'Essence' of Meng Wanzhou's alleged crime is fraud — not sanctions violation, Crown says

Meng Wanzhou may be accused of violating sanctions against Iran, but lawyers for the Crown say the essence of the charges against the Huawei chief financial officer is fraud.

And that's an offence in both the United States and Canada.

Lawyers for Canada's attorney general filed their legal arguments Friday in advance of the start of a formal hearing into the U.S. request for Meng's extradition for allegedly lying to banks about Huawei's relationship with a hidden subsidiary accused of violating U.S. sanctions against Iran. 

The week-long hearing, set to begin in B.C. Supreme Court on Jan. 20, will examine the question of double criminality: whether the crime for which the U.S. wants to extradite Meng would be considered an offence north of the border.

"The essence of [her] conduct is fraud on a bank (HSBC)," the Crown says in its submissions. "As a result of the misrepresentations, HSBC's economic interests were put at risk."

Living under house arrest

Meng was arrested at Vancouver airport on Dec. 1, 2018, after flying from Hong Kong to Canada on what was intended to be a short stopover before continuing to Mexico and Argentina for a business conference.

The 47-year-old is currently living under house arrest in one of two mansions she owns in Vancouver, as part of the terms of a $10 million bail agreement.

She is accused of reassuring an HSBC executive about Huawei's activities after the 2012 publication of an article claiming a company with connections to Huawei had attempted to sell U.S. computer equipment to Iran's largest telecommunications provider.

Meng allegedly gave a PowerPoint saying Huawei no longer held a controlling interest in the company — SkyCom — and that she had resigned from SkyCom's board.

'A risk of economic loss'

Her lawyers provided their arguments on double criminality in late November.

They claim that because Canada didn't have the same sanctions against Iran at the time the extradition warrant against Meng was sworn, her alleged actions couldn't have led to any offence if they had occurred in Canada.

But the Crown claims that's a narrow view of extradition law which has been rejected by Canadian courts.

They say it's the "essence" of the offence that counts — not the exact words of the statutes.

"Here, American sanctions law simply tells us why the alleged misrepresentations mattered to the United States," the Crown submission reads.

"The misrepresentations, made to maintain the credit relationship, created a risk of economic loss for the bank and are sufficient to make out a case of fraud in Canada."

A political pawn?

The hearing on double criminality will be followed — if warranted — by a hearing in June during which Meng's lawyers plan to argue that she was a victim of a conspiracy between Canadian and American authorities to violate her rights.

They will also argue that she's being used as a political pawn, citing comments by U.S. President Donald Trump that he would be willing to intervene in Meng's case, if it could secure a better trade deal with China.

In recent weeks, Prime Minister Justin Trudeau appeared to bolster their case by telling the hosts of a Quebec TV station the U.S. "should not sign a final and complete agreement with China that does not settle the question of Meng Wanzhou" and two Canadians arrested in China in the week after her detention.

The two Canadians, former diplomat Michael Kovrig and entrepreneur Michael Spavor, have been held in jail in China for more than a year. China has accused both men of spying.

A complex case

The Crown's submissions on double criminality reveal the complex nature of the case.

At the time of Meng's alleged fraud, HSBC was under the terms of a deferred prosecution agreement with the U.S. Department of Justice for violating sanctions against Cuba, Iran., Libya, Sudan and Burma.

In addition to forfeiture of more than $1 billion US and civil penalties of $665 million US, HSBC had agreed to undertake enhanced anti-money laundering compliance obligations, Violating that agreement could have subjected the bank to criminal proceedings.

According to the Crown, the bank relied on Meng's alleged lies in making the decision to participate in a syndicate that loaned Huawei $1.5 billion US in July 2015.

"[Meng's] alleged dishonest act induced HSBC to continue to provide financial services when otherwise it would not have done so," the Crown argues.

Meng has denied the allegations.