Until she was detained by the Royal Canadian Mounted Police while transiting Vancouver International Airport, the world had not heard of Meng Wanzhou. Now everybody knows that Meng, 48, is the chief financial officer of Huawei and the daughter of Ren Zhengfei, chief executive officer and founder of China’s leading technology giant.
The RCMP arrested Meng in respond to a warrant from the US District Court in Brooklyn, New York. The warrant was actually drafted on August 22, 2018, but not delivered to the Canadians until November 30, urging immediate action because Meng was expected to transit Vancouver on December 1 en route to Mexico City.
The message from US officials implied that if she was not arrested this time, the next opportunity might not come again for an indeterminate period. Unfortunately for the Canadians, they fell for the story.
The Americans had been monitoring Meng’s movements for some time. Between August 22 and December 1, 2018, they noted that she had visited six other countries with extradition treaties with the US, namely Britain, Ireland, Japan, France, Poland and Belgium. Had she been allowed to leave Vancouver, she would have visited Mexico, Costa Rica and Argentina. They too have extradition treaties with the US.
Canada the designated patsy
With 10 countries to choose from, then US deputy attorney general Rod Rosenstein, directing this operation, concluded that Canada would be the easiest patsy and most willing to act as a vassal state to run this errand for Uncle Sam.
Selecting a willing collaborator was important because extradition hearings are almost always complicated, subject to challenges and appeals, and can consume a lot of time. Most countries would prefer not to get involved with such proceedings, since as a disinterested third parties, they have no skin in the game.
Indeed, Meng has languished under house arrest at the home she owns in Vancouver since her arrest nearly two years ago. Her next hearing is scheduled for this Monday, October 26. Lawyers familiar with extradition cases have opined that this case could drag on for another five years before all the issues and challenges can be resolved.
Much has already been reported about this cause célèbre, but I have seen very few discussions that examine the rotten underpinnings of the case, which I now propose to do in this article.
The origin of this case was probably more than 10 years ago as Washington watched the growth and development of Huawei with increasing dismay. Huawei had grown into a major supplier of telecommunication technology, and then threatened to become the world’s leader in that sector.
By the time Donald Trump became US president, Huawei had indeed become the leader in 5G, the fifth-generation wireless communication protocol and a leading maker of telecommunication hardware and mobile phones.
The Trump administration decided that the way to deal with the rise of Huawei was to use brute force – suppression, harassment and active campaigns with other nations not to buy from Huawei. Two news articles in 2012 and 2013 gave the ad hoc task force the idea to consider accusing the company of violating the US sanctions on Iran.
On further reflection, they must have concluded that charging a company in China with violating a US sanction on doing business with another country, in this case Iran, had a low probability of sticking.
But another article in 2013 reported that Meng had given HSBC a PowerPoint presentation about Huawei and Skycom. Meng was quoted as saying, “Huawei’s engagement with Skycom is normal and controllable business operation,” and that “as a business partner of Huawei, Skycom works with Huawei in sales and service in Iran.”
The “aha” moment for the Trump team was the fact that Skycom had attempted to sell Hewlett-Packard (HP) personal computers to Iran. The sale was never consummated but the intent to sell US technology to Iran was evidently sufficient to charge Skycom with violating the sanctions.
So far in the story, it seems to be a slam-dunk for the Trump team. All they did was read some old news articles and found a way to link the printed evidence to the CFO of Huawei.
Now bear with me, dear readers, and you will see that the story starts to smell fishy.
The most damaging “evidence” offered as part of the charges filed by the US Justice Department with the Canadian courts was the aforementioned PowerPoint Meng had prepared for HSBC. The US prosecutors claimed that the presentation showed Meng had lied to the bank and cause it to violate the sanctions against Iran unknowingly.
So it would seem that HSBC had turned state’s evidence to help the US federal court. However, the bank did not necessarily have clean hands in this matter. It issued a press release in 2012 that read in part: “HSBC has reached agreement with United States authorities in relation to investigations regarding inadequate compliance with anti-money-laundering and sanctions laws.
“Under these agreements, HSBC will make payments totaling US$1.921 billion, continue to cooperate fully with regulatory and law-enforcement authorities, and take further action to strengthen its compliance policies and procedures.”
