The Justice Department alleges that Meng, the daughter of Huawei founder Ren Zhengfei, committed bank and wire fraud by misleading HSBC about the company’s relationship with a subsidiary, Skycom, effectively tricking it into clearing more than $100 million in transactions that violated U.S. sanctions on Iran from 2010 to 2014.
Under Canadian law, to “commit” Meng for extradition, the allegations must meet the test of “double criminality,” meaning that the charges of which she is accused in the United States must also be considered crimes in Canada.
Meng’s legal team told Associate Chief Justice Heather Holmes that the alleged misrepresentations do not amount to fraud, and that the case is really about the United States trying to enforce its sanctions against Iran — sanctions that did not exist in Canada at the time Canadian officials agreed to begin extradition.
“The requesting state has cast this matter as a case of fraud against a bank,” said Richard Peck, the Vancouver-based lawyer leading Meng’s defense team. “In our respectful submission, this is an artifice. In reality, sanctions violations is the essence of the alleged misconduct.”
Canadian prosecutors have called that argument a “complete red herring.”
China has cast Meng’s arrest as an effort to stunt the country’s growth. Asked about the hearing in Beijing on Monday, Chinese foreign ministry spokesman Geng Shuang said China’s position was “consistent and clear.”
“The U.S. and Canada abused their bilateral extradition treaty and arbitrarily took compulsory measures against a Chinese citizen without cause,” Geng said, according to remarks posted on the foreign ministry’s website. “Once again we urge the Canadian side to take China’s position and concerns seriously, release Ms. Meng and ensure her safe return to China at an early date.”
Meng, who has been out on bail, attended the hearing Monday in a black dress with polka dots and black Manolo Blahnik heels that showed off the GPS monitor adorning her ankle. She sat at a table with a translator.
Spectators filled the 146-capacity courtroom in downtown Vancouver for the long-anticipated hearing. Meng’s husband, Liu Xiaozong, also attended.
At the heart of Meng’s alleged deception is a 2013 meeting at a Hong Kong teahouse, where she delivered a PowerPoint presentation to the bank.
According to the U.S. indictment, the presentation included “numerous misrepresentations” about Huawei’s ownership and control of Skycom, putting the bank at risk of financial harm and criminal liability. Had HSBC known about the alleged sanctions violations, U.S. authorities say, it would have “reevaluated” its banking relationship with Huawei.
Meng’s lawyers argued that the “essence” of the case is about sanctions violations, and the fraud allegations are merely a “facade.”
The notion that the United States is interested in policing meetings “between a private bank and a private citizen halfway around the world” is a “fiction,” Peck said. “This extradition has every appearance of the United States seeking to enlist Canada to enforce the very sanctions we repudiated.”
Meng’s lawyers said double criminality is rarely “contentious,” but this case is unique.
Canada lifted its sanctions against Iran in 2016, after the United States and other powers reached a nuclear deal with Tehran. Though the Canadian sanctions were in place at the time of the 2013 meeting in Hong Kong, Meng’s lawyers argued that they were no longer in place in February 2019, when Canada’s justice department set the extradition process in motion.
Holmes asked defense attorney Eric Gottardi to consider whether Canada could bring fraud charges if the 2013 meeting had taken place in Canada instead of Hong Kong. Gottardi said he would like to “crystallize his thoughts” overnight and provide an answer Tuesday.
As the hearing opened, a spokesman for Huawei said it would be “inappropriate for us to give specific comments on the ongoing legal proceeding.”
“We trust in Canada’s judicial system, which will prove Miss Meng’s innocence,” spokesman Benjamin Howes said. “Huawei stands with Miss Meng in her pursuit of justice and freedom.”
If the judge finds the double-criminality test is not met, Meng will be freed, though prosecutors will have an opportunity to appeal. If the test is met, the process will advance to a second stage in June, when Meng’s lawyers are expected to argue that the case against her is politically motivated.
Meng has filed a separate lawsuit against the Canada Border Services Agency, the Royal Canadian Mounted Police and the Canadian government, alleging that her constitutional rights were breached when she was detained at Vancouver’s airport in December 2018.
The arrest of Huawei’s “princess” touched off a chain of events that has left Canada caught in the middle of a standoff between the United States and China.
China arrested two Canadians, former diplomat Michael Kovrig and businessman Michael Spavor, and charged them with stealing state secrets in a move widely viewed as retaliation. They are being held in cramped prisons and have not had access to a lawyer or their families. China also imposed restrictions on several Canadian agricultural imports.
A small number of protesters gathered outside the courthouse with signs demanding the release of Kovrig and Spavor and calling attention to the mass internment of Muslim Uighurs in the Xinjiang region of western China.
Canadian officials including Prime Minister Justin Trudeau have prevailed on the United States for help securing the release of “the two Michaels.” U.S. officials including President Trump have raised the men’s detention with Chinese counterparts, to no avail so far.
Geng, the foreign ministry spokesman, said Monday that China and Canada “have stayed in touch.”