Iran and agreed to independent monitoring of its operations.
Huawei's lawyers allege that even after that, "HSBC continued to process Iran-related transactions through its New York branch and concealed that conduct from DOJ."
The independent monitor eventually discovered this alleged misconduct, the lawyers say, leading prosecutors to then pressure the bank into a deal.
"HSBC agreed to cooperate in the government's efforts to depict Huawei as the mastermind of HSBC's sanctions violations and supply witnesses to the government's stalled investigation of Huawei, falsely claiming among other things that HSBC was misled about the relationship between Skycom [a former subsidiary] and Huawei and about the business those companies did in Iran."
In what the lawyers describe as a "wrongful bargain," they allege that the prosecutors in exchange agreed to overlook HSBC's alleged misconduct and to recommend ending the independent monitoring of the bank.
Responding to the lawyers' allegations, HSBC spokesman Robert Sherman in New York said: "HSBC responded factually to the DOJ's requests for information. Information provided by HSBC to the DOJ was provided pursuant to formal demand, including grand jury subpoena or other obligation to provide information pursuant to a deferred prosecution agreement or similar legal obligation."
Sherman added: "The Justice Department determined that HSBC met all of its obligations, including its sanctions obligations, under its 2012 deferred prosecution agreement." He declined to comment as to whether the bank was aware of the existence of the purported documents Huawei's lawyers are seeking.
According to the lawyers' letter, prosecutors have said they expect to largely finish turning over documents from their case for Huawei's review by March 4.
Last year, HSBC launched a public-relations campaign to contain the fallout from its role in the U.S. prosecution of Huawei and defend its position as the largest foreign bank in China. The internal campaign, titled "Beijing Visibility Strategy," was to protect the bank's reputation in the world's second-largest economy.
The PR offensive came after reports that Liu Xiaoming, China's ambassador to the U.K., summoned then-CEO John Flint in early 2019 to the embassy to interrogate him over the company's role in the arrest and prosecution of Meng.
The bank lost out on some roles in China amid the Huawei fallout. Last year, it was not part of the committee that decides China's prime lending rates. Among the expanded panel's 18 members, only two foreign banks -- Standard Chartered and Citigroup -- were included.
HSBC also lost out on a bond-underwriting license to Deutsche Bank and BNP Paribas.
At HSBC's earnings media call this week, interim Chief Executive Noel Quinn said China remained a strategic growth opportunity and the bank would continue to invest in China and Hong Kong as part of its pivot to Asia.