HSBC suffered no risk of loss as a result of alleged deceptions by Meng Wanzhou, her lawyer told a Canadian court on Monday, as the Huawei Technologies chief financial officer’s two-year battle against extradition to the United States entered a critical stage.
But a Canadian government lawyer representing US interests said the fact that Huawei was not a “deadbeat” borrower from the bank was irrelevant to Meng’s alleged fraud.
This phase of hearings in the Supreme Court of British Columbia in Vancouver, lasting until April 1, is scheduled to include extensive arguments about whether Meng suffered an abuse of process when border agents questioned her and seized her electronic devices and passwords at the city’s international airport on December 1, 2018, before police arrested her. The border agents then turned over the devices and their passwords to police.
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Her lawyers contend that this was conducted at the orchestration of the US Federal Bureau of Investigation, that Meng’s Canadian charter rights were breached, and that the American bid to have her extradited to face trial on fraud charges in New York should thus be thrown out.
In another branch of Meng’s argument, her lawyers said they will also press a claim that the US has no jurisdiction over her alleged actions that are at the heart of the case: she is accused of defrauding HSBC by lying in a PowerPoint presentation to a banker about Huawei’s business dealings in Iran, thus putting the bank at risk of breaching US sanctions on Tehran.
Meng’s meeting with the HSBC banker took place in a Hong Kong teahouse in 2013; HSBC is not a US bank; and Meng is not a US citizen. Her lawyers thus contend that the US is trying to assert extraterritorial jurisdiction, in breach of customary international law.
She denies the US charges.
On Monday, the hearings began with an application by one of Meng’s lawyers, Frank Addario, to admit evidence from another Huawei executive about the supposed risk of fraud loss arising from HSBC’s loans to the Chinese tech giant.
“We say … there never was any risk that the bank could incur a loss,” said Addario. The US records of the case, presented to the BC court, were “misleading” about this, he said.
But Associate Chief Justice Heather Holmes suggested that risk was inherent to the lender in any loan transaction.
Addario said the issue of “remoteness” had to be considered. “You’d still have to show something to get over the [test] that the risk is not remote and speculative,” he argued.
Holmes continued to suggest considerations about the likelihood of loan default were less important than that a risk always existed.
“One never sees in a fraud case of an outstanding loan … an analysis of ‘all right, what were the chances here that it might not have been repaid’. An omission from numerous judgments isn’t a legal proposition, but surely it’s telling,” she said.
Huawei is not a deadbeat and the banks are doing just fine … Whether anyone has lost money simply doesn’t matter in the law of fraud
Canadian government lawyer Robert Frater
In response to Addario, Canadian government lawyer Robert Frater said that “whether there was any loss is not useful in determining whether there was any risk”.
“Huawei is not a deadbeat and the banks are doing just fine,” said Frater, but this had nothing to do with whether fraud had taken place. “Whether anyone has lost money simply doesn’t matter in the law of fraud.”
Summing up his opposition to the admission of the new evidence, he said “it has no merit, it’s time to move on”.
On Friday, Holmes rejected Meng’s request to admit as evidence statements by other Huawei employees that contradict the claim she misled HSBC. However, Holmes provisionally allowed parts of an expert report on US sanctions law.
The hearings over the next three weeks had also been expected to include attempts by Meng’s lawyers to pursue evidence from Ben Chang, a former Royal Canadian Mounted Police sergeant who was involved in her case but now works as an executive for a Macau casino. Chang is refusing to testify in the extradition hearings; legal documents filed by Canadian government lawyers said there were fears for his safety.
But a hearing on the matter, previously scheduled to take place on Tuesday, was cancelled amid discussions between the rival lawyers.
Holmes reserved judgment on Monday’s application, and the hearing was adjourned until Wednesday.
The final hearings in the extradition case are scheduled to take place from April 26 to May 14. Holmes will then decide whether extradition should be allowed, although appeals could last for years and the final decision on whether to send Meng to the US will rest with Canada’s justice minister.
Meng’s arrest and her long fight against extradition have upended China’s relations with the US and Canada. China arrested two Canadians, Michael Kovrig and Michael Spavor, in the days following Meng’s detention and has accused them of espionage; Ottawa regards their arrests as retaliatory.
Meng, who is the daughter of Huawei’s founder Ren Zhengfei, is under partial house arrest at her C$13.2 million (US$10.6 million) Vancouver mansion.
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