Judge questions defence logic as Meng Wanzhou extradition hearing continues

Questions about loss, risk, fraud and the implications of sanctions violations filled a B.C. courtroom Tuesday as lawyers for Meng Wanzhou wrapped up their attempts to convince a judge not to extradite the Huawei executive to the United States.

Associate Chief Justice Heather Holmes quizzed defence lawyer Eric Gottardi about the logic behind his argument that Meng's alleged offence wouldn't be considered a crime in Canada.

Holmes is tasked with deciding whether charges against the 47-year-old chief financial officer meet the bar of so-called double criminality necessary to extradite someone from one country to another.

Meng is charged with fraud in relation to an allegation she put foreign banks at risk of loss and prosecution by lying about Huawei's ownership of a hidden subsidiary accused of violating U.S. economic sanctions against Iran.

'It's sanction breaking'

Move that same set of circumstances to Canada, Gottardi told Holmes, and there would be no crime because Canadians have rejected economic sanctions.

But Holmes didn't seem so sure, asking Gottardi whether someone could in fact be prosecuted domestically for lying in Canada, over the phone, to someone in another country who then lost money as a result.

The defence lawyer struggled for an answer, noting that the imagined scenarios were adding fiction to an exercise that already requires a judge to ponder a hypothetical scenario by transposing the facts of a case to Canada.

"It's difficult to respond to your question," he said at one point before ultimately returning to the fundamental argument underlying the case at hand.

"It's sanction breaking. It's in inducing a U.S. bank to breach domestic laws. That's what the Americans are upset about. That's what underlies these offences."

The 'essence' of the allegations

Meng was arrested at Vancouver International Airport on Dec. 1, 2018 on a stopover from Hong Kong to a conference in Argentina. She faces charges of bank fraud in the United States.

She has been living under house arrest in a multimillion-dollar Vancouver home since last December, when she was released on $10 million bail pending the outcome of the extradition battle.

Meng's case has already fractured Canada-China relations, after Beijing detained two Canadians and restricted imports in moves widely seen as retaliation for Meng's arrest.

The Crown is expected to begin its arguments on Wednesday, asking Holmes to consider the "essence" of the allegations against Meng as the judge ponders the question of double criminality.

In written arguments filed in advance of the hearing, prosecutors say that a fraud charge against Meng could be made on either side of the border, because she allegedly made a misrepresentation to HSBC, which risked loss as a result.

The Crown's arguments also touch on the questions that Holmes put to Gottardi — suggesting that she could still think about the impact of U.S. sanctions without having to consider Canada's position on Iran.

HSBC could have been subject to millions of dollars in fines because of a deferred prosecution agreement with the United States in relation to sanctions violations against other countries.

"The sanctions context is useful only to aid in identifying the resulting harm flowing from [Meng's] alleged lie," the Crown wrote in a filing in advance of the hearing.

'Our government supports it'

Defence lawyer Scott Fenton concluded the defence's case by arguing — essentially — that the case for fraud couldn't be made because all the fraud involved stemmed from sanctions violations.

He said that all the potential losses in the case come from "legal" risk of fines or prosecution for offences that don't exist in Canada.

Fenton also noted that if banks are "innocent dupes" of a misrepresentation then they would have done nothing wrong, and if they haven't done their due diligence, they would be at fault — not just Meng.

The lawyer also rejected the notion a Canadian bank could risk its reputation by financing a sanctions-breaking client.

"There is nothing wrong with a company in Canada transacting in dollars in Iran. In fact, our government supports it. Promotes it," Fenton said.

"There can't be reputational harm to a Canadian branch of a bank for doing the very things that our government has said are not only entirely lawful but encourages them to do."

If the judge decides the legal test of double criminality has not been met, Meng will be free to leave Canada, though she'll still have to stay out of the United States to avoid the charges.

If the judge finds there is double criminality, the hearing will proceed to a second phase.

That phase, scheduled for June, will consider defence allegations that Meng's rights were violated during her arrest in December 2018.