VANCOUVER, British Columbia (CN) — A Chinese court sentenced a Canadian businessman to 11 years in prison on espionage charges Wednesday on the eve of the start of formal committal arguments in Huawei CFO Meng Wanzhou’s extradition hearing.
Michael Spavor, detained in China since December 2018, was accused of spying in China though his detention was roundly condemned as a retaliatory act of so-called hostage diplomacy in response to Meng’s arrest in Canada on a U.S. extradition request. Canadian Prime Minister Justin Trudeau characterized Spavor’s arrest as “arbitrary” at the time, while Canada’s ambassador to China Dominic Barton immediately expressed disappointment in the sentence of both Spavor and fellow Canadian Robert Schellenberg on drug charges.
Schellenberg's 15-year prison term was rescinded and recently replaced with a death sentence. Barton said that it was no “coincidence that these are happening right now while events are going on in Vancouver,” referring the Meng's extradition hearing in B.C. Supreme Court in Vancouver.
Spavor and former diplomat Michael Kovrig, who’ve come to be known as “the two Michaels” since their detention in China, have reportedly been held in isolation in China with limited access to lawyers and diplomatic support. Canadian foreign affairs minister Marc Garneau condemned Spavor’s sentence as part of China’s “practice of arbitrary detention with a mock, sham trial with absolutely no transparency whatsoever, and a verdict that is completely unjustified.”
Former ambassador David Mulroney also weighed in via Twitter, saying “China is continuing to match every step in the Meng extradition process by steadily stepping up the campaign of fear and retribution against our imprisoned Canadians. Unspeakably cruel to them and their families."
Meanwhile, the experience of the two Michaels in China stands in stark contrast to Meng’s situation in Canada, where she’s been out on bail for nearly three years living in a mansion not far from the Chinese embassy in Vancouver under round-the-clock, court-ordered supervision. Meng’s extradition proceedings are ongoing and scheduled to continue until Aug. 20.
After wrapping up the last of four abuse of process applications Tuesday, final committal arguments began in Vancouver on Wednesday as Crown prosecutor Robert Frater, on behalf of the United States, took the court through the U.S. accusations of fraud perpetrated by Meng against HSBC.
“At last we come to committal,” Frater said, telling Associate Chief Justice Heather Holmes that the case before her has evolved over the years since it began, but at its essence remains “crystal clear” that the law of fraud is aimed at preventing dishonesty in commercial dealings.
“The elements of fraud are amply met by the evidence in the three records of the case," Frater told Holmes.
For an extradition bid to be successful, all a requesting state must do is establish a prima facie case against a defendant based on evidence put forward in the records of the case, he said. The U.S. accuses Meng of defrauding HSBC Bank in a meeting in Hong Kong in 2013, held at her request, with a senior bank executive after reports by Reuters in December 2012 and January 2013 laid out possible U.S.-Iran sanctions violations by a Huawei subsidiary known as Skycom.
Frater said that at the meeting, Meng was “dishonest because of what she did say and because of what she did not say,” committing “sins of both omission and commission” by telling the bank executive known as Witness B that Huawei — and its contractors, subsidiaries and business partners — had the highest standards of compliance when dealing in sanctioned countries,
Frater said Meng falsely tried to distance Huawei from Skycom, even though the firms were one and the same.
“Huawei is Skycom,” Frater repeated throughout the day’s submissions, even as the judge peppered him with questions about the Crown’s positions. Holmes frequently told Frater she’s been confused and troubled by the record of the case being silent on the line between prohibited transactions in Iran versus legitimate business that didn’t run afoul of the sanctions.
“Are all Iranian transactions prohibited in and of themselves?” Holmes asked Frater.
“No,” he said.
“I would like to understand the position of the requesting state as set out in the ROCs,” Holmes interrupted, referring to the records of the case. “I will say I’ve had great difficulty understanding the ROCs what it is about the commercial dealings of Huawei on one hand and Skycom on the other, that is said to have engaged U.S. sanctions.”
She added: “I have been troubled by this issue,” saying the records of the case don’t make clear how “certain things engage sanctions and other things don’t.”
Frater conceded the U.S. records of the case don’t set out clearly what crossed the line in doing business in Iran, telling Holmes that “there is not a general description about what is on the good side of the line in the ROCs.”
However, he said it's obvious that some business in the Islamic republic was allowed given Meng’s admission that Huawei did business in the country. But he noted Meng's assurances had satisfied HSBC’s representative that the bank could continue its relationship with the Chinese tech giant without fear of violating U.S. sanctions or breaking a deferred prosecution agreement in the U.S. involving its own follies working in sanctioned countries.
“Fraud is about commercial honesty. They needed candor to be able to run their business here and they didn’t get it,” Frater said. “Whether HSBC should’ve believed that, the fact is, they did. They acted on it and that’s fraud.”
The hearings continue Thursday in Vancouver.
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