Extradition of Huawei Executive Clears a Major Legal Hurdle in Canada

VANCOUVER, British Columbia — The chief financial officer of the Chinese technology giant Huawei came one step closer to standing trial in the United States on sweeping fraud charges after a Canadian court ruled on Wednesday that prosecutors had satisfied a critical legal requirement for her extradition from Canada.

The executive, Meng Wanzhou, will have another chance to fight for her release at a June 15 hearing on the defense’s argument that her rights were violated during her arrest. That hearing may be delayed, however, because the defense and prosecution are wrangling over the release of documents.

Her arrest immediately thrust Canada into the middle of a diplomatic struggle between the United States and China — over trade, theft of technology secrets and whether Huawei’s efforts in helping countries build 5G next-generation mobile networks present a threat to national security.

It also severely strained Canada’s own relations with China. Shortly after Ms. Meng’s arrest, China detained — in retaliation, some say — two Canadians and accused them of espionage. They are still in secret jails in China.

The relationship has since become even more fraught, with Canadians criticizing China’s handling of the coronavirus pandemic and its human rights policies. Wednesday’s decision is expected to aggravate those tensions.

“We are likely in for several more years of worsening relations between Canada and China, with both sides hardening their stances at a moment when countries are already questioning China’s role in the pandemic,” said Guy Saint-Jacques, a former Canadian ambassador to China.

Wednesday’s court ruling, from Heather Holmes, associate chief justice of the British Columbia Supreme Court, found that prosecutors had cleared a fundamental hurdle for Ms. Meng’s extradition under Canadian law — demonstrating that the conduct she is accused of in the United States, if proved, also constitutes a crime in Canada.

The legal concept is known as “double criminality.”

The judge ruled that double criminality was met in this case, because the conduct Ms. Meng is accused of meets the essence of fraud, by “the making of intentionally false statements.”

“Canada’s law of fraud looks beyond international boundaries to encompass all the relevant details that make up the factual matrix, including foreign laws that may give meaning to some of the facts,” the judge wrote.

In their indictment against Ms. Meng, now 48, United States prosecutors charged her with fraudulently deceiving four banks into making transactions that would help Huawei evade United States sanctions against Iran.

Her defense team argued that the extradition request did not satisfy the requirement of double criminality because it was based on the accusation that U.S. sanctions against Iran had been breached — sanctions that Canada no longer has in place

Prosecutors said Ms. Meng lied to representatives of the bank HSBC in 2013 about Huawei’s relationship with Skycom, a company that would clear transactions between Huawei and HSBC in Iran, by saying Skycom was a partner, rather than a subsidiary of Huawei.

They said that misrepresentation amounted to fraud by exposing HSBC to reputational and economic risk in light of the American sanctions.

“Lying to a bank in order to get banking services that creates a risk of economic prejudice is fraud,” said Robert Frater, Canada’s chief general counsel for the Department of Justice, arguing the United States’ case in court earlier this year.

Ms. Meng, the eldest daughter of Huawei’s founder, Ren Zhengfei, one of China’s most prominent businessmen, has denied the allegations.

The U.S. indictment charging Ms. Meng also accused Huawei of stealing trade secrets, and obstructing a criminal investigation into whether the company tried to evade economic sanctions on Iran by destroying or concealing evidence.

The United States has repeatedly accused Huawei of stealing technology from its Western rivals and argues that the company’s ties to the Chinese government make it a threat to the national security of countries who adopt its technology in their next generation mobile networks. Huawei vehemently denies that.

The Trump administration escalated its campaign against the company this month by restricting its ability to work with chip makers that produce many crucial components in its smartphones and telecom equipment.

Canada itself has been reviewing whether it should allow Huawei technology in the country’s 5G network.

China experts said the Meng case has spurred Canadians to rethink how to deal with the economic superpower.

In addition to detaining the two Canadians — the former diplomat Michael Kovrig and the businessman Michael Spavor — China also restricted imports of pork, canola oil and other Canadian products after Ms. Meng’s arrest.

David Mulroney, another former Canadian ambassador to China, said China’s handling of the coronavirus pandemic, its jailing of the two Canadians, its infringements of human rights in Hong Kong and its mass detention of minorities in Xinjiang meant Ottawa could no longer return to the status quo in its relations with Beijing.

“There has been a global awakening prompted by the pandemic that China is an unreliable partner,” he said.

Last week, Prime Minister Justin Trudeau said China had linked the detention of the two Canadians with Ms. Meng’s case from the beginning, and had failed to understand that Canada had an independent judicial system, free from “political intervention.”

“China doesn’t work quite the same way,” he said.

Ms. Meng’s defense has filed a separate civil case against Canadian authorities, arguing that her rights were breached when border officials questioned her for three hours before making an arrest, seized her phones, asked for her passcodes and searched her eight pieces of luggage.

The defense also argues that Canadian officials improperly shared Ms. Meng’s SIM cards and her phone’s serial numbers with American law-enforcement officials.

Government prosecutors counter that the border guards had every right to search her and were just doing their jobs.

In early 2019, Ms. Meng was released on bail of 10 million Canadian dollars. She has spent the time since living in two different mansions that her family owns in wealthy areas of Vancouver.

Most recently, she has lived in a gated $14 million, seven-bedroom mansion in the city’s exclusive Shaughnessy neighborhood. Until the pandemic hit, she was able to travel relatively freely around the city — shopping and attending musical concerts — though she had to wear a GPS tracker on her ankle.

She takes daily painting lessons and her mother has been living with her.

Last weekend, she appeared at the steps of the imposing modernist British Columbia Supreme Court, making a thumbs-up gesture for photographers.

Many in Canada have noted the contrast between her circumstances and those of the Canadians imprisoned in China, whose access to lawyers and their families is severely limited.

Ms. Meng appeared in court for several hearings, cutting a glamorous figure in either casual outfits or colorful designer dresses and at times wearing stiletto heels adorned with glitter, which drew attention to the GPS tracker on her left ankle.

On the 70th anniversary of the founding of the People’s Republic of China, she wore a bright red Gucci dress, adorned with an enamel Chinese flag pin.

Ms. Meng could appeal a final decision on extradition to the Supreme Court of Canada, a protracted process that experts say could drag on for years.

After a ruling from the Supreme Court, the case would move to the political arena, with the justice minister of Canada making the final decision on whether she must be sent to the United States to stand trial.

Tracy Sherlock reported from Vancouver, British Columbia, and Dan Bilefsky from Montreal. Raymond Zhong contributed reporting from Taipei, Taiwan.

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