Canadian justice lawyer says Huawei CFO was dishonest

The dishonesty of a senior executive for Chinese communications giant Huawei Technologies put a bank at risk of violating U.S. sanctions against Iran, a Canadian justice department lawyer told an extradition hearing Thursday.

Canada arrested Meng Wanzhou the daughter of Huawei’s founder and the company’s chief financial officer, at Vancouver’s airport in late 2018. The U.S. wants her extradited to face fraud charges. Her arrest infuriated Beijing which sees her case as a political move designed to prevent China’s rise.

The U.S. accuses Huawei of using a Hong Kong shell company called Skycom to sell equipment to Iran in violation of U.S. sanctions. It says Meng, 49, committed fraud by misleading the HSBC bank about the company’s business dealings in Iran.

The lengthy extradition proceeding is entering a phase which involves arguments over the U.S. government’s request to extradite Meng.

Justice department lawyer Robert Frater said Meng was dishonest about Huawei’s relationship with Skycom during a meeting with a HSBC executive.

“By not being honest and withholding information, HSBC was deprived of the opportunity to protect itself,” said Frater.

After the meeting, HSBC made money transfers involving Skycom which could have caused the bank a liability, Frater said.

“Given that Huawei was Skycom, the activities of Skycom and Huawei posed an actual real risk to HSBC of violating US sanctions on Iran," he said.

Frater presented case law that says even if there is not a financial loss, fraud can still occur when an institution like HSBC is persuaded to continue to provide services it might have refused had it known all the facts.

In wrapping up his submission, Frater said he disagreed with Meng’s defense team that the case against her was unique, unprecedented and a legal stretch.

The defense will begin its arguments against the extradition Friday.

Meng, who attended court wearing an electronic monitoring device on her ankle, followed the proceedings through a translator.

The judge isn’t expected to rule on Meng’s extradition until later in the year. Whatever her decision, it will likely be appealed.

Meng’s lawyers have denied any dishonestly on her part. They also argue HSBC was not placed at any risk and the charges against her are politically motivated.

On Tuesday a Chinese court sentenced Canadian entrepreneur Michael Spavor to 11 years in prison for spying.

Spavor and fellow Canadian Michael Kovrig were arrested in December of 2018 in apparent retaliation to Meng’s arrest.

The Chinese government has released few details other than to accuse Spavor of passing along sensitive information to Kovrig, beginning in 2017. Both have been held in isolation and have little contact with Canadian diplomats.

In another case, the Higher People’s Court of Liaoning province in the northeast rejected an appeal by Canadian Robert Schellenberg, whose 15-year prison term on drug smuggling charges was increased to death in January 2019 following Meng’s arrest.

Meng remains free on bail in Vancouver and is living in a mansion.

Canada and other countries, including Australia and the Philippines, face trade boycotts and other Chinese pressure in disputes with Beijing over human rights, the coronavirus and control of the South China Sea.

China has tried to pressure Canadian Prime Minister Justin Trudeau’s government by imposing restrictions on imports of canola seed oil and other products from Canada.