The US accusations that Meng Wanzhou had defrauded HSBC existed in an “evidentiary vacuum”, her lawyer told her Canadian extradition hearing on Tuesday, as he dismissed arguments that she had put the bank’s reputation or loans to Huawei Technologies at risk.
Such risks were at best “remote” and “speculative”, if not zero, said lawyer Scott Fenton, as hearings in the extradition case neared their end, almost 1,000 days after Meng’s arrest at Vancouver International Airport on a US warrant.
The Huawei executive is wanted by US prosecutors for allegedly defrauding HSBC by lying to the bank about the Chinese tech giant’s business dealings in Iran, conducted via an affiliate called Skycom, thus putting the bank at risk of breaching US sanctions.
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The alleged deceit is said to have been carried out in a 2013 PowerPoint presentation she made to a HSBC executive in a Hong Kong teahouse that was intended to reassure the bank.
A fraud charge must involve actual loss or risk of loss, Meng’s lawyers and the Canadian government lawyers representing US interests in the case agree.
There is no allegation that Meng caused HSBC actual loss, and the hearings in the Supreme Court of British Columbia have already heard Meng’s lawyers try to debunk the risk of direct sanctions loss to the bank, which was fined US$1.9 billion in 2012 for unrelated Iran sanctions violations.
On Tuesday, Fenton addressed the risk of other forms of loss, namely reputational or loan losses, telling Associate Chief Justice Heather Holmes the US records of the case included evidence of neither.
“In all cases, concrete evidence must exist that the alleged deceit triggered either actual loss or a concrete non-speculative risk of loss … it can’t be zero. It can’t be theoretical and speculative,” he said.
Because “a no-loss, no-risk-of-loss theory of deprivation is impossible to square”, the Canadian government’s lawyers had failed to establish an “essential element” of a fraud charge, Fenton said. He called the absence of loss in the US case “bizarre”.
Meng’s statements “were not material to the granting of the loans” from HSBC to Huawei, and it was not enough to argue she induced the bank to continue the loans, Fenton said.
Any impact was “wholly unquantifiable” and therefore incapable of proving fraud, he said.
Fenton said the claims of reputational risk were “generic … lacking specificity and lack any causal nexus to the applicant’s PowerPoint”.
Similarly, there was no evidence any of HSBC’s loans to Huawei entities were exposed to any increased risk as a result of Meng’s presentation, he said.
Meng is Huawei’s chief financial officer and the daughter of company founder Ren Zhengfei. Her arrest and subsequent treatment has infuriated China, triggering a diplomatic crisis.
Meng’s extradition case is now at the committal stage, which is scheduled to end on Friday. It is the final courtroom process before Holmes decides whether to release Meng or recommend to Canada’s Justice Minister David Lametti that she be sent to New York to face trial.
The final decision whether to surrender Meng to the Americans rests with the minister. Legal experts meanwhile say that an appeal is likely regardless of what Holmes says in her ruling, which could take months to hand down.
Most of the long case has been devoted to Meng’s lawyers’ extensive arguments that she is the victim of such an egregious abuse of process that the only remedy is for the extradition case to be stayed, and for her to be released.
That separate option is still on the table for Holmes, but during the committal process, the Canadian government lawyers must establish that there is a prima facie case of fraud, and not Meng’s guilt; that is, that her alleged conduct would be capable of supporting a prosecution had it occurred in Canada.
The Canadian government lawyers say Meng’s dishonesty was “abundantly clear” in her presentation to the banker, known as Witness B. Meng had “falsely tried to distance Huawei from Skycom … the truth [is] that Huawei was Skycom”, the Canadian Department of Justice’s top lawyer, Robert Frater, told the committal hearing last week.
But Meng’s lawyers say that she made “crystal clear” that Huawei and Skycom were working together in Iran and the presentation described the relationship as “controllable”, hence no deception took place, they claim.
Another Meng lawyer, Mark Sandler, said on Monday that it was “absurd” to simultaneously claim that she deceived HSBC into breaching US sanctions, and HSBC also risked being criminally convicted for having been innocently tricked.
Summing up Meng’s committal arguments, lawyer Eric Gottardi said on Tuesday that the opposing side had depicted the PowerPoint as saying Huawei did business in Iran but did not violate sanctions.
“We agree,” Gottardi said. “Yet here we are, some eight years later, trying to sift through the ROCs [records of the case] to divine what possible deception” had taken place, and what risk, if any, been suffered by HSBC.
The US had substituted evidence with “guesses and speculation”, Gottardi said, and “fundamental justice” demanded Meng be discharged.
The hearing was adjourned until Wednesday.
Meng’s case has sent China’s relations with Ottawa and Washington into a tailspin. In the days after her arrest on December 1, 2018, China detained two Canadians, Michael Spavor and Michael Kovrig, and put them on trial this year.
Last Wednesday, the day Meng’s committal hearings began, a Chinese court announced that Spavor had been convicted of espionage and sentenced to 11 years in prison. No verdict has been announced for Kovrig.
Canadian Prime Minister Justin Trudeau decried the Spavor ruling as “absolutely unacceptable and unjust”. China’s foreign ministry responded by calling Canada “arrogant” and “ridiculous”.
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