Even for a major international bank, $1.9 billion is not chump change. But the interesting question not answered is whether “cooperate fully” included giving the PowerPoint slides to the Justice Department. Did the US government agree to deduct some amount from the fine as quid pro quo?
US prosecutors not playing with a full deck
The legal counsel for Meng were quick to point out to the presiding judge that the PowerPoint deck presented by the US prosecutors was incomplete. Slides that would have portrayed a different position for Meng in this decade-old affair and indicate that she had been transparent with HSBC were left out.
As The Globe and Mail observed, it’s highly unusual to go after individual executives carrying out company business rather than indicting the corporation for illegal offenses; indeed, one such example was the case against HSBC. Obviously, the special circumstance for going after Meng was that she was the daughter of the founder of Huawei.
The age of this case in the Canadian court is nearing two years. The original hare-brained idea was to hold Meng hostage to put pressure on her father, Ren Zhengfei. It didn’t work. Huawei has grown stronger and increased worldwide sales in the interim.
The latest Trump-team move was to deny Huawei access to critical semiconductor technology, which will temporarily set the company back, but at great cost to American high-tech industries – read David Goldman’s forecasts in Asia Times here and here.
With the current attention on denying American technology to Huawei, the US may have lost interest in Meng’s incarceration, but Canada is left holding the bag of a stinky mess not of its making. The Big Brother south of the border has skillfully set up Canada to take the fall, and there is no nice way to put the gloss on this little piggy.
Washington deliberately gave Vancouver authorities just one day to plan and make the arrest. They did not have time to look at the broader picture, consider the international consequences, or consult with Ottawa. Let’s face it, they were played for suckers – OK, if not suckers at least country bumpkins.
Not Justin Trudeau’s brightest moment
However, the prime minister of Canada, Justin Trudeau, has not exactly been a smart national leader and avoided the sinkhole laid out before him. He had plenty of opportunities to tamp down this sordid affair. Instead he lost control of the situation.
Five days after Meng was detained, her arrest was finally made public, and the Chinese Embassy in Canada was furious and demanded her immediate release. Ottawa did not respond.
Ten days later, two Canadians were detained in China, heretofore referred to in the media as the “two Michaels.” Beijing denied that the arrests were related to Meng’s arrest, which of course Trudeau wouldn’t buy. But Trudeau also did not acknowledge the reciprocal nature of China’s action.
Instead, he accused China of using arbitrary detention to achieve political goals and said that to give in to Beijing would put more Canadians at risk.
His reasoning is a real head-scratcher. Urging Canada to release Meng is hardly politics but humanitarian, and it’s hard to see how arranging a prisoner swap would endanger more Canadians – unless Ottawa is planning to intercept more Chinese business executives transiting Canadian airports in the future.
There are plenty of voices within Canada telling Trudeau that he can cut off the extradition process if he wants to. One summary reads: “The Extradition Act in 1999 gives the justice minister ‘unfettered discretion to withdraw an extradition at any time during the judicial phase of extradition,’ which offers the federal government a very clear option.”
Even though China has significantly reduced its imports from Canada, Trudeau appears undeterred. He apparently treats placating the irascible Donald Trump as more important than Canada’s sovereignty and national interest. He even fired his ambassador to China, a historic first, for publicly suggesting that Trump’s public comments provided grounds to stop the extradition.
Too bad Justin is just not a chip of the old block that was his father, Pierre Trudeau. Fifty years ago, Pierre led Canada to establish one of the first diplomatic relations between a Western country and People’s Republic of China, two years ahead of US president Richard Nixon’s visit to Beijing and nine years before formal normalization between the US and China.
Now, it appears unlikely that any surprising turnabout development is likely to take place at the court hearing on Monday. Meng’s fate will have to wait for the outcome of the US presidential election on November 3.
K J Noh and I have outlined the messy legacy created by US Secretary of State Mike Pompeo and a long list of actions that former vice-president Joe Biden will have to take to right the ship of statecraft if he wins the election.
Assuming that he wins, upon taking over the Oval Office, he will have many things to tend to, but one of his easiest tasks will be to drop the extradition process for Meng promptly. It’s long overdue and the decent humanitarian thing to do.
George Koo recently retired from a global advisory services firm where he advised clients on their China strategies and business operations. Educated at MIT, Stevens Institute and Santa Clara University, he is the founder and former managing director of International Strategic Alliances. He is currently a board member of Freschfield’s, a novel green building platform.