What Will Happen in Huawei CFO Meng Wanzhou’s Canada Extradition Case?

When Meng Wanzhou’s flight touched down in Vancouver on December 1, 2018, she expected it to be a brief layover. Instead, unbeknownst to the Huawei CFO, the daughter of the telecom giant’s founder Ren Zhengfei, she would have to stay for the long haul. Meng was detained and has been under house arrest for over two years, fighting extradition to the United States.

Meng is accused of misrepresenting Huawei’s relationship with another telecom equipment seller doing business in Iran during a 2013 PowerPoint presentation to HSBC, allegedly defrauding the international bank and putting it at risk of violating U.S. sanctions against Iran.

Her protracted legal battle in a Canadian courtroom ended its latest hearing on August 18, 2021, two days earlier than expected. Associate Chief Justice Heather Holmes will hold a case management conference on October 21 to announce the date for delivering her ruling.

Guy Saint-Jacques, a former Canadian ambassador to China, predicts that Holmes is unlikely to render her decision before November: “There is a small chance that she will agree with the defense that the rights of Meng were not respected when she was arrested. However, the more realistic scenario is that the judge will recommend extradition be granted.”

Days after Meng’s arrest, Canadian businessman Michael Spavor and former Canadian diplomat Michael Kovrig were detained in China. Beijing has subsequently leveled espionage charges against Spavor and Kovrig.

Through diplomatic channels, Beijing has made clear that the destiny of Spavor and Kovrig will hinge on the outcome of Meng’s extradition case. Earlier in August, Spavor was sentenced to 11 years in prison. Kovrig is likely to face an even harsher conviction.

Meng has maintained her innocence from the outset. Her team of Canadian counsels has laid out a four-pronged legal argument: that the extradition request from the U.S. violated international law; that both U.S. and Canadian officials had waded into the legal debate, soiling the process with politics; that the Canadian border authorities violated Meng’s Charter rights; and that the U.S. provided faulty evidence, which constitutes an abuse of process.

Meng’s initial hope at a quick release was quashed when Holmes ruled that her case met the double criminality requirement of Canada’s extradition law. In addition, Meng’s team failed to convince the court to grant her access to confidential documents on the circumstances of her arrest. Meng was recently dealt with yet another setback when the court ruled that HSBC’s hundreds of pages of documents to Huawei under a legal settlement could not be admitted as evidence.

David Laufman, a partner at Wiggin and Dana who previously oversaw U.S. export and sanctions enforcement at the Department of Justice, notes that Meng has practically exhausted her avenues of appeal to contest the Canadian government’s determination to comply with the U.S. extradition request. “It seems unlikely that she is going to prevail at the ultimate level of appellate review,” said Laufman.

There are some indications that Holmes has some doubt about whether the charges are consistent with Canadian legislation relating to the crime of fraud.

From court transcripts, Holmes raised several doubts about the prosecutors’ arguments. She challenged the Crown: If Meng had not already disclosed the controllable relationship between Huawei and Skycom, how could Meng be in a position to give assurance to HSBC about Skycom’s compliance with U.S. laws?

“[In] the fraud case, there do appear to be real problems with the U.S. Department of Justice’s prosecution case. There’s conflicting evidence even out of HSBC itself,” said Sandy Garossino, a columnist for Canada’s National Observer and a former Crown prosecutor and trial lawyer who once worked with Holmes.

“The defense has done a good job to undermine some of the key charges against Meng. But this is not a trial,” cautioned Saint-Jacques, noting the Crown only needed to establish a prima facie case that Meng had defrauded HSBC. “Justice Holmes may note in her decision that the argumentation is weak but that the extradition can still proceed.”

If Holmes rules that Meng is eligible for extradition, Canadian Minister of Justice Lematti might determine that the extradition would not be in Canada’s national interest, and Meng must be released, under Section 23 (3) of the Extradition Act.

“The [justice] minister has been disingenuous by passing the buck to the court when he knows that Section 23(3) of the Extradition Act gives him the power to decide whether to proceed with an extradition case,” said Gary Botting, a Vancouver barrister and author of multiple books on extradition law. “It’s a matter of political will.”

For the Canadian minister of justice to deny extradition after the courts have granted it would be unusual, according to Jerome Cohen, professor at New York University School of Law and a leading American expert on Chinese law and government.

“To do that before the legal issues are dealt with would look too political and appear to be a blow to the rule of law and an insult to the United States. The [minister of justice’s] rejection of the courts’ decision at the final stage would be even more controversial,” said Cohen. Plus, there “would be hell to pay for the Trudeau government, which allowed the two Michaels to suffer for years only to achieve an outcome that could have spared them at the outset.”

“Ultimately, it’s all about politics,” argued Botting, “The U.S. wanted their corporations to win [the 5G footrace], so it enlisted the help of Canada, which stuck out its foot in the final lap and tripped the front-runner, allowing rival companies to surge ahead.”

Other experts dispute the notion that the case against Meng Wanzhou was part of the U.S. government’s strategy to thwart the rise of the Chinese telecom giant and hence politically motivated.

Laufman acknowledged that certain U.S. criminal prosecutions may be politically controversial and even aggravate U.S. foreign relations with other countries. But he disputes the notion that the case against Meng was politically motivated. “There is no merit whatsoever to [that argument],” said Laufman, who noted that the investigation into Huawei began before Donald Trump assumed office and China-U.S. relations significantly deteriorated.

“This case was pursued solely based on applicable law and consistent with Department of Justice enforcement policy. Politics had nothing to do with it,” Laufman said.

