Huawei CFO loses bid to dismiss US extradition request

Canadian court ruling will allow proceedings to continue against Meng Wanzhou

A Canadian court has denied an attempt by Huawei’s chief financial officer, Meng Wanzhou, to dismiss an extradition request from the US, where she faces allegations of fraud in a politically charged case that has further strained ties between Washington and Beijing.

Ms Meng, daughter of Ren Zhengfei, the Chinese telecoms group’s founder, has been under house arrest in Vancouver, where she was detained in December 2018 after landing on a stopover flight at the city’s airport. She was held at the request of the US, which is seeking her extradition on fraud charges relating to violating US sanctions against Iran.

The US charged her with fraud after allegedly misleading UK-based bank HSBC in 2013 about its ties with a subsidiary operating in Iran. The bank said the misrepresentation put it at risk of breaching US sanctions against Iran because of its work in US dollar-clearing transactions.

The case has been linked to the Trump administration’s efforts to keep Huawei from dominating global 5G mobile networks, arguing that the Chinese company can use its equipment to spy on the west. 

Ms Meng’s detention in December 2018 has also severely hurt relations between China and Canada. Beijing jailed two Canadians — Michael Spavor and Michael Kovrig, allegedly for espionage — which many Canadians say was a retaliation for her arrest.

Canada-China relations will remain in the doghouseWesley Wark, University of Ottawa

Her defence lawyers sought to have the case dismissed because they said the charges failed the test of “double criminality” — meaning that the US charges against her are also crimes in Canada. Her lawyers have previously said the charges against her were based solely on sanctions, not fraud, and because Canada did not have sanctions against Iran at the time, she did not break Canadian law. 

Under the terms of the US-Canada extradition treaty, the alleged crimes must be crimes in both countries.

However, prosecutors have argued the essence of the US government’s case against Ms Meng was fraud, not sanctions. “Lying to a bank in order to get banking services that create risk of economic prejudice is fraud,” Robert Frater, crown lawyer, said during a hearing in January.

Heather Holmes, associate chief justice, on Wednesday dismissed Ms Meng’s application because the issue of double criminality was “capable of being met”, and the allegations “depend on the effects of the US sanctions”.

“I conclude that those effects may play a part in the determination of whether double criminality is established,” she wrote in her judgment.

Regarding the defence’s argument that Ms Meng’s conduct was not a crime because Canada does not have sanctions against Iran, Justice Holmes ruled “it is not necessary that the foreign offence have an exactly corresponding Canadian offence”.

“It is the ‘essence of the offence’ that is important,” she ruled.

Though Ms Meng was not present for the judgment, she arrived at a separate Vancouver courtroom shortly after it was publicly released to go over next steps in the case. Both sides will return on June 3 to determine a schedule for future proceedings. Several more legal rounds are expected in the case.

Ms Meng appeared confident just days before the judgment, smiling and posing for photographs in front of the courthouse on Saturday with friends.

Huawei said in a statement it was disappointed by the ruling. “We have repeatedly expressed confidence in Ms Meng’s innocence. Huawei continues to stand with Ms Meng in her pursuit of justice and freedom”.

Wesley Wark, a University of Ottawa professor and an expert on national security and intelligence, said the ruling would further dent Canada-Chinese relations.

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China would seek to portray Canada as “politically weak and subservient to the US”, he said. “Canada-China relations will remain in the doghouse and any efforts being made by [Canada’s ambassador to China Dominic] Barton will bear little fruit for a little while past this.”

Prof Wark also said Mr Kovrig and Mr Spavor would probably remain in Chinese jails. “The best hope is that they will be charged and tried, and then released/expelled on some kind of amnesty down the road, but in the meantime they will have to endure more time in Chinese jails,” he said. 

The ruling also marks a setback for Huawei, which recently warned that US moves to cut the Chinese company off from international semiconductor supplies were having a devastating effect on its business.

Shortly after the judgment, Canada’s justice department noted the court concluded that it was possible Ms Meng’s conduct could amount to a crime in Canada.

“An independent judge will determine whether that test is met. This speaks to the independence of Canada’s extradition process,” it said.