Fraud is the 'heart of the case' for Meng Wanzhou extradition: Crown
Credit to Author: Keith Fraser| Date: Thu, 23 Jan 2020 00:06:34 +0000
The federal Crown argued Wednesday that the essence of the case against Huawei executive Meng Wanzhou is her alleged fraudulent conduct, and denied an assertion by her lawyers that U.S. sanctions against Iran were a pivotal issue.
In his opening remarks, Crown counsel Robert Frater, speaking on behalf of U.S. authorities who are seeking Meng’s extradition, told B.C. Supreme Court Associate Chief Justice Heather Holmes that the prosecution arguments do not represent a complex theory of the case.
“Fraud, not sanctions violations, is at the heart of this case,” he said. “Your job is to determine whether there is evidence before you capable of amounting to some evidence of the constituent elements of fraud.”
Frater made his comments during the first stage of Meng’s extradition hearing that is dealing with the issue of whether the Crown has met the test for double criminality, whether the crime for which Meng is being sought for extradition to the U.S. is also a crime in Canada.
Meng was arrested at the Vancouver airport in December 2018 and held on $10-million bail pending the extradition hearing.
U.S. authorities allege that in 2013 Meng lied to HSBC bank officials about the relationship between her company and a former subsidiary that was trying to do business in Iran, in violation of the American trade sanctions. Meng, Huawei’s CFO and the daughter of the firm’s founder, is accused of falsely claiming that there were no longer links between Huawei and Skycom in order for HSBC to continue its multimillion-dollar dealings with the Chinese tech giant.
Huawei Chief Financial Officer Meng Wanzhou leaves B.C. Supreme Court on a lunch break during her extradition hearing at B.C. Supreme Court in Vancouver, British Columbia, Canada January 22, 2020.
In submissions earlier this week, Meng’s lawyers claimed that the alleged sanctions violations are central to the case and that because Canada has no equivalent sanctions against Iran, the court should discharge her.
Frater argued that the essence of the fraudulent conduct was that through Meng’s alleged misrepresentation, she paved the way for HSBC to continue to provide banking services to Huawei, creating a risk of economic prejudice to HSBC.
“Lying to a bank in order to get banking services that creates a risk of economic prejudice is fraud,” he said.
Frater told the judge there were two ways to be satisfied that there was some evidence of fraud, one that ignores the foreign legal context and one that does not. The defence argument that the case is simply about sanctions is not supported by the case law, he said.
The prosecutor said it was important to look at the facts and took the judge through allegations outlined in the supplemental record of the case (SROC) provided by U.S. authorities.
On the same day that Meng met with HSBC officials in August 2013, Huawei announced a $1.5-billion, five year loan from a syndication of international banks with HSBC being the coordinator of the loan and one of the principal lenders, contributing $150 million to the deal, according to the SROC.
Huawei chief financial officer Meng Wanzhou leaves her Vancouver home to go to her extradition hearing in British Columbia Supreme Court on January 22, 2020 in Vancouver, British Columbia.
The SROC claims that in March and April 2014 Huawei entered into talks to become involved in a further $700-million to $900-million credit facility from another syndication of banks including HSBC.
It also claims that in March 2014 HSBC’s global-risk committee met to discuss Huawei and considered the information provided by Meng at the 2013 meeting.
Then in April 2014 an HSBC employee who is only identified as “Witness A” concurred with a proposal to increase HSBC’s credit to Huawei with the proposal discussing HSBC’s “reputational and regulatory concerns” regarding Huawei, says the SROC.
Frater noted that HSBC, which at the time had recently reached a deferred prosecution agreement involving dealings with other countries, including Libya and Burma, faced both regulatory and reputational consequences flowing from any dealings that ran afoul of the Iranian sanctions.
He argued that there was enough evidence to prove fraud without considering the sanctions issue but the judge questioned whether it was possible to do so. The judge also wondered whether the Meng case presented particular challenges as an extradition case.
“Isn’t it because of that we’re having this extensive set of submissions? There’s a great deal of conduct that can be characterized as fraud,” the judge said.
After Frater’s submissions, Richard Peck, a lawyer for Meng, asked that the defence be given the chance to make a reply to the Crown on Thursday morning, a request that was approved by the judge.
If Meng wins the double-criminality stage of the process, the extradition will be set aside, although the Crown can appeal any such ruling. If she loses, the case proceeds to another stage in June at which the court will address an allegation by Meng that Canadian officials engaged in an abuse-of-process during her arrest.