Meng Wanzhou defrauded HSBC without causing loss, extradition case is told, as diplomatic storm swirls outside court
A global diplomatic storm is swirling outside Meng Wanzhou's extradition case in the Supreme Court of British Columbia - but inside, the Huawei Technologies executive's fate may instead hinge partly on arcane Canadian case law, including a fraud involving a Nova Scotia car dealer almost 30 years ago.
A Canadian government lawyer on Thursday cited that case and others as he tried to bolster the allegation that Meng had deceived and defrauded HSBC, even though the bank suffered no economic loss.
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Robert Frater, the Canadian Justice Department's chief general counsel who is representing US interests in the extradition case, told Associate Chief Justice Heather Holmes he expected Meng's lawyers to depict the case as "unique and unprecedented", but it was not.
"This is a case about lying to a bank in order to get banking services continuing to flow as before. That is not an unusual thing," he said.
American prosecutors want Meng - who is the chief financial officer of Huawei and a daughter of its founder, Ren Zhengfei - to face trial in New York for allegedly defrauding HSBC. She was arrested at Vancouver's airport on a US warrant on December 1, 2018, triggering the extradition battle.
Meng is accused of defrauding HSBC by lying in a PowerPoint presentation about Huawei's business dealings in Iran, conducted via an affiliate called Skycom, and thus putting the bank at risk of breaching US sanctions on Tehran. She denies the charges.
The contrast between the high-level international dispute outside the court and the obscure legal discussions within could scarcely have been more stark on Thursday.
Because Meng's extradition would require that she be charged with something capable of supporting a trial in Canada - had her conduct been committed there - long discussions were devoted to fraud case law.
For instance, Frater cited the 1992 fraud conviction of a Nova Scotia Ford dealer named Gaetz to support the contention that Meng had similarly defrauded HSBC, and that the bank suffered "deprivation" by being denied knowledge to make an informed decision.
The US does not accuse Meng of causing HSBC an economic loss; it has argued that her alleged dishonesty exposed the bank to risk.
'Arrogant': China rejects criticism over court process for Canadians
In the Nova Scotia case, Gaetz hid from a bank the fact that leased vehicles had been sold, and instead of paying the bank the sale proceeds, as required, he continued to make monthly lease payments as if they had not. Gaetz had not profited, and the bank had suffered no monetary loss, but he was nevertheless convicted in a ruling upheld in the Supreme Court of Canada.
Had Meng properly informed HSBC about Huawei's Iran business, it could have shielded itself from risk by blocking Skycom transactions, "or ending the relationship with Huawei altogether", he said.
In addition to the risk posed by possible US legal action for breaching Iran sanctions, HSBC was exposed to "loan risk" by Meng, by being denied the opportunity to properly assess credit facilities it had extended to Huawei, said Frater.
Meng had reached out to HSBC after the Reuters news agency published stories in 2013 suggesting that Huawei was using Skycom to breach sanctions, Frater said, offering the bank an explanation that was "generous" in its depiction of sanctions risk, but "economical" about the true relationship between Huawei and Skycom. The two companies were one and the same, Frater has previously said.
Other Huawei employees had made similar representations to other banks, said Frater, in what he called a "coordinated plan for reassurance of lenders, with Ms Meng as an integral part".
"Ms Meng's PowerPoint is clearly an artfully prepared script" to deceive the bank, and it spoke to the "mental element" of the crime, he said, adding that it had the "hallmarks of knowing, intentional misrepresentations".
The hearing was adjourned until Friday.
This week's developments in China have coincided with the endgame for Meng's marathon extradition case.
The committal proceedings, which began on Wednesday and could continue until August 20, are the final courtroom process before Holmes decides whether to release Meng or recommend to Canada's Justice Minister David Lametti that she be extradited to the US.
The final decision on whether to surrender Meng to the Americans rests with the minister. But legal experts expect Holmes' ruling will be appealed regardless of what she decides, potentially dragging out for years a case that has roiled China's relations with Ottawa and Washington.
After Spavor's 11-year sentence for espionage was announced in China on Wednesday, Trudeau decried the ruling as "absolutely unacceptable and unjust".
Canada has said Spavor is a victim of hostage diplomacy, depicting his treatment and that of another detained Canadian, Michael Kovrig, as retaliation for the Meng case; Beijing says Meng has been arbitrarily detained and should be freed immediately.
China's foreign ministry responded to Trudeau by calling Canada "arrogant" and "ridiculous".
"On one hand, Canada portrays itself as a country upholding the rule of law and with judicial independence, but on the other it is interfering in Chinese judicial organs and trespassing on the concept that everyone is equal before the law. Its true intention is to politicise legal issues," the ministry said on Thursday.
Kovrig and Spavor were arrested in the days after Meng's arrest. No ruling has been announced in Kovrig's espionage case.
This article originally appeared on the South China Morning Post (SCMP).
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