will america's sad attempt to slow china down in the race to g5 work- think on this who do 188 nation's ledaers trust more
trump or president xi
case reporting out of canada by south mornig post last update fruday eveing american
Sabrina Meng Wanzhou, the chief financial officer of Chinese telecommunications
giant Huawei Technologies, fraudulently represented the company in order to get around US and EU sanctions on Iran, a packed
courtroom in Vancouver, Canada, heard on Friday.
Meng, a daughter of Huawei founder Ren Zhengfei, was in British
Columbia Supreme Court for a bail hearing on fraud charges. The hearing ended without a decision and will continue on Monday.
The US is also seeking to extradite Meng in relation to Huawei’s alleged use of
an unofficial subsidiary, Skycom, to skirt the sanctions, a lawyer representing the Canadian government said.
was arrested at Vancouver International Airport on December 1 as she changed planes and has been detained ever since.
entered courtroom 20 for her bail hearing dressed in a green tracksuit, smiling and laughing as she conferred with her Vancouver
lawyer, David J. Martin.
About 100 journalists filled the high-security room, which was
constructed to try terrorists involved in the 1985 bombing of an Air India flight from Toronto to Delhi, and is surrounded
by bulletproof glass. Some of Huawei’s team, apparently
made up of executives and lawyers, had reserved 20 seats in the public gallery, said lawyer Sarah Leamon as she tried to move
journalists out of the way.
Scott Bradley, a senior vice-president of Huawei
who was seated in the public gallery, declined to comment on the case. A man wearing an enamel Chinese flag pin, who was seated
prominently among the Huawei team, also declined to comment.
The Canadian government’s
lawyer, John Gibb-Carsley, told the court that the US sought Meng on “fraud offences” involving US and EU sanctions
China demands explanation from US and Canada over arrest
Between 2009 and 2014, Huawei used an unofficial subsidiary, Skycom, to conduct business
in Iran, Gibb-Carsley said, telling the court: “This was the crux of the fraud.”
2013, Meng “personally represented to banks that Skycom and Huawei were separate” the lawyer said, after the banks
became aware that Skycom was doing business in Iran.
An arrest warrant was issued
for Meng by a New York judge on August 27, 2018, seeking her to stand trial for fraud. Gibb-Carsley described the US becoming
aware last month that Meng would soon be transiting through Canada, on her way from Hong Kong to Mexico.
November 30, a Canadian judge agreed to a US request that Meng be arrested, and on December 1 she was detained at Vancouver’s
airport as she changed planes, said Gibb-Carsley.
There had been doubt over whether
Meng’s alleged breach of US and EU sanctions amounted to a Canadian offence, something required for extradition.
But Gibb-Carsley said the alleged efforts to deceive financial institutions about the nature of
Huawei’s relationship with Skycom amounted to the Canadian offence of fraud.
Meng deceived financial institutions and in so doing put their pecuniary
and financial interests at risk
deceived financial institutions and in so doing put their pecuniary and financial interests at risk,” he said.
Gibb-Carsley said Meng engaged in an “extensive pattern of dishonesty”,
as he opposed bail, citing her supposed flight risk. Meng had access to “a vast amount of resources” and had “no
meaningful connection” to Canada, he said.
He also said that she faces multiple
charges, each of which carries a maximum penalty of up to 30 years in prison. “There is an incentive to flee,”
Ren, Huawei’s founder and Meng’s father, is worth US$3.2 billion,
said Gibb-Carsley, citing the US request for extradition. As he argued against releasing Meng, he seemingly acknowledged that
her husband, who went unnamed but was later identified by the surname Liu, was living in Canada.
dismissed the idea that the “surety [against Meng fleeing] is her husband … but he’s not a jailer in the
community” and said that while Meng owns “two very expensive family homes” in Vancouver, “that is
not a meaningful connection to this jurisdiction”.
Who is Sabrina Meng Wanzhou – and why the big deal?
