Huawei Exec Denies Violating Iran Sanctions at Bail Hearing

VANCOUVER, British Columbia (CN) – The biting December morning cold in Vancouver did little to dampen the international firestorm surrounding the news of the arrest of Huawei Technologies chief financial officer Sabrina Meng Wanzhou as she made a court appearance in B.C. Supreme Court on Friday.

In this undated photo released by Huawei, Huawei’s chief financial officer Meng Wanzhou is seen in a portrait photo. China on Thursday, Dec. 6, 2018, demanded Canada release the Huawei Technologies executive who was arrested in a case that adds to technology tensions with Washington and threatens to complicate trade talks. (Huawei via AP)

On Dec. 1, Canadian authorities detained the Chinese telecom executive at Vancouver International Airport at the behest of the United States, which is now seeking her extradition on suspicion of violating trade sanctions on Iran.

Meng’s arrest drew a swift rebuke from the Chinese Embassy in Ottawa and officials on both sides of the border remain tight-lipped about the details of the case.

“At the request of the U.S. side, the Canadian side arrested a Chinese citizen not violating any American or Canadian law,” the embassy’s statement reads.

However, extradition requests made to Canada must involve so-called “dual criminality where in all cases, the conduct for which extradition is sought must be considered criminal in both the requesting country and in Canada.”

Meng had originally asked to seal evidentiary details discussed at Friday’s hearing from the media. Canada’s Extradition Act allows for parties to request a seal, which a judge can grant if publication or broadcasting the information would jeopardize a fair trial.

However, Meng’s bid for a ban was quickly abandoned after it was challenged by a consortium of media outlets including Reuters, Wall Street Journal publisher Dow Jones, and several local media outlets in Vancouver. Meng’s lawyer admitted that “the horses have left the barn.”

Meanwhile, Huawei has reportedly claimed it’s in the dark about the reasons for Meng’s arrest but said it “believes the Canadian and U.S. legal systems will ultimately reach a just conclusion.”

A spokesman for the Department of Justice in the Eastern District of New York, where Meng’s charges originated, had no comment and Justice Canada would only confirm Meng’s arrest at the request of the United States. Meng’s lawyer David Martin did not respond to requests for comment the day before the hearing.

International media from dozens of outlets gathered outside the courthouse in downtown Vancouver Friday morning, jockeying for position outside the glass doors as a line formed to get into Courtroom 20. To a packed public gallery, Meng – clad in green prison sweats – was led to the prisoner’s dock behind bulletproof glass where she was joined by a Mandarin interpreter. She smiled as her lawyers greeted her and they chatted before the arrival of Justice William Erhcke.

After dealing with the publication ban issue, crown prosecutor John Gibb-Carsley laid out the allegations against Meng, outlining a suspected conspiracy by Huawei to use a subsidiary called Skycom to import banned technology into Iran.

Authorities say Meng spearheaded a “damage control” effort after a Reuters story emerged that Huawei was using Skycom as an “unofficial subsidiary” to facilitate doing business in Iran in violation of U.S. sanctions.

Gibb-Carsley told the court that the “crux of the alleged fraud” centered on a presentation Meng gave to HSBC Bank in Hong Kong, in which she supposedly gave false assurances of Huawei’s compliance with international law while doing business in Iran through Skycom.

The prosecutor urged the court to deny Meng’s bail request, given her access to vast resources and what he called an “extensive pattern of dishonesty” involved in the “conspiracy to defraud multiple international financial institutions.”

He also outlined how Meng and other Huawei executives altered their travel patterns after the company learned of grand jury subpoenas issued to Huawei’s U.S. subsidiaries by the Justice Department. Meng made “numerous trips” to the U.S. in 2014, 2015 and 2016, Gibb-Carsley told the court, but those trips stopped after March 2017. He said Meng deliberately avoided traveling to the U.S. to avoid prosecution and has an incentive to flee given the serious nature of the allegations by the U.S., which has 60 days to file a formal extradition request after her arrest.

But Meng’s lawyer Martin disputed his client or Huawei was involved in any illegal or improper conduct. He told the court the company operates in 170 countries and has more than 170,000 employees. Martin said it was “preposterous” and “hotly contested” that a large banking institution would be induced to violate international trade sanctions based on a PowerPoint presentation, given both the bank and Huawei have “vast compliance departments” that have to navigate an extremely complex landscape of international sanction law.

Moreover, Martin said Meng acknowledged both Huawei’s and her own past involvement with Skycom, which was supposedly sold off years ago. Martin said Huawei has never made military technology, and referred to technology sold by Skycom and Huawei in Iran as “benign domestic telecommunications equipment.”

Martin urged the court to release his client on bail, saying the U.S. government’s case has “glaring deficiencies” and that her arrest was last-minute and based upon a “skeletal description of a theory of liability.”

Martin also denied Meng and other Huawei executives actively avoided traveling to the United States, but had simply abandoned ties there after a high-profile deal with AT&T fell apart. Company executives, he said, had no reason to travel to the United States after the country became “hostile” to Huawei doing business there.

Martin also revealed that Meng was formerly a permanent resident of Canada, which expired in 2009, disputing the prosecutor’s assertion that Meng’s incentive to flee was heightened by having little or no connection to Vancouver. Meng’s family owns two properties in the city, spends weeks here in the summertime and had kids who attended school in Vancouver between 2009 and 2012, Martin told the court.

“There is a consistent involvement of this family in Vancouver life,” he said. “My lord, this is a woman with a completely clean record.”

Meng also agreed to surrender both her Chinese and Hong Kong passports if granted bail, offered equity in her family’s Vancouver homes as surety, and said she would never do anything to humiliate or embarrass the company her father founded.

“She would be an outcast in China” if she was to flee, Martin said. “She would be a pariah.”

The hearing was adjourned until Dec. 10.

News of Meng’s legal woes follow years of warnings by top-ranking Canadian intelligence officials of Chinese espionage activities targeting the country’s tech sector, the latest coming in a speech this week by Canadian Security Intelligence Service director David Vigneault who warned emerging 5G network technology was particularly vulnerable.

This year, Huawei and Vancouver’s Telus Corp. teamed up to operate a so-called “Living Lab” to develop 5G technology, while the Chinese company also runs the “Seeds for the Future” program for student exchanges with the University of British Columbia and Simon Fraser University.

Both Canada and the United Kingdom have remained outliers among allies in their dealings with Huawei. The company has been barred from building networks in New Zealand and Australia, and has been shut out of U.S. government bids over cybersecurity concerns.

The timing of Meng’s arrest also comes amid increasing U.S.-China trade tensions and has put Canadian Prime Minister Justin Trudeau in the awkward position of angering Beijing after cozying up to strengthen ties upon taking power.

 

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