Canada deals major blow to Huawei CFO in US extradition battle

Huawei has lost its legal fight to rely on documents that it believed would undermine the US extradition case against Meng Wanzhou, its chief financial officer, after a Canadian judge decided they would not be allowed as evidence.

According to Huawei, the documents from within HSBC prove the bank was not misled by Meng about Huawei's dealings in Iran, as US prosecutors have alleged. They were confidential until April, when a court in Hong Kong ordered HSBC to release them to Huawei, and have been made publicly available since then.

US authorities maintain that Meng lied to HSBC about Huawei's relationship with Skycom, a company that sold telecom products into Iran. HSBC was duped into believing Skycom was only a business partner or affiliate when it was really a front company for Huawei, say US prosecutors.

But Meng's legal team insists HSBC executives were always aware that Huawei was ultimately in control of Skycom bank accounts. The HSBC documents prove this beyond doubt, they argue.

Seen by Light Reading, they include reams of internal HSBC emails as well as correspondence between bank officials and HSBC, mixed in with news reports and details of Skycom's financial performance.

One email sent by an HSBC employee to others in early 2013 bears the subject line "Fw: Huawei – Skycom Tech Co Ltd" and shows that HSBC staff were in talks with Huawei about the closure of Skycom accounts.

Others indicate that HSBC knew Huawei was previously a shareholder in Skycom and that Meng sat on its board before 2010.

Before the decision on Friday, Huawei had expressed optimism that at least some documents would be admissible based on their authenticity and because they cast doubt over the US record of the case.

But Associate Chief Justice Heather Holmes decided otherwise during a case management hearing before the weekend. "My decision is that the application is denied," she is reported to have said. "The HSBC documents will not be admitted."

She did not provide reasons for the decision but apparently said these would be forthcoming in the next ten days.

Huawei reacted by issuing the following statement: "We respect the court's ruling, but regret this outcome. Even though the court did not permit Ms Meng to introduce additional evidence, the new documents demonstrate clearly that HSBC, including its senior executives, were aware of Huawei's relationship with Skycom and its business in Iran."

"It shows that the United States' Record of the Case (ROC) and Supplemental ROCs are manifestly unreliable," continues the statement. "The hearings will continue, and as always we support Ms Meng in her pursuit of justice and freedom."

Sanctions regime

The decision is clearly a huge blow to Meng and her legal team, whose defense seemed to rest heavily on obtaining access to the HSBC documents and ensuring they would be allowed in court.

Meng has been detained in Vancouver since December 2018 when she was stopped by officials at the airport and prevented from boarding a flight.

While the US case against her is built entirely on a charge of fraud, Skycom is reported to have sold products to Iran that included US equipment, breaching American trade sanctions against the Middle Eastern country.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

ZTE, a smaller Chinese rival to Huawei, was previously hit with two successive $1 billion fines and banned from acquiring US components after being charged with similar trade violations. The ban nearly drove the company out of business before it was eventually lifted.

The HSBC documents neither prove nor disprove whether Skycom sold US equipment to Iran, but Huawei is already subject to restrictions that prevent it from procuring any technologies based on US intellectual property.

The sanctions were introduced by former US President Donald Trump – whose administration saw Huawei as a Chinese threat to the security of the US and its allies – and they have been tightened up by his successor Joe Biden.

Meng is reportedly due back in court on July 29 and a final decision on her extradition to the US is expected by October or November this year. Whichever way the decision goes, it is likely to be followed by a similarly drawn-out appeals process.

Related posts:

— Iain Morris, International Editor, Light Reading