Huawei CFO's lawyers say US fraud charges are a 'facade' - TechCentral

Huawei CFO’s lawyers say US fraud charges are a ‘facade’

Meng Wanzhou

Huawei chief financial officer Meng Wanzhou shouldn’t be dispatched to the US because her alleged crimes don’t meet Canada’s legal tests for extradition, her defence lawyers said at the opening of hearings.

At issue in a legal battle that has severely strained Canada-China relations is whether her extradition request meets the crucial test of double criminality — would her alleged crime have also been a crime in Canada? If the judge rules it doesn’t meet that standard, she could be discharged, according to Canada’s extradition rules.

Extraditing Meng “would undermine the double criminality rule”, her defence lawyer Richard Peck told the court in Vancouver.

The hearings that began on Monday offer Meng’s first opportunity to avoid handover to the US, which accuses her of fraud, saying she lied to HSBC and tricked it into transactions that violated US sanctions on Iran. Meng attended the hearing in a black dress with polka-dots that displayed the GPS tracker on her ankle as some 150 media and spectators watched the proceedings from the gallery.

Her defence has argued that the US case is, in reality, a sanctions-violations complaint that it’s sought to “dress up” as fraud to make it easier to extradite her.

“Fraud is a facade,” Peck said. “In the end, we are being asked to impose on Canada an obligation to assist the US in enforcing sanctions on Iran.”

Her team, citing section 29 of Canada’s Extradition Act, says double criminality needs to be assessed as of February 2019 — the date when Canada’s justice minister authorised the start of extradition proceedings.

No sanctions

At that time, Canada didn’t have sanctions on Iran. Therefore, her lawyers argue, her case fails to meet the double criminality test — any transactions by HSBC wouldn’t have broken any Canadian laws.

Associate chief justice Heather Holmes appeared to question whether the court might consider a broader time range. “It might not be as straightforward as it appears,” she said.

If so, that could throw a spanner into the defence’s arguments. Meng allegedly tricked the HSBC banker at a meeting at a Hong Kong tea house in August 2013, when Canada had a full embargo on trade with Iran. So any transactions by HSBC at that time would have violated Canadian sanctions.

Huawei founder Ren Zhengfei

The judge also appeared to test another central pillar of Meng’s defence. Her lawyers have cited Canadian legal precedent to argue that for fraud to have occurred, HSBC must have been at risk of economic loss. “That essential element of risk of deprivation is missing,” Peck said, pointing again to the lack of Canadian sanctions.

Holmes seemed to challenge that: if the case were considered as a domestic proceeding but for one change — that Meng had lied to HSBC in Canada as opposed to in Hong Kong — would that not be a prosecutable fraud case here, she asked.

Defence lawyer Eric Gottardi, seemingly caught off guard, replied: “If there was dishonesty combined with a risk of deprivation, arguably you could make out the offence.”

Meng, the eldest daughter of billionaire Huawei founder Ren Zhengfei, has become the highest profile target of a broader US effort to contain China and its largest technology company, which Washington sees as a national security threat. Meng, who turns 48 next month, is charged with bank and wire fraud, which carry a maximum term of 20 years in prison on conviction.

China has demanded Canada release Meng, and has retaliated by slapping sanctions on Canadian products such as canola, while detaining two Canadians after her arrest in December 2018.

The double-criminality hearings are scheduled for four days but the ruling would likely come much later — possibly in months.

Confidence

As the extradition hearing began, Huawei released a video statement on its Twitter feed saying it has confidence in the process. “We trust in Canada’s judicial system which will prove Ms Meng’s innocence,” spokesman Benjamin Howes said.

Meng has been biding her time in a Vancouver mansion since her arrest. That’s in sharp contrast to the conditions endured by the two Canadians — Michael Kovrig and Michael Spavor — who were detained in China after her arrest.

Prime Minister Justin Trudeau’s government says securing the release of the two men — one a former diplomat, the other an entrepreneur — is a priority and that it has asked the Trump administration for help. Foreign minister Francois-Philippe Champagne told reporters on Sunday at a cabinet retreat in Winnipeg, Manitoba, that he raised the issue last week with US secretary of state Mike Pompeo.

Over the weekend, a senior aide to former Prime Minister Jean Chretien joined John Manley, a former Liberal deputy prime minister and industry minister, in urging Trudeau to consider ordering an end to the Huawei executive’s extradition as part of a prisoner exchange for Kovrig and Spavor.

Asked about that proposal on Monday, deputy Prime Minister Chrystia Freeland said: “Our government has been clear that we’re a rule of law country and that we honour our extradition treaty commitments. That is what we need to do, and that is what we will do.”  — Reported by Natalie Obiko Pearson, with assistance from Stephen Wicary, (c) 2020 Bloomberg LP

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