On December 1, 2018, Huawei CFO Meng Wanzhou was taken into custody by Royal Canadian Mounted Police officers while transiting at Vancouver Airport. She has remained on Canadian soil ever since, awaiting the results of extradition proceedings that could send her to stand trial in the United States for alleged fraud in violation of U.S. sanctions against Iran. The oft-extended extradition trial is set to finally wrap up this August, at which point the presiding judge, Associate Chief Justice Heather Holmes of the British Columbia Supreme Court, will decide whether to issue a stay of the proceedings or commit the extradition to its final phase. If she elects the latter, all that stands between Meng and a trip to the Eastern District of New York is the ultimate authorization of the Canadian justice minister.
The genesis of the case stems from comments Meng made to a representative of British bank HSBC at a Hong Kong teahouse in 2013, pertaining to an allegedly Huawei-dominated entity known as Skycom. Skycom was found to be attempting to sell U.S. computer gear to the Islamic Republic. The level of control Huawei exercised over Skycom is disputed by the defense counsel, though they do acknowledge a certain amount.
At August’s hearing, look for Meng’s defense team to make one last push for the case to be stayed. Expect them to revisit some prior arguments contending an abuse of process stemming from the lackadaisical record keeping process pertaining to the arrest, improper politicization by former U.S. President Donald Trump in linking the case to a potential trade deal with China, and an absence of U.S. jurisdiction in light of the fact pattern giving rise to the allegations. Meng’s team has previously objected that Meng’s alleged conduct did not meet the U.S.-Canada double criminality requirement. That issue was decided in favor of the Crown last year.
Meng’s attorneys have additionally applied to introduce new evidence from HSBC that they believe will further elucidate that their client was a victim of abuse of process. The exact nature of that material has yet to be made public. A final decision on admittance will be rendered near the end of this month. One potential possibility is that Meng’s team will attempt to demonstrate that HSBC was fully aware of the dealings with Iran, which would help attack the contention the bank was defrauded. Then the question would turn to the importance and truthfulness of the 2013 comments in affecting HSBC’s banking decisions and whether or not a prima facie case of fraud stands in the eyes of the judge.
The jurisdictional hook relied on by U.S. law enforcement is that transactions resulting from this conversation were cleared in U.S. dollars via HSBC’s U.S. subsidiary. The U.S. Supreme Court has yet to definitely rule on whether dollar clearing is sufficient to establish jurisdiction over a foreign entity, since they have not been directly posed such a question. However, the 2018 case Jesner v. Arab Bank cast some doubt in dicta about whether dollar clearing alone would be enough to establish jurisdiction over a foreign entity. Despite that, both the SEC and DOJ, which are usually the organizations that handle these types of crimes, make it clear in their resource guide to the Foreign Corrupt Practices Act that such actions are sufficient to confer jurisdiction.
Regardless of the outcome of this particular case, setting a precedent in the extradition context for dollar clearing jurisdiction over high-profile foreign citizens may encourage a further push for certain nations to distance themselves from the dollar. Otherwise, the immense proportion of greenback transactions could give rise to a jurisdictional scope untouched by geographical boundaries. Russia has already announced it will remove all dollar-denominated assets from its wealth fund. The question of dollar clearing jurisdiction is one that continues to engender debate among legal scholars, with the defense referring to several law professors to support their position there is no reasonable connection to the United States.
The history of Canada-U.S. extradition proceedings does not paint a rosy picture for Meng. Though the 2006 Canadian Supreme Court case U.S. v. Ferris spelled out a role for the extradition judge to weigh some evidence in determining the plausibility of a case, that has rarely taken place on the ground. Between 2006 and 2017, only 16 out of 198 cases resulted in successful challenges at the committal stage. The pattern in those cases was not weak evidence, but rather no evidence at all pertaining to certain elements of the alleged crimes. The likelihood of the justice minister terminating the proceedings is likewise not high. In the decade starting in 2008, only nine of the extradition requests from Canada to the U.S. were terminated in this manner. Most of those decisions stemmed from considerations such as the health of the accused or potentially disparate sentencing guidelines in the United States.
In fact, Canada’s overall extradition rate is known for being comparatively high, pegged at around 90 percent. This has led to dissatisfaction among some legal scholars, especially in the wake of the extradition of Professor Hassan Diab to France in 2014 based on a handwriting sample that did not appear to match his script. That case was subsequently dropped by judges in France due to lack of evidence (the appeals court has since overturned, calling Diab back to stand trial). For purposes of comparison, India’s success rate in securing extraditions has been estimated as low as 36 percent.
Extradition in Canada is also conditioned on its Charter of Rights and Freedoms, a bill of rights added to the Canadian Constitution in 1982 that guarantees certain civil rights to all in Canada, including freedom from unreasonable search, seizure, or arbitrary detention as well as the guarantee of habeas corpus. Meng’s team asserts that the confiscation of her electronic devices constitutes unreasonable seizure. Her defense further argues that the deletion of officer emails relevant to determining if the FBI was ultimately responsible for ordering such seizure and collection of identifying information constitutes negligence.
On the politicization point, there is some precedent for Canada refusing extradition on interference grounds; however, the hill to climb is quite steep. The 2001 case U.S. v. Cobb resulted in the extradition judge issuing a stay of proceedings despite a prima facie case being presented against the defendants, which is typically the threshold for passing the case on to the minister. In that instance, the judge that would preside over the case in the United States suggested he would give the absolute maximum prison sentence at his disposal. Furthermore, the prosecuting attorney made appalling comments insinuating that the accused might become victims of homosexual rape in prison. Although Trump’s remarks teasing a possible intervention if the circumstances were ripe certainly seem to manifest at least a disregard for judicial independence, it is unclear based on the dearth of available precedent if that would be enough to stay proceedings. Trump’s statement has never been repudiated, but the fact he is no longer in office could also desalinate that line of attack.
There is also a contingent of academics and public servants within Canada that has voiced displeasure with the diplomatic situation Canadian authorities have found themselves in by complying with the U.S. request. Perhaps most notably, Canadian Ambassador to China John McCallum was fired in 2019 for saying that it would be in Canada’s interest if the United States dropped the extradition demand. Many Canadian media outlets have portrayed the subsequent arrests of Canadians Michael Kovrig and Michael Spavor in China as retribution for Meng’s detention. China and Canada had actually begun preliminary negotiations surrounding a mutual extradition treaty in 2016, something that now appears to be a shot in the dark to materialize at any point in the near future after Ottawa suspended its extradition treaty with Hong Kong. It also remains to be seen if this spat will hinder efforts at cooperation between U.S. and Chinese law enforcement agencies, a goal that was initiated in order to help handle counternarcotics, cybercrime, and capital flight operations.
In terms of Huawei’s business prospects, the firm initially benefited from a wave of domestic support in the wake of Meng’s detention, allowing revenue to remain mostly solid. The longer time horizon of U.S. blacklisting has started to curtail growth in certain sectors, leading the telecom giant to announce it will focus more on software development in the short run, as that sphere is further outside the bounds of direct U.S. influence. Huawei’s 76-year-old founder (and Meng’s father) Ren Zhengfei has stated he is mentally prepared for the possibility that he may never see his daughter again, but has urged her not to give in to the accusations.
If Meng ends up on U.S. soil, she will face up to 30 years in prison on bank and wire fraud charges. Her case would then be in the hands of the Eastern District of New York to try and decide, where proceedings would undoubtedly draw a media frenzy. Based on the current case calendar, we are approaching the long-awaited finish line of the extradition proceedings.