The lawyer drew laughter from the gallery when he compared the defence’s request
for bail of C$1 million (US$752,400), compared to her father’s billions, saying “we are not in the same universe”.
Meng had demonstrated that she was avoiding travel to the United States, even though
she had a 16-year-old son going to school in Boston, said Gibb-Carsely.
2014 and early 2017, Meng travelled frequently to the US, he said. But US authorities say that in April 2017 she became aware
of the investigation, when US-based Huawei executives were served as part of a grand jury probe. She had not visited America
since then, he said.
Following a 15-minute break, defence lawyer Martin told the judge
that Meng should be granted bail because “you can rely on her personal dignity”, adding: “You can trust
Were Meng to breach a court order it would “humiliate and embarrass
her father, whom she loves”, said Martin. “She would embarrass China itself,” he added.
You can rely on her personal dignity. You can trust her
Martin clarified that Meng’s
potential surety, in addition to cash bail, could include her two homes in Vancouver, worth about C$14 million (US10.5 million)
He also portrayed the US extradition request as incomplete, saying: “We
don’t have a charge – the US has not identified an indictment in this material.”
said there were “glaring deficiencies” in the timelines offered by the US about Meng’s alleged deceptions,
and that Meng had been “very open” that Huawei had once owned Skycom, and that she had once sat on the board of
directors, but that it had been sold in 2009.
Martin said that the bank that was
allegedly deceived by Meng about Huawei’s Iran dealings was “Hong Kong Bank”, which he called “the
largest bank in the world”. He subsequently identified it as HSBC, which is the world’s seventh biggest bank by
total assets and sixth by market capitalisation.
Who is the family behind Chinese telecoms giant Huawei?
The idea that a 2013 PowerPoint presentation to HSBC by Meng - which the US claimed
represented fraud - could have induced the bank to provide improper financial services “is preposterous”, Martin
said, telling the court that the evidence presented by the US that Huawei had secret control over Skycom did not include the
crucial element of timing.
Martin derided evidence that Huawei maintained control over Skycom, supposedly revealed in corporate
stationery shared by the companies and in Huawei email addresses once used by Skycom executives.
of people have logos of Apple on their documents,” he said. “That doesn’t mean they are Apple.”
Lots of people have logos
of Apple on their documents. That doesn’t mean they are Apple
He said Meng had told bank executives that Huawei had done everything
possible to maintain compliance in its dealings with Iran, and that nothing provided to Iranian customers differed from products
typically shared with other customers around the world.
Martin, identifying HSBC as
the bank in question, also said, “if there is an alleged conspiracy [involving Meng and a financial institution] then
I ask rhetorically, why has that company not been charged?”
He also rejected
the notion that Meng had been deliberately avoiding the US to dodge arrest. He said instead that her travel plans were largely
dictated by the U-China trade war.
”An entity would have to be tone deaf to not
understand that the US had become a hostile place for Huawei to do business,” he told the court. Huawei’s business
had thus wound down in the US and there was little reason for her to travel there, he said.
Huawei agrees to UK security steps to avoid 5G ban: report
Martin provided details of Meng’s private life, citing an affidavit in which she
said he said she and her second husband, surnamed Liu, had a 10 year old daughter.
also has three sons from a previous marriage, he said. One, who is 14 lives in Hong Kong; another, 16, is studying at Andover,
near Boston in Massachusetts; and Meng has a 20-year-old son who works as computer engineer.
Reading from Meng’s affidavit, Martin quoted her as saying, “For some period of time
I was a permanent resident of Canada.” This had expired in 2009, said Martin, but Meng retained extensive links to Canada
and Vancouver, something that should weigh in her favour in seeking bail.
her children had undergone part of their schooling in Vancouver, the affidavit said, and Meng still spent two or three weeks
in the city every year.
