China vs Canada: Tug of War Over Detained Huawei CFO’s Extradition

The first stage of the extradition hearing of Meng Wanzhou, Huawei’s Chief Finance Officer and eldest daughter of its founder, Ren Zhengfei, started on Monday in Vancouver. The case infuriated Beijing, causing a diplomatic uproar between China and Canada and complicated high-stakes trade talks between China and US.

Huawei is the image of China’s progress in the world of technology and has been a subject to US security concerns over the years. China’s Foreign Ministry complained that US and Canada were violating Meng’s rights and called for her release as soon as possible.

Washington accuses Huawei of using a Hong Kong shell company to sell equipment to Iran in violation of US Sanction. It says Meng, 47, committed fraud by lying to HSBC about Huawei’s relationship with its Iran-based affiliate Skycom in order to induce it to continue providing banking services to Huawei. This put the bank at risk of violating US sanctions against Tehran. According to court documents, Huawei allegedly controlled the operations of Skycom in Iran. Its staff used Huawei email accounts and security badges, and its bank accounts were controlled by Huawei. But Meng told HSBC Executives in a presentation in 2013 that Huawei no longer owned Skycom and that she had resigned from Skycom’s board.

Meng however, denies the allegations. Her defence team says comments by Donald Trump suggest that the Meng Wanzhou case is politically motivated. Meng was detained in December 2018 in Vancouver as she was in a Hong Kong-Mexico flight stopover, on the same day that Trump and China’s President Xi Jinping met for trade talks. Prosecutors have come out and said that Meng’s case is separate from the wider US-China Trade dispute.

This comes just after China and US have reached a ‘Phase 1’ trade agreement a week ago. Trump had raised the possibility of using Huawei’s fate as a bargaining chip in the trade talks, but the deal that was announced this Wednesday didn’t mention the company. Huawei is the biggest global supplier of network gear for cellphone and internet companies. But now, Washington is pressuring other countries to limit the use of Huawei’s technology, warning that they could be opening themselves up to surveillance and theft.

The initial stage of Meng’s extradition hearing will focus on whether Meng’s alleged crimes are ‘crimes’ both in US and Canada.

Her lawyers filed a motion arguing that the Meng Wanzhou case is really about US sanctions against Iran and not a fraud case as Canada does not have similar sanctions on Iran. The second hearing scheduled for June will consider defence allegations that the FBI violated her rights while collecting evidence before she was actually arrested. The extradition case could take years to resolve if there are appeals.

In retaliation to Meng’s arrest, China detained former Canadian diplomat Michael Kovrig and Canadian entrepreneur Michael Spavor. The two have been denied access to their lawyers and families. China has also placed restrictions on some of the Canadian exports to China including canola oil seed and meat. Last January, China also handed a death sentence to a convicted Canadian drug smuggler.

Former Canadian PM Jean Chretien and his ex-Deputy John Manley have urged Canadian PM Justin Trudeau to simply release Meng in a “prisoner swap” for Spavor and Kovrig in order to normalize relations with China. It will be worth witnessing how this tug-of-war ends with China having a tighter grip.

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