Meng Returns to Court Amid Signs Canada-China Standoff May Ease

(Bloomberg) -- Canada's arrest of Huawei Technologies Co.'s chief financial officer two years ago on a U.S. handover request triggered a political uproar as China quickly jailed two Canadian men. Since then, the fates of the three people have been locked in a seemingly intractable diplomatic impasse.

But a change in administration in Washington offers a glimmer of hope to China and Canada that the standoff may de-escalate.

Until then, Meng Wanzhou will keep fighting her extradition from Canada to the U.S., where she's wanted on fraud charges. Prosecutors in New York claim she misled banks into handling transactions that violated U.S. sanctions on Iran.

Meng, 49, returns on Monday to a Vancouver court where over the next 10 weeks her lawyers plan to present the case they've been building for more than two years, attempting to show there was an abuse of process in her arrest and that she should be released.

Meng, the eldest daughter of Huawei's billionaire founder Ren Zhengfei, was arrested at Vancouver's airport in December 2018 during a stopover. Within days, China imprisoned Michael Kovrig, a former diplomat, and Michael Spavor, an entrepreneur who ran tours to North Korea. They've been behind bars for more than 800 days while Meng enjoys the relative freedom of house arrest in her Vancouver mansion.

The events put Canadian Prime Minister Justin Trudeau in a bind that former President Donald Trump showed scant interest in resolving. Canada needs to uphold its extradition treaty with its closest ally, yet has little power to persuade China to release the men without interfering in an independent judicial process.

Biden and his administration understand they have an active role to play in resolving the issue and securing the release of Spavor and Kovrig, Trudeau said in a Feb. 24 interview. For the first time, U.S. President Joe Biden called on China last week to let go the two detained Canadians.

“Human beings are not bargaining chips,” Biden told reporters.

It isn't clear whether that could mean the U.S. may withdraw its request that Canada hand over Meng or negotiate a deal for her release.

“I certainly know this is a priority to the Prime Minister,” White House Press Secretary Jen Psaki said on Friday. “We all know that.” But she declined to say whether the U.S. is considering dropping the case, referring the question to the Justice Department.

The Justice Department continues to pursue her extradition, a department official said Friday. In December, the Justice Department was in talks about a possible resolution to the case. But discussions on a deferred prosecution agreement had stalled, Dow Jones reported earlier this month.

Among the banks the U.S. claims Meng misled is HSBC Holdings Plc. Meng was charged in New York with wire and bank fraud. She enters the next phase of hearings after suffering a legal setback in the U.K., where she had sought bank records from HSBC in an effort to prove she didn't trick any lenders.

In the coming weeks, Meng's defense will lay out its abuse-of-process claims in four separate parts:

• She claims her case is political: Trump muddied the criminal case two weeks after her arrest by suggesting that he might try to intervene if it would boost a China trade deal.
• She also claims Canadian border agents, police and the U.S. Federal Bureau of Investigation unlawfully used the pretext of an immigration check at the airport to get her to disclose evidence to use in the criminal case against her.
• Her third point is that the U.S. deliberately withheld or misstated evidence in its extradition request, including that HSBC was well aware of Huawei's ties to an Iran-linked company that sparked the extradition request and, therefore, she couldn't have defrauded the bank.
• And she alleges a violation of international jurisdiction. The U.S. case hinges upon a presentation that Meng, a Chinese national, gave to a non-U.S. bank at a meeting in Hong Kong, which has no connection to the U.S., her lawyers claim. The U.S. is also seeking to assert unilateral sanctions overseas, they said.

Those issues will be argued at the Supreme Court of British Columbia in hearings scheduled to conclude on May 14. After that, Associate Chief Justice Heather Holmes is expected to issue a decision on whether or not to commit Meng to extradition.

Appeals could lengthen the process significantly. Some Canadian extradition cases have lasted as long as a decade.

The U.S. case is U.S. v. Huawei Technologies Co., 18-cr-457, U.S. District Court, Eastern District of New York (Brooklyn).

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