On Sept. 24, 2021, the U.S. Department of Justice (DOJ) announced that Meng Wanzhou, Chief Financial Officer of Chinese telecom giant Huawei, had entered into a deferred prosecution agreement (DPA) on charges of conspiracy to commit bank fraud and conspiracy to commit wire fraud, bank fraud and wire fraud. In so doing, Meng admitted to making material misrepresentations to U.S. financial institutions about Huawei’s business activities in Iran. According to the terms of the DPA, DOJ agreed to withdraw its request for Meng’s extradition from Canada and recommend to the Eastern District of New York (EDNY) that the court release her on a personal recognizance bond, with the understanding that all charges will be dismissed in December 2022 if she does not commit any additional federal, state, or local crimes.
The development ends a “damaging” trilateral U.S.-China-Canada standoff at the intersection of U.S. criminal justice, foreign relations, and international law. The good news is that it cools a source of longstanding tension between the three countries. The bad news is what it may portend for the future of U.S. extraterritorial law enforcement policy, both at home and abroad.
As I wrote about here previously, in December 2018, the Canadian government arrested Meng at the request of the U.S. government, which was moving to extradite her to the United States on the aforementioned conspiracy charges. In doing so, Canada was acting pursuant to its legal obligations under the U.S.-Canada extradition treaty. Just nine days later, China arrested two Canadian nationals—Michael Kovrig and Michael Spavor—within hours of each other on espionage charges. Since that time, Spavor was convicted and sentenced to 11-years in prison, while Kovrig was detained in Beijing and was awaiting a final verdict in his case. Meanwhile, Meng had continued to challenge her extradition in the Canadian courts.
In late 2020, the Trump Administration attempted to negotiate a DPA with Meng, but agreement broke down given that Meng denied wrongdoing. The Biden administration re-initiated such discussions in recent weeks, and Meng had apparently shifted given a desire to be reunited with her family. Once the DPA was announced, China returned Spavor and Kovrig to Canada, where they were personally greeted by Prime Minister Justin Trudeau. Just a few hours later, Meng touched down in Shenzhen, China, greeted by an applauding crowd.
Analysis: Short-Term Resolution, Long-Term Concerns
In the short term, the DPA constitutes a win for the United States, China, and Canada. The United States secured a public statement from Meng admitting responsibility for engaging in fraudulent conduct. China helped obtain Meng’s freedom from the uncertainty of Canadian extradition proceedings and, quite possibly, conviction in EDNY. And Canada secured the return of its two nationals from China while getting out of the middle between the United States and China.
But in the longer term, the case raises three causes for concern.
The first is that an autonomous DOJ will continue to disturb foreign relations by engaging in foreign affairs prosecutions—criminal cases with a strong nexus to a foreign country. Some foreign affairs prosecutions inure to the benefit of foreign relations—think the El Chapo and FIFA cases—whereas others, such as Meng’s, disrupt them. This risks putting the White House and State Department on a challenging foreign relations footing. For example, in 2014, President Barack Obama publicly resisted calls to intervene in a DOJ investigation into French bank BNP Paribas, despite pressure from then-French President François Hollande to do so.
The second concern is the inverse: the risk of undue White House control over criminal case management. Foreign policy is a bread-and-butter function falling squarely within the discretion of the U.S. president, whereas criminal law enforcement turns on a DOJ that, while under presidential political leadership, is traditionally free of direct presidential control at the case-by-case level. Given that foreign affairs prosecutions fall into the space between, the White House may be more likely to intervene in the case management of particular matters due to foreign relations concerns, giving rise to the specter of overtly politicized prosecutions. For example, as John Bolton lamented in his memoir, in 2018, President Donald Trump “made matters worse on several occasions by implying that Huawei could be simply another U.S. bargaining chip in the trade negotiations”—reminiscent of his apparent intervention in other domestic prosecutions like that of Roger Stone.
The final, and most pronounced, concern is what I have previously called the global arrest game. At the extreme—as I argue in “The Criminalization of Foreign Relations,” a forthcoming article in Fordham Law Review—the U.S. government could recklessly deploy U.S. extraterritorial law enforcement as a central plank in its foreign relations. The fear is that other countries would engage in retaliatory arrest rather than attempting to resolve disputes through negotiated treaty channels or diplomatic mechanisms.
Meng’s political and popular aftermath may foreshadow how such a global arrest game might manifest itself. Upon Meng’s release, Chinese news media scarcely mentioned Spavor’s and Kovrig’s release, creating the public impression amongst the Chinese public that Meng was simply vindicated of wrongdoing. Meanwhile, Canadian public perceptions of China have declined, with over seventy percent of Canadian respondents holding an unfavorable view of China. And former Trump Administration officials have accused the Biden administration of capitulating to Chinese hostage taking, risking domestic politicization and congressional backlash. This may exacerbate preexisting prosecutorial saber rattling, such as China’s prior announcement that it would detain U.S. citizens if DOJ proceeds with prosecution of scholars who are members of the Chinese military, set against the ongoing United States’ China Initiative. The risk is that lingering hostility will lead to further multilateral antagonism.
How can we mitigate such risk? Much will turn on the complex interplay between rising criminalization, intra-executive coordination, and the broader evolution of multilateral relations. But one promising answer lies in the triple-layered institution of U.S. prosecutorial decisionmaking, which may engage the White House; Main Justice in Washington, D.C.; and the individual line prosecutor. My view is we should preserve DOJ autonomy, but close the distance between individual prosecutors and Main Justice in Washington, D.C.—what I call presidential distancing and also prosecutorial integration. This will prevent direct presidential intervention in individual cases, but also ensure that Main Justice—which participates in meetings of the National Security Council—has better overall control over foreign affairs prosecutions. In my above-referenced forthcoming article, I also discuss the need for greater scholarly attention to the normative foundations of criminalization. The enduring challenge remains: preserving a principled place for criminal accountability adjacent to—but distinct from—U.S. foreign policy.