Free Huawei CFO Meng
In 2019, Canada became a willing participant in both an escalating trade war and an international incident. Canadian border personnel guided and supported by the FBI and US Homeland Security (HS) detained Ms. Meng (the CFO of Huawei) by arresting her at the Vancouver International Airport.
On the surface, it seemed odd that a C-Suite executive from Chinese giant Huawei would be arrested for alleged bank fraud and that both the FBI and HS would be on Canadian soil. It also seemed odd that Canada would be asked to hold a Chinese citizen so she could be extradited to the USA. The elevating factor that drew global attention is that a sitting US President, Donald Trump, would refer to Ms. Meng as a “bargaining chip”.
With a US embargo on foreign trade with Iran, Meng was charged with financial fraud by misleading HSBC Holdings Plc about Huawei Technologies Co Ltd’s business in Iran.
How did Meng and Huawei become embroiled in a fraud and extradition case?
Meng gave a PowerPoint presentation to a HSBC banker in Hong Kong in 2013 that has been cited as key evidence against her. In that presentation, Meng said that Skycom Tech Co Ltd — a firm that operated in Iran — was “a business partner of Huawei,” while the United States has described it as an unofficial subsidiary.
Meng’s lawyers argued the prosecutors omitted key disclosures Meng made in the presentation regarding Huawei’s ongoing business operations in Iran and that Skycom worked with Huawei in sales and service in Iran.
Because the U.S. summary of the PowerPoint omitted the disclosures it was “materially misleading.”
The US’ case said that only “junior” HSBC employees knew of the relationship between Huawei and Skycom. Huawei was one of HSBC’s biggest clients making that claim implausible. In fact, new evidence from HSBC shows, a senior HSBC manager aka “HSBC employee 7” in the court case is a “managing director” HSBC, and is the same person who has always been in charge of the risk evaluation of Huawei’s account in HSBC, including all the KYC (Know Your Customer) procedures that is used to thwart criminal activity.
HSBC’s HORIS (Head Office Reporting Information System) is their internal customer management system. The records from HORIS shows, HSBC system was fully aware of the relationship between Huawei and Skycom.
According to an agreed document transfer from HSBC via a Hong Kong court, Meng was charged with financial fraud because of her presentation, but that PowerPoint was never submitted to HSBC’s global risk review committee. It further shows that the US ROC (record of case) provided misleading information.
The US case that Huawei used HSBC as a conduit for a $900M deal with Iran also is flawed. The $900 million credit facility that the United States said HSBC had extended to Huawei did not exist. Rather Huawei was in a $1.6 billion credit arrangement with 26 banks, and HSBC’s total contribution was limited to $80 million, Meng’s lawyers argued.
The issues were clear to everyone, from the very beginning, that Ms. Meng, daughter of the founder and CEO of Huawei, was an easy target for the USA to put pressure on Huawei to keep them out of the US-dominated hi-tech market — really?
The Trade War Begins
In Mar. 2018, the US-China trade war broke out. By June 2018, the US Congress began to take action against Chinese companies, especially Huawei. This campaign includes public statements, letters to the government, and lawmaking to expel Huawei from the US market. Then on August 13, 2018, President Trump signed the National Defense Budget Act (NDAA) to prohibit the federal government from purchasing Huawei equipment.
It certainly looked like a dynamic escalation by the US to keep China out of North America. Huawei had begun a 5G deployment with sales, and an implementation program in Western countries including the US. Huawei was getting kudos for its robust technology. The US feared that China would soon dominate the tech market not only with their more advanced 5G but other technologies as well.
While the US economy, culture, and politics is diminishing in power in the eyes of the world they still want and demand world dominance in most aspects of technology. The ‘greatest country in the world’ does not want to lose a trade war.
With Trump’s nationalistic policies he had tried to retain it’s self-proclaimed leadership position in the world. It was hoped that when Biden took office his policies would be more collaborative and this obvious trade war would be replaced by cooperation — not so!
While the US was in-fighting on infrastructure funding, the Chinese were putting billions into their high tech industries. If China wanted to dominate the hi-tech market with quality equipment they were ‘putting their money where their mouth is.’
Is Meng A Pawn in a Trade War?
According to the Washington Post (July 1, 2021), President Donald Trump gave the Chinese ample reason to regard Meng as a pawn in a larger power play. Asked by Reuters during a Dec. 11, 2018, interview whether he would intervene with the Justice Department in Meng’s case, Trump answered: “Whatever’s good for the country, I would do.” He said that if he decided her release would produce a big trade deal with China, “I would certainly intervene.”
This sounds like transactional politics aka quid pro quo. This impression is reinforced by former national security adviser John Bolton, who writes in his memoir, “The Room Where It Happened,” that Trump described Meng as “the Ivanka Trump of China” and seemed sympathetic to releasing her if he could get concessions from the Chinese.
The case against Huawei’s CFO is an abuse of the extradition process based on omitted facts and US foreign policy directives.
On June 3, 2021, Biden made an Executive Order allowing the US to use financial weapons against Chinese companies it deemed a national security threat. It stated that Investors could no longer buy new securities in these companies on American markets starting from August 2, and existing US investors were given a year to divest their holdings.
Canadian extradition cases have been known to drag on for years, some a decade. How can the US, in good conscience, continue to fight Meng’s extradition to the US in light of the HSBC evidence?
The US has raised the game with Executive Orders against Chinese companies and showed its might against a professional woman in custody in Canada. The Chinese government will not back down in the case of Huawei.
The documents released in Hong Kong in April 2021 clearly show a different picture than what the US is arguing in Meng’s case. Canadian prosecutors were trying to ban the publication of the new documents but the trial judge denied their application.
The Canadian Perspective
In my opinion, the US has placed Canada in an untenable situation with the Meng case. It has caused a major disintegration of what was a friendly relationship between Canada and China while making Canada look like a stooge for the US. If the Meng Case was strictly based on the law without foreign intrusion it would have been settled on the first day of court.
It’s also, clearly, exposed a flawed extradition policy based on the 1999 Extradition Act.6 “The new law went way too far in accommodating foreign states, says Dalhousie law professor Robert Currie. Canadian are shaking their heads on this one because the current legislation puts far more power in the hands of the Minister of Justice who is clearly playing a political game of appeasement to the USA.
The Facts Will Set You Free
The US will have a lot of explaining to do in the next court date with Ms. Meng. Evidence that clearly would not hold up in a US court seems to hardly be evidence in a extradition hearing in Canada.
The people know this Meng prosecution is part of the trade war so do the lawyers the courts and the US government but no one wants to make the first move. At a time when US foreign policy is bereft of reason perhaps it’s time the US show some diplomacy.
Throwing stones at each other will not stop two giants from seeking hegemony. However, if the US shows an attempt at ‘making peace’ with China it may go a long way with returning diplomacy and common sense to a non-sensical situation with Meng.
If the US can show that it does believe in human rights and that it won’t use petty criminal allegations, the US will see the value of ceasing the prosecution of Meng and move on to some collaboration to lower tensions in a very stressed world.
The Meng deportation case has gone on far to long!
Originally published at https://www.linkedin.com.
