Defence claims no proof Meng Wanzhou is tied to any loss suffered by bank

A lawyer for Meng Wanzhou says the Crown has failed to establish a link between the Huawei executive's actions and any loss purportedly suffered by HSBC.

Mark Sandler took aim at the heart of the case for extradition to the U.S. Monday, claiming prosecutors lack evidence they need to try Meng for fraud: loss or threat of loss to a victim and a connection between that loss and the accused.

In legal documents and submissions filed in the high-profile B.C. Supreme Court case, it's referred to as a "causal link" — or "causation."

"You cannot commit Ms. Meng [for extradition] absent evidence that she made representations that were relied upon by HSBC to its detriment," Sandler told Associate Chief Justice Heather Holmes.

"Causation is the Achilles' heel in the requesting state's case."

Final week of legal proceedings

The high-profile extradition proceeding entered what is scheduled to be its last week of court time Monday, more than two-and-a-half years after Meng first appeared in the same Vancouver courthouse in the days after her arrest.

The 49-year-old is Huawei's chief financial officer and the daughter of the company's billionaire founder, Ren Zhengfei.

She is charged with fraud and conspiracy in New York in relation to allegations she lied to an HSBC executive in Hong Kong in August 2013 about Huawei's control of a subsidiary accused of violating U.S. economic sanctions against Iran.

Prosecutors claim Meng gave a Powerpoint presentation which described the relationship between Huawei and the other company as a "controllable" business partnership, obscuring the fact that they were one and the same entity.

HSBC allegedly relied on Meng's statements in deciding to continue handling Huawei's finances, placing the bank at risk of both civil and criminal liability for moving money tainted by sanctions violations through the U.S. banking system.

A winning case in a variety of ways

Final arguments on the extradition request began last week with the Crown describing the allegations against Meng as a routine fraud case involving dishonesty in commercial dealings.

Robert Frater, the Justice Department's top lawyer, said the only thing that sets the proceedings apart is the context of foreign sanctions.

Sandler told Holmes HSBC hasn't suffered any loss and was never at risk of prosecution.

He said the transactions which would have allegedly drawn the scrutiny of financial regulators involved payments Skycom made to a third party that HSBC then cleared through the U.S. system. 

Sandler said there's no evidence Meng was aware of those payments and no evidence she knew her alleged misrepresentations would have any influence on them.

In making his point, he cited a 1973 case in which a woman was acquitted of defrauding Eaton's by lying on a credit card application because the department store "did not actually rely on the application form in determining whether to extend credit."

The name of the defendant in that case was Winning; Sandler said "it was a winning case in a variety of ways, in my submission."

"Fraud cases in Canada aren't just about dishonesty in commercial dealings," Sandler said.

"You don't convict people for fraud unless the dishonesty is also manifested because a victim acted upon it to its detriment."

Turning 'fraud law on its head'

The Crown contends that the risk of loss to HSBC should be enough to establish a fraud charge — whether the bank lost money or not.

In answer to that argument, the defence has obtained an affidavit from John Bellinger, a former senior associate counsel to the George W. Bush White House.

"After an extensive review of U.S. sanctions enforcement actions, Bellinger could not find a single case in which the U.S. government had 'imposed civil or criminal liability on a bank or other party for engaging in prohibited transactions as a result of having been intentionally deceived by a third party,'" the defence says in its written submissions.

In deciding whether to extradite, Holmes has to determine if there would be enough evidence to send Meng to trial for fraud in Canada if her alleged offences had occurred in this country.

Sandler told the judge both the Crown and the defence have pored over Canadian fraud cases looking for similar fact patterns.

He said it "would turn fraud law on its head" to accept the prosecution's theory of the case.

"There has never been a fraud case in Canadian jurisprudence in which in the absence of actual loss and in the absence of risk of actual pecuniary loss, the possibility that the government will go after the victim for liability has supported a fraud prosecution," he said.

"Never happened."

The defence is expected to continue its submissions Tuesday.

The proceeding is scheduled to wrap by Aug. 20 after which Holmes is likely to reserve her decision.