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Parties Spar Over ‘Risk’ to HSBC in Handling Huawei Accounts

The extradition of Huawei CFO Meng Wanzhou to the United States to face fraud charges could hinge on whether HSBC's dealings with the tech giant carried sufficient risk for the bank.

VANCOUVER, British Columbia (CN) --- Embattled Huawei executive Meng Wanzhou returned to the B.C. Supreme Court on Monday as her defense team urged the court again to accept evidence that they claim will show the United States’ case against the CFO is “misleading on several points.”

Kicking off three weeks of scheduled hearings, Meng’s lawyer Frank Addario urged Associate Chief Justice Heather Holmes to include affidavit evidence from a Huawei employee about specific loans and credit facilities extended to Huawei over several years. Addario said the evidence will refute prosecutors’ claims that HSBC was at risk of “deprivation” due to what the United States says were misrepresentations in a PowerPoint presentation to an HSBC executive in a Hong Kong tearoom in 2013.

Addario said the evidence would “correct the record” about potential losses to the bank relating to loans and credit facilities extended to Huawei and its many subsidiaries. The “deprivation element,” he said, has been a “moving target” of prosecutors who claim Huawei’s damage control after a Reuters article about an Iranian subsidiary resulted in Meng fraudulently inducing the bank to continue its relationship with the Chinese telecom giant --- in violation of U.S. sanctions.

“Canadian fraud law requires an actual risk that is not speculative," Addario said. "We say there was no risk of deprivation.”

Moreover, he said that even if Meng’s alleged misrepresentations did pose a risk, it would be too “remote” to constitute fraud. He characterized the prosecution’s position as a “controversial” theory of a “risk-free risk of deprivation,” since the ability to repay the loans was not in question, and the bank does not allege any losses.

But Justice Holmes disputed Addario’s submissions about fraud law and risk. 

“The law often assumes there’s inherent risk of nonrepayment even if there’s actual repayment, and the law doesn’t start examining what were the risk factors and might this person have died unexpectedly and their estate not repay,” she said. “We simply don’t go into those inquiries because there’s a recognition that there’s always a risk in an outstanding loan.”

Addario didn’t disagree but said the details of the loans in question are relevant because case law doesn’t support the “proposition that every loan carries sufficient risk to initiate liability and fraud.”

In Holmes’ past ruling on the double-criminality element of the bid for Meng’s extradition, Addario pointed out that she found “some risks don’t amount to deprivation because they’re speculative, remote or hypothetical.”

Still, Holmes cautioned him about “subtleties to that issue that still need to be argued.”

Prosecutor Robert Frater argued the evidence the defense seeks to admit is of no use since it only shows no loss to the bank, rather than no risk of loss to the bank since it kept on doing business with Huawei while hiding involvement with a sanctions-violating subsidiary.

“Focusing on the term loan loss is of no assistance here,” Frater said, noting Canadian case law dictates that what has to be shown “is the risk of economic loss.” Frater also urged Holmes to reject claims that Huawei affiliates and subsidiaries sought loans and financing that were somehow “hermetically sealed” and not affected or involved in what he said were Meng’s deceitful attempts to salvage Huawei’s relationship with the bank.

He called the defense's evidence “irrelevant” and said “it’s time to move on.”

Last week, Holmes dismissed earlier, similar defense applications to include additional affidavit evidence, finding that it “relates to issues properly within the domain of a trial, not the extradition hearing" that would "take the extradition hearing beyond its proper scope.” Holmes will rule on the latest defense application at the end of March.

Proceedings will continue Wednesday with further arguments on another branch of Meng’s abuse of process allegations against Canadian authorities relating to her arrest at Vancouver airport in December 2018. 

Categories / Criminal, International, Technology

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