VANCOUVER, British Columbia (CN) — Huawei chief financial officer Meng Wanzhou must face extradition proceedings initiated by the United States, a Canadian court ruled Wednesday, finding what the U.S. accuses the Chinese telecom executive of would also be a crime in Canada.
British Columbia Supreme Court Associate Chief Justice Heather Holmes found the conduct the United States accuses Meng of would constitutes fraud had it happened in Canada, siding with prosecutors who laid out the U.S. case against the daughter of billionaire company founder Ren Zhengfei.
Back in January, Meng’s lawyers tried to steer the case away from fraud allegations, claiming U.S. sanctions against Iran were at the heart of the case. They argued the double-criminality test for extradition failed because Canada had no sanctions the bank could have violated had it processed transactions from Iran.
“This is a unique case because the risk of economic deprivation arises solely from the operation of foreign penal law for which no Canadian corresponding penal law exists,” defense lawyer Scott Fenton told the court.
Government lawyers, on the other hand, characterized Meng’s conduct as simple fraud under Canadian law because “anytime you’re giving out money based on a misrepresentation, you’re at risk,” Robert Frater, chief general counsel at the Department of Justice told the court.
Holmes agreed, emphasizing that while the allegations against Meng remain unproven, her alleged misrepresentations could amount to fraud under Canadian law where potential “deprivation caused by the prohibited act need not be actual economic loss, but may consist of the potential for loss, meaning that the victim’s economic interests are imperilled [sic].”
“Ms. Meng says that the alleged conduct could not have amounted to fraud in Canada because it relates entirely to the effects of U.S. economic sanctions against Iran, and at the relevant time Canada had no such sanctions,” Holmes wrote.
While the “allegations depend on the effects of U.S. sanctions,” Holmes concluded that “those effects may play a part in the determination of whether double criminality is established.
“For that reason, Ms. Meng’s application will be dismissed,” Holmes wrote.
While she rejected prosecutors’ arguments that fraud could be established in the absence of U.S. sanctions against Iran, she found that foreign laws can still play a part in domestic fraud prosecutions.
“Consider this. A domestic prosecution for fraud could properly, I suggest, take place in Canada on the basis of false statements made in Canada that put a U.S. bank at economic risk for violating U.S. sanctions. Nothing about our law of fraud would prevent reference to U.S. law to explain how the U.S. bank was put at risk, in order to establish deprivation,” Holmes wrote. “Since a domestic prosecution could in this way rely indirectly on the effects of U.S. law, it is difficult to understand why the domestic aspect of a double criminality analysis in an extradition proceeding should not do so as well.”
Meng’s legal team unsuccessfully argued the fraud case was an “artificiality” since the U.S. had “no real interest in policing private dealings between a foreign bank and a private citizen on the other side of the world.”
But Holmes found that the “essence” of the case against Meng involved allegations of false statements in a “banker client relationship” which put the bank at risk.
“The U.S. sanctions are part of the state of affairs necessary to explain how HSBC was at risk, but they are not themselves an intrinsic part of the conduct,” Holmes wrote. “For this reason, I cannot agree with Ms. Meng that to refer to U.S. sanctions in order to understand the risk to HSBC is to allow the essence of the conduct to be defined by foreign law. Canada’s laws determine whether the alleged conduct, in its essence, amounts to fraud.”
Holmes said if accepted, “Ms. Meng’s approach to the double criminality analysis would seriously limit Canada’s ability to fulfill its international obligations in the extradition context for fraud and other economic crimes. The offense of fraud has a vast potential scope. It may encompass a very wide range of conduct, a large expanse of time, and acts, people, and consequences in multiple places or jurisdictions.
“Experience shows that many fraudsters benefit in particular from international dealings through which they can obscure their identity and the location of their fraudulent gains,” the judge continued. “For the double criminality principle to be applied in the manner Ms. Meng suggests would give fraud an artificially narrow scope in the extradition context. It would entirely eliminate, in many cases, consideration of the reason for the alleged false statements, and of how the false statements caused the victim(s) loss or risk of loss.”
Holmes set a case management conference for June 3.
A Huawei spokesperson said the company was disappointed with the ruling.
“We have repeatedly expressed confidence in Ms. Meng’s innocence. Huawei continues to stand with Ms. Meng in her pursuit for justice and freedom. We expect that Canada’s judicial system will ultimately prove Ms. Meng’s innocence,” the spokesperson said in an email.
Meng’s fate, however, is far from sealed since she can exhaust a lengthy appeal process that could stretch on for several more years. Additionally, after the court rules on committal, the decision to extradite ultimately lies with Canada’s Minister of Justice — a decision which can also be overturned on judicial review by the Federal Court of Canada.
The defense has also accused Canadian authorities of abuse of process and violating Meng’s rights during her detention at the Vancouver International Airport on December 1, 2018. Border guards questioned Meng for hours and searched her electronic devices in what the defense calls a “fishing expedition” at the behest of American law enforcement.
While Wednesday’s ruling didn’t deal with the abuse of process allegations, Meng’s multipronged legal strategy is underpinned by diplomatic hardball strategies being played in Beijing, including the widely condemned arrest and incarceration of Canadians Michael Kovrig, a former diplomat, and Michael Spavor, a businessman and entrepreneur.
Dubbed “the two Michaels,” the pair have been imprisoned in China for nearly two years on charges of violating Chinese national security law. While their imprisonment just days after Meng’s arrest was seen as a retaliatory move against Canada, the country found itself unenviably wedged between the might of its closest ally and neighbor and the intemperate and unpredictable force of an increasingly authoritarian trading partner.