Huawei’s Chief Financial Officer Meng Wanzhou appeared in a Vancouver court for the first day of her extradition trial, which would decide if she can be transferred to the United States for criminal processing.
Meng’s trial comes more than a year after she was arrested in Vancouver in December 2018, upon an extradition request by the United States, where she is indicted on fraud charges.
U.S. federal prosecutors allege that Meng misled U.S.-based banks about the company’s business dealings in Iran, causing the banks to violate U.S. sanctions. They say she lied to bank representatives about Huawei’s relationship with an Iranian company, which was in fact a subsidiary of Huawei.
The trial could take months—or even years—to conclude.
Meng’s case sparked an escalating diplomatic row between Canada and China. Weeks after her arrest, Chinese authorities detained two Canadians—former Canadian diplomat Michael Kovrig and businessman Michael Spavor—on spying charges in apparent retaliation. Beijing went on to block imports of Canadian canola seed and other agricultural products.
Meng, 47, who is also the daughter of the company’s founder Ren Zhengfei, is currently out on bail in Canada. She says she is innocent and will fight extradition, in part, on grounds that her alleged conduct is not illegal in Canada. This is known as the standard of “double criminality.”
The first phase of the trial, held at the Supreme Court of British Columbia, is expected to last at least four days. It will focus on the issue of “double criminality”: Prosecutors will need to prove that the U.S. crime that Meng is accused of committing also constitutes a crime in Canada.
Canadian prosecutors’ case rests on the accusation that Meng lied to representatives of HSBC in 2013 about Huawei’s relationship with Skycom, an affiliate of the company that did business in Iran. Meng, prosecutors allege, told HSBC that Skycom was a partner when it was in fact a subsidiary, which caused the bank to clear transactions in violation of Iran sanctions.
They say that Meng’s alleged conduct put HSBC at risk of financial loss, and thus makes it sufficient to establish a case of fraud in Canada.
“Inducing a bank to extend financial services by lying to it is criminal,” the prosecution said in court filings.
“To establish HSBC’s deprivation, there is no need to consider American sanctions law.”
Meng’s lawyers, however, argue that the alleged fraud does not constitute a crime in Canada because it, unlike the United States, has not imposed sanctions against companies doing business with Iran.
“Would we be here in the absence of U.S. sanctions law? And … our response is no,” defense lawyer Richard Peck told the court on Jan. 20.
“In a typical case, double criminality is not contentious. This case however is founded on an allegation of breach of U.S. sanctions, sanctions which Canada has expressly repudiated,” he added.
The courtroom was packed, with more than 100 people in the gallery.
Michael Splatt, criminal defense counsel at Ottawa-based firm Abergel Goldstein & Partners, told The Epoch Times that while Meng faces as “uphill battle” due to the “extremely low” standards of proof in extradition hearings, her defense team does present a “very good argument” on the point of double criminality.
“If you take the United States out of the picture, would she have been arrested and detained when she came into Canada? And the answer is, obviously, no,” he said.
However, Toronto-based lawyer and adjunct professor of international law at York University Leo Adler, told The Epoch Times that the key issue is whether a fraud has been committed. Canada’s lack of sanctions against Iran is not a primary factor in this inquiry, he said.
If the prosecutors can convince the judge that Meng lied to the bank about Huawei’s relationship with Skycom, and that it occurred during the course of negotiations, “then I think [the prosecution] … has a decent shot” in proving double criminality, Adler said.
“If the effect [of the alleged lie] is that it could have created a danger to HSBC, then it’s a fraud,” Adler said.
“You can call it a sanctions [violation] on the one side [United States]. It’s a fraud here [in Canada].”
Both Splatt and Adler are not involved in the case.
Legal experts have said it could be years before a final decision is reached in the case, since Canada’s justice system allows many decisions to be appealed.
The Canadian case also stands amid a backdrop of intensifying scrutiny of Huawei in the United States. The Trump administration blacklisted the company in 2019 from doing business with U.S. firms on national security grounds. U.S. authorities are reportedly considering adding further restrictions on U.S. companies that sell to the Shenzhen-based company.
U.S. officials and experts have sounded the alarm about the potential for Huawei equipment to be used by the Chinese regime for spying or to disrupt communication networks. Such concerns arise from the company’s links with the Chinese military, as well as the fact that Chinese law compels companies to cooperate with intelligence agencies when asked. The company denies the allegations.
While U.S. President Donald Trump told Reuters in December 2018 that he would intervene in Meng’s case if it served U.S. national security interests or helped close a trade deal with China, the matter did not feature in the “phase one” trade deal struck between the two countries last week.
Recently, U.S. Treasury Secretary Steven Mnuchin told CNBC that security issues surrounding Huawei do not figure into trade discussions with Beijing, but “part of the national security dialogue, which is ongoing.”
Meng‘s legal team is currently only scheduled to call evidence in the last week of April, and a second phase of the trial, focusing on abuse of process and whether Canadian officials followed the law while arresting Meng, is set to begin in June. Closing arguments are expected in the last week of September and first week of October.
Reuters contributed to this report.