Not all experts are on board. “It’s one of these moments where you see an industry that is at the forefront of the resurgence of techno-nationalism. And Canada was in a political predicament,” said Robert J. Hanlon, associate professor of international relations and Asian politics at Thompson Rivers University.

Hanlon argued that in most comparable cases, the corporation – rather than individual executives – is held accountable. Airbus agreed to pay over $3.9 billion in penalties to resolve the Foreign Bribery and ITAR case. Likewise, in 2015, Deutsche Bank was fined $258 million for violating Iran- and Syria-related sanctions. But no executives were detained upon stepping off a plane.

Botting argued that this case is simply a variation of U.S. prosecutors’ tactic to “round up as much small fry as it can and get them to implicate the larger fish.”

Despite the high-profile political and diplomatic tensions surrounding the Meng case, the legal underpinnings of this cause célèbre are not that unusual, argued Laufman, “It just so happens that Huawei is a giant international brand championed by the Chinese government.”

“It is formally a Department of Justice policy with respect to the prosecution of business organizations to exhaust efforts to hold accountable corporate officials who have engaged in wrongdoing in addition to the company itself, where there is sufficient admissible evidence to do so,” said Laufman, “On the premise that individuals run companies, there is no greater deterrent to future criminal wrongdoing by other business organizations than seeing that individual company leaders be held accountable for criminal wrongdoing.”

Meng’s legal team seized on an opportunity in late 2018, when Trump shared his private musings about intervening in Meng’s case to lock in a better trade deal with China with Reuters reporters.

“President Trump’s reported comments about telling the Justice Department to dismiss the [Meng] case in the broader context of the U.S.-China trade dispute were highly improper and detrimental to the U.S. criminal justice system. They suggested that criminal prosecutions in the United States can be horse-traded like soybeans or cotton in the international marketplace at the whim of a given U.S. administration, to accomplish a given foreign policy purpose,” recalled Laufman.

“That undermines the legitimacy of the U.S. criminal justice system of justice by suggesting that it is like so many other supposed systems of justice around the world, which are governed by political considerations rather than the rule of law.”

“My impression is that the indictment was based on the usual legal criteria and process,” said Cohen, “However, if I were the trial judge, I would deny it on the ground that Trump’s intervention [with respect to] trade rendered the request too political to allow extradition.”

While waiting for the outcome of her extradition case in Vancouver, Meng is required to wear an electronic anklet. She still has access to many of the pleasantries of her old life, including individual painting lessons and high-end shopping sprees.

A source close to Huawei said Meng’s arrest has been particularly disruptive to her children, who had to leave the United States in the middle of the school year. “That has been difficult for her. Something that she is a part of has had an impact on her kids.”

“Her arrest has forced her into the public spotlight in a way that could be quite uncomfortable to her. But I think she has adapted to that in a way that shows her strength and resilience. Meng does not seem to bear bitterness or ill-will towards the U.S. or Canada for how she’s been treated,” according to the source, who has recently personally interacted with Meng.

In stark contrast with Meng’s confinement in her gilded cage are the dire circumstances of Kovrig and Spavor. According to Canadian diplomats who have recently paid consular visits, the two Canadian nationals are confined to cells, sustaining on a diet of rice, boiled vegetables, and a meager supply of protein.

“[From] my discussion with people in China, there is a great deal of anger over the fact that the Canadian government detained Meng in the first place, and they wanted Canada to pay the price,” said Charles Burton, a senior fellow at the Macdonald-Laurier Institute and former counselor at the Canadian Embassy in Beijing. Releasing Meng “would only open the way for China to engage in more violations of international law through coercive measures to achieve Chinese policy goals.”

How Canada should respond to Beijing’s hostage tactics remains controversial. There must be an explicit political acknowledgment on both sides that there could be a political solution to this crisis, according to Hanlon. “The sooner that the respective legal cases can be completed, the sooner the politicians will come to the table and acknowledge that this is a political crisis, beyond just legal parameters.”

“Meng’s arrest and detention in Canada coincided almost exactly with the SNC-Lavalin scandal,” recalled Garossino, “[Trudeau] was reluctant to be seen to be intervening in yet another prosecution by the Canadian Ministry of Justice. In addition, there was a failure to recognize the difference between domestic criminal prosecutions and extradition matters. [The latter] have an inherent foreign policy and diplomatic component to them.”

Canada is going to the polls on September 20. “The minority Liberal government is vulnerable to a vote of no confidence,” said Hanlon, “The lack of intervention is much more a testament to the domestic political vibes than it is to try to appease or get out of this diplomatic crisis.”

Other experts believe that fundamentally, the kind of intervention that could resolve the diplomatic deadlock must come from the United States.

“Meng’s case is subject to the rule of law in Canada. If there’s any intervention to drop it, it has to come from the U.S. that requested to detain her in the first place. This is a high-profile case that will set a precedent for future cases involving Chinese business executives overseas as well as cases involving application of U.S. law in third-party territories,” said Lynette Ong, a political science professor at the University of Toronto.

Last year, the Wall Street Journal reported that Meng was negotiating a deferred prosecution agreement. “There reportedly have been ongoing settlement negotiations. However, she probably refuses to admit guilt,” said Cohen.

No matter how the negotiations pan out, Garossino argued, “The sheer political realities are staring us hard in the face. Political leaders hate to negotiate for hostages. They all say they won’t do it. And yet, they do in extenuating circumstances. And I think we’re here now.”