Saturday, October 31, 2020

Huawei CFO gets closer to U.S. extradition after losing court case

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A British Columbia Supreme Court judge ruled against Huawei’s chief financial officer Meng Wanzhou on Wednesday, dismissing one of the key arguments by the daughter of the company’s founder in her fight against extradition from Canada to the United States.

Huawei’s lawyers argued before the Vancouver court in January 2020 about the issue of “double criminality” — whether or not the actions the U.S. accused her of committing were also crimes under Canadian law. Canada’s Associate Chief Justice Heather Holmes issued a lengthy ruling Wednesday shooting down Meng’s arguments, thus allowing the winding extradition proceedings to continue moving forward.

“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 (just as it has none now).

The Attorney General counters first, that the elements of the offence of fraud in Canada can be made out, on the allegations, without reference to U.S. sanctions against Iran; and second, that in any event the sanctions may properly give background or context to the alleged conduct and explain why it mattered,” Holmes wrote.

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“For the reasons, I will give, I find that the allegations depend on the effects of U.S. sanctions. However, I conclude 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.”

The judge argued that “the essence of the alleged wrongful conduct, in this case, is the making of intentionally false statements in the banker-client relationship that put HSBC at risk,” and so “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.”

If Meng’s lawyers had succeeded in convincing the court that the U.S. effort was invalid, she could have been off the hook. Now, the proceedings will move forward, with another hearing later this summer over whether Canada abused its power by arresting her.

Meng was arrested by Canadian authorities in December 2018 at the request of the U.S., indicted in the Eastern District of New York in January 2019, and charged with bank fraud and wire fraud as well as conspiracy to commit both. In the same 13-count indictment in the Brooklyn court, Huawei itself as well as two affiliates, Huawei USA and Skycom, were charged with wire fraud, bank fraud, conspiracy, money laundering, and violations of the International Emergency Economic Powers Act specifically related to Huawei dodging sanctions against Iran.

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The Justice Department detailed a sanctions evasions scheme by Huawei dating back as early as 2007. Huawei hid its connection to Skycom, using it as a cutout to do business in Iran with plausible deniability. Meng was charged with helping hide Skycom’s affiliation with the giant Chinese telecom and with concealing Huawei’s illicit activities in Iran, including by allegedly lying to Huawei’s major banking partner HSBC in 2013 to help further the fraud.

After Meng’s arrest, China arrested two Canadian citizens, businessman Michael Spavor and former diplomat Michael Kovrig, who remain imprisoned. Meng was released on $10 million bail in early January 2019 and has been living in a mansion her family owns in Vancouver. She is allowed to travel around the city with a GPS monitor on her ankle.

The Justice Department unveiled a superseding indictment against Huawei in February, charging the Chinese telecommunications giant with racketeering and conspiracy to steal trade secrets.

The 16-count indictment charged Huawei and its U.S.-based subsidiaries with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act. The Justice Department pointed to the company’s “long-running practice of using fraud and deception to misappropriate sophisticated technology from U.S. counterparts” and revealed new claims about Huawei’s deceptive efforts to evade U.S., European Union, and United Nations sanctions when doing business in North Korea and Iran.

The new indictment alleged Huawei arranged for its goods to be shipped into sanctioned countries, using code names for the countries in their internal company documents. The indicted defendants now include Huawei, four subsidiaries (Huawei Device, Huawei USA, Futurewei, and Skycom), and Meng.

Meng is the daughter of Ren Zhengfei, Huawei’s founder and CEO, who has consistently denied that Huawei has done anything wrong.

In November, Attorney General William Barr said Huawei’s “own track record, as well as the practices of the Chinese government, demonstrate that Huawei … cannot be trusted.”

The U.S. has engaged in an all-out effort to limit Huawei’s global reach, especially in the area of fifth-generation wireless, or 5G, pushing its “Five Eyes” partners to reject Huawei technology in their communications networks. Canada is currently reconsidering its business dealings with Huawei, though it is under extreme pressure by the Chinese Communist Party. The U.S. views Huawei technology as a national security threat.

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