Meng’s affidavit said she had two passports, one from China
and the other from Hong Kong, which was used to enter Canada on Saturday and has been seized. “I will surrender both
my passports,” said Meng in her sworn statement, in supporting her pursuit of bail.
defence lawyer also said that Meng was unsuited to incarceration, citing a “carcinoma problem” as well as a blood
Japan to ban Huawei, ZTE from government contracts
Martin emphasised the size of Huawei, saying it had gross revenue in 2017 of US$19.2
billion, and gross profit of US$7 billion. “Business in Iran is marginal to this enterprise,” he said.
firm held a special place in the Chinese business world, and Meng would not imperil that by fleeing if granted bail, Martin
”Her father would not recognise her,” he said. Her colleagues
would hold her in contempt. she would be a pariah.”
Martin tendered as a character reference a letter from the headmaster of a private school in Massachusetts
that was attended by one of her sons. Meng was “a person of the highest professional and moral standards”, the
The evidence concerning Meng’s arrest, and the reasons for
it, had previously been subject to a publication ban issued at her request. However, that was lifted as the first order of
business at the hearing on Friday morning.
If Huawei [violated sanctions] they should be barred from operating in the US or from purchasing US technology
Martin did not oppose the lifting of the measure
by Mr Justice William Ehrcke, saying “the horse has left the barn”. The lifting had been sought by a lawyer for
various media organisations.
Despite the court's lifting of the publication ban, the US Department
of Justice declined to comment or provide any details about the order for Meng's extradition.
arrest, which only became public knowledge on Wednesday, triggered an outcry from China, which demanded an explanation. Beijing
has lodged protests with both Ottawa and Washington.
The situation has reverberated
among investors and US multinational companies concerned about potential repercussion their executives in China might face
in response to Meng’s arrest.
Asked by the South
China Morning Post on Friday whether China would retaliate against foreign business executives in China, Chinese
foreign ministry spokesman Geng Shuang said that China “has always protected the legitimate rights and interests of
foreign nationals in China and they should obey Chinese laws [when they are in China]”.
China tries to reassure US execs after Huawei CFO’s arrest
On Friday, the Trump administration's top economic adviser, Larry Kudlow said that American
firms should not alter their business operations. “I wouldn't stop business or disrupt business just on the basis of
Huawei,” Kudlow, director of the National Economic Council, told CNBC.
Kudlow suggested that American companies that have dealings with China should play a role in advocating on the US government's
behalf as it confronts Beijing on trade and technology issues.
“If I were
they, I would try to help us with all the Chinese officials regarding these trade talks and trade openings, and tariff reduction,
non-tariff barriers of course the technology issues”, he said. “So they should join us.”
Thursday, US Republican Senator Marco Rubio, a national security hawk on China, tweeted: “If Huawei has been helping
violate US sanctions by transferring US technology to Iran they should be barred from operating in the US or from purchasing
Such a ban would hurt Huawei, due to the highly interconnected supply chain between
Chinese telecoms and their US component makers in the US. Huawei buys from various US companies, including Qualcomm, as it
develops its 5G technology.
Just this spring, another Chinese telecom equipment giant, ZTE,
tripped over supply chain issues, when the US Commerce Department said it had failed to make good on vows to punish employees
involved in unsanctioned sales to Iran and North Korea. The department imposed a seven-year ban on sales by US companies to
ZTE, a move that led ZTE to shutter its main operations within weeks.
President Xi Jinping asked US President Donald Trump to intervene, the ban was rescinded and ZTE instead agreed to pay a fine
of up to US$1.4 billion, replace its board and install a US compliance officer. But the ban was a wake-up call for China to
realise that even its largest telecoms firms could barely survive without US suppliers.
tech-heavy Nasdaq composite index has lost more than 6 per cent since Monday’s close, partly as a result of concern
that Meng’s arrest will derail talks between Washington and Beijing aimed at resolving a bilateral trade war that started
The case continues.
Additional reporting by Owen Churchill and Jodi Xu Klein