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Meng Wanzhou's extradition lawyers call US fraud case implausible, unprecedented, fatally flawed, in final push for release

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  • HSBC

Lawyers for the Huawei Technologies executive Meng Wanzhou called the US fraud case against her implausible, unprecedented and fatally flawed, as they argued in the final stage of her extradition hearing on Friday that she must be released.

The US accusation - that Meng defrauded HSBC by lying about Huawei's business dealings in Iran and thus put the bank at risk of breaching American sanctions on Tehran - "displays legal and factual defects rarely seen in fraud prosecutions, at least at the committal stage", her lawyers told the Supreme Court of British Columbia in a submission.

Meng lawyer Eric Gottardi told Associate Chief Justice Heather Holmes that the US case was based on "vague and shifting theories of risk and causation".

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Most fraud cases involve a victim being cheated out of their money, Gottardi said, but in Meng's case, "the theory of economic loss by HSBC is wholly illusory [and] fatally flawed".

The extradition battle, which began when Meng was arrested at Vancouver International Airport on December 1, 2018, is reaching a climax as the diplomatic furore surrounding the case escalates. China was infuriated by Meng's arrest, and her treatment has sent Beijing's relations with Ottawa and Washington into crisis.

"No deception. No loss. Not even a plausible theory of risk. And no causal connection between the impugned representations and the deprivation said to have befallen the putative victim," Meng's lawyers said in a written submission to the committal hearing, which is the last courtroom process before Holmes decides whether to release Meng or recommend to Canada's Justice Minister David Lametti that she be extradited.

The final decision on whether to surrender Meng to US authorities to face trial in New York will rest with the minister alone.

Meng, who is Huawei's chief financial officer and a daughter of company founder Ren Zhengfei, is alleged to have lied to a HSBC banker in a 2013 PowerPoint presentation that was intended to allay concerns about Huawei's business in Iran, which was conducted via an affiliate called Skycom.

Committal requires that a prima facie case of fraud is established: that is, the accusations must be capable of supporting prosecution in Canada had the conduct been committed there.

Robert Frater, a Canadian Department of Justice lawyer representing US interests in the case, said on Wednesday that a prima facie case had been established, and that Meng's dishonesty to HSBC was "abundantly clear".

But the submission by Meng's lawyers argued that "no reasonable trier of fact could find that HSBC was actually misled about Huawei's control of Skycom when the very presentation the Requesting State relies on described Skycom as 'controllable' by Huawei".

"And no reasonable trier of fact could find that HSBC, by relying on Ms Meng's representations, risked sanctions violations because on all versions of the facts, HSBC already knew that Skycom did business in Iran," it added.

The submission called the supposed risk HSBC faced - that the bank might be charged with violating US sanctions for clearing Skycom payments through the US - "entirely unmoored" from the presentation Meng made in a Hong Kong teahouse.

"The requesting state's theory of liability is unprecedented in Canadian law," the submission concluded, as it called for Meng's discharge.

"In no prior case has an individual been found guilty of fraud for exposing another individual - much less a sophisticated multinational corporate entity - to the hypothetical risk of a separate and future enforcement proceeding."

The sanctions risk allegedly arose from the US routing of Iran business payments by Skycom to a British firm called Networkers, Gottardi said.

The Canadian government's lawyers have said that Skycom and Huawei were not separate entities, but one and the same.

But "nothing said by Ms Meng [about the relationship] was capable of giving rise to sanctions risk", Gottardi said, and there was "not a scintilla" of evidence she had influenced HSBC's decision to route the Networkers payments through the bank's US entity.

In any case, Gottardi said, a report by former White House lawyer John Bellinger debunked the idea that Skycom had breached sanctions with the payments and nothing Meng said in her PowerPoint presentation was misleading or untrue.

The "decisive" Bellinger report showed that the Huawei-Skycom relationship was irrelevant to HSBC's sanctions risk, Gottardi said.

Another of Meng's lawyers, Frank Addario, said of Meng's PowerPoint presentation: "She doesn't dispute the allegations of a close connection [between Skycom and Huawei]...the only thing she says is 'we didn't sell embargoed equipment and nor did any of our partners'."

Addario said that Skycom was indeed a third party to Huawei in its relationship with HSBC, "not an arm's-length third-party partner, but a third party nonetheless".

Until the committal process began on Wednesday, Meng's extradition case has mostly been devoted to her lawyers' claims that she has suffered such an "egregious" abuse of process that her case should be stayed, or halted entirely.

Experts say that regardless of what Holmes decides, an appeal is likely, potentially extending the case for years.

The committal hearings, which could last until August 20, have coincided with a ramping-up of tensions between China and Canada and the US. On Wednesday, a Chinese court announced that it had convicted Canadian Michael Spavor of espionage and sentenced him to 11 years' imprisonment.

Meng Wanzhou leaving her Vancouver home to attend a court hearing on Tuesday. Photo: Reuters alt=Meng Wanzhou leaving her Vancouver home to attend a court hearing on Tuesday. Photo: Reuters

Spavor and a second Canadian, Michael Kovrig, were arrested in China in the days after Meng's detention; Ottawa has called them victims of "hostage diplomacy" that is in retaliation for the Meng case. Kovrig was also tried for espionage this year, but the outcome has not been announced.

Canadian Prime Minister Justin Trudeau decried the Spavor ruling as "absolutely unacceptable and unjust". China's foreign ministry responded to Trudeau by calling Canada "arrogant" and "ridiculous".

Another Canadian, Michael Schellenberg, had his death sentence for drug trafficking upheld in China on Tuesday.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.