Meng Wanzhou, the chief financial officer of Chinese tech giant Huawei (and daughter of its founder, Ren Zhengfei) detained by Canadian authorities for extradition to the U.S. this month on allegations she lied to financial institutions as part of a scheme to evade sanctions on Iran, will not learn whether she can post bail until at least Tuesday.
Per the Wall Street Journal, the Supreme Court of British Columbia’s Justice William Ehrcke seemed “skeptical” during Monday hearings regarding a proposed bail arrangement of $11.2 million in cash and assets, viewing Meng as a potential flight risk:
As part of the bail terms, Mr. Martin suggested 15 million Canadian dollars (about $11.2 million), one million in cash and the rest secured by her two Vancouver homes. He presented two people, each to serve as a surety, essentially a supervisor for an accused person out on bail. One of them was Xiaozong Liu, Ms. Meng’s husband, and the other was Scot Filer, chief executive of the Vancouver-based firm Lions Gate Risk Management.
Justice Ehrcke questioned Mr. Liu’s immigrations status, saying he wasn’t convinced he could ensure Ms. Meng wouldn’t be a flight risk if he can’t remain in Canada himself. Extradition cases can go on “not just for many months, but many years,” Justice Ehrcke said.
According to the Star, Meng’s attorney also proposed that she could wear an electronic monitoring bracelet if released on bail.
While it was previously reported that Meng could face 30 years in prison if she is extradited to the U.S. and convicted, according to Reuters, that 30-year sentence is actually the maximum she could be locked away “for each charge.” It’s not clear how many charges she might face.
Since Huawei does business in countries that are signatories to international sanctions against Iran—spearheaded by the U.S., but including France, Germany, the UK, and the European Union—it is not allowed to do business there. Prosecutors allege Meng engaged in a conspiracy to defraud financial institutions (reportedly including HSBC) into believing a Huawei-controlled company, the Hong Kong-based Skycom, was an independent firm so that they would process financial transactions related to attempted sales of embargoed Hewlett-Packard computer equipment to Iranian telecoms.
Meng’s detention in Canada at the behest of U.S. authorities has become a major flashpoint because not only is she a well-known executive of a famous Chinese company—this year, Huawei became the world’s second-largest smartphone manufacturer—the U.S. and China are currently engaged in a trade war. While Donald Trump and his Chinese counterpart Xi Jinping recently agreed to a truce of sorts in which each side would refrain from imposing new tariffs, the Times reported there has been a “combustible torrent of outrage and alarm among affluent and influential Chinese.” The Chinese government is reportedly trying to prevent the issue from exploding into a larger fight, but it also warned of “grave consequences” if Meng is not released.
The standoff could easily get much more tense. According to CNN, some White House officials view Meng as potential “leverage” during future trade talks, and have additionally offered conflicting explanations of whether some aides knew in advance her arrest would come during meetings between Trump and Xi. If Trump’s administration actually plans on using her as a sort of hostage, Slate wrote, “it would be an extraordinary breach of diplomatic convention, and one that would pose retaliatory risks for thousands of Americans working in China.”
Huawei has also launched an aggressive overseas expansion funded by Chinese state banks, particularly in telecommunications gear and 5G networks. As the Times’ Kara Swisher noted, there is considerable concern in the U.S. that China will have a major advantage in the next generation of wireless technology. U.S. intelligence agencies also allege that Huawei and other Chinese companies’ equipment and perhaps their phones could be rigged for espionage purposes, though little hard evidence of that has ever emerged.
The U.S. government and some of its allies have either already imposed or plan to impose restrictions on the use of technology from Huawei and fellow Chinese tech giant ZTE, and U.S. companies have followed suit. That prompted Huawei to seek answers from the Federal Trade Commission earlier this year, per Bloomberg:
Huawei listed a series of actions, including a decision by Congress to bar federal agencies from buying equipment or services from Huawei and ZTE, and decisions by AT&T Inc. and Verizon Communications Inc. not to marketHuawei smartphones. The FCC is considering a measure to forbid U.S. carriers from using federal subsidies to buy gear from the companies.
“We have asked the Federal Trade Commission to work with their peers in government to ensure that the effects of these interventions are fully understood,” Huawei said in a separate statement. “Rules based on arbitrary security concerns are anticompetitive.”
As TechDirt’s Mike Masnick noted, there is reason to suspect that some of the U.S. restrictions have more to do with blunting the reach of Chinese competitors than actual spycraft. For example, in 2012 the Washington Post reported that California-based Cisco Systems had launched a lobbying campaign demanding increased scrutiny of Huawei.
Canadian courts could rule that the U.S. is seeking Meng’s extradition simply out of racial or religious prejudice or for political reasons, which would render the request invalid, and she has the right to several rounds of appeals in the country before any U.S. transfer may occur.
According to the Journal, Meng’s defense team claims Huawei cut ties to Skycom in 2009 and cannot be held responsible for the firm’s actions. It also alleged that Meng has multiple health issues that could worsen during detention.
“My father founded Huawei and I would never do anything that would cause the company reputational damage,” Meng said, according to the paper. “I believe breaching my bail conditions would cause such damage.”