VANCOUVER, British Columbia — The chief financial officer of the Chinese technology giant Huawei came one step closer to standing trial in the United States on sweeping fraud charges after a Canadian court ruled on Wednesday that prosecutors had satisfied a critical legal requirement for her extradition from Canada.
The executive, Meng Wanzhou, was arrested in Vancouver in December 2018, at the request of the United States, and indicted in January 2019. Her detention set off one of the biggest legal dramas in recent Canadian memory, its twists and turns parsed on national television.
Her arrest also thrust Canada into the middle of a diplomatic struggle between the United States and China — over trade, theft of technology secrets and whether Huawei’s efforts in helping countries build 5G next-generation mobile networks present a threat to national security.
And it severely strained Canada’s own relations with China. Shortly after Meng’s arrest, China detained two Canadians — in retaliation, some say — and accused them of espionage. They are still in secret jails in China.
That relationship has become more fraught since, with Canadians criticizing China’s handling of the coronavirus pandemic and its human rights policies. Wednesday’s decision is expected to aggravate those tensions.
Guy Saint-Jacques, a former Canadian ambassador to China, said the ruling likely presaged “both sides hardening their stances at a moment when countries are already questioning China’s role in the pandemic.”
On Wednesday, Huawei said that it was “disappointed” in the ruling, and that it expected Meng would ultimately be proved innocent.
Chinese state media this week signaled there could be a backlash if the ruling did not go in Meng’s favor. Global Times, a state-owned tabloid with a nationalist bent, warned of “resentment” in China should the judge make a decision that “panders to the Trump administration.”
After the decision, Canada’s minister of foreign affairs, François-Philippe Champagne, stressed that the Canadian judiciary was independent.
He said that Canada would continue to engage with China, and that its top priority was the release of the two Canadians — the former diplomat Michael Kovrig and the businessman Michael Spavor — “who have been arbitrarily detained for over 500 days.”
Meng will have another chance to fight for her release in the coming months at hearings on whether her rights were violated during her arrest.
While the Meng case has complicated Canadian diplomacy, Wednesday’s decision was a matter of law.
In her decision, Heather Holmes, associate chief justice of the British Columbia Supreme Court, found that prosecutors had cleared a fundamental hurdle for Meng’s extradition under Canadian law — demonstrating that the conduct she is accused of in the United States, if proved, also constitutes a crime in Canada.
The legal concept is known as “double criminality.”
The judge ruled that double criminality was met because the conduct Meng is accused of — “the making of intentionally false statements” — meets the essence of fraud.
In their indictment against Meng, now 48, U.S. prosecutors charged Meng with fraudulently deceiving four banks into making transactions to help Huawei evade U.S. sanctions against Iran.
Her defense team argued that the extradition request did not satisfy the requirement of double criminality because it was based on the accusation that U.S. sanctions against Iran had been breached — sanctions that Canada no longer has in place.
Prosecutors said Meng lied to representatives of the bank HSBC in 2013 about Huawei’s relationship with Skycom, a company that would clear transactions between Huawei and HSBC in Iran, by saying Skycom was a partner, rather than a subsidiary of Huawei.
They said that misrepresentation amounted to fraud by exposing HSBC to reputational and economic risk in light of the American sanctions.
“Lying to a bank in order to get banking services that creates a risk of economic prejudice is fraud,” said Robert Frater, Canada’s chief general counsel for the Department of Justice, arguing the U.S. case in court earlier this year.
Meng, the eldest daughter of Huawei’s founder, Ren Zhengfei, one of China’s most prominent businessmen, has denied the allegations.
The U.S. indictment charging Meng also accused Huawei of stealing trade secrets and obstructing a criminal investigation.
The United States argues that Huawei’s ties to the Chinese government make it a threat to the national security of countries who adopt its technology in their next generation mobile networks. Huawei vehemently denies that.
The Trump administration escalated its campaign against Huawei this month by restricting its ability to work with chip makers that produce many crucial components in its smartphones and telecom equipment.
Canada itself has been reviewing whether it should allow Huawei technology in the country’s 5G network.
Despite the assertion by Champagne, the foreign minister, that Canada would continue to engage with China, experts said that China’s behavior was spurring Canadians to rethink how to deal with the economic superpower.
In addition to detaining the two Canadians — the former diplomat Michael Kovrig and the businessman Michael Spavor — China also restricted imports of pork, canola oil and other Canadian products after Meng’s arrest.
David Mulroney, another former Canadian ambassador to China, said China’s handling of the coronavirus pandemic, its infringements of human rights in Hong Kong and its mass detention of minorities in Xinjiang had also worsened relations with Beijing.
“There has been a global awakening prompted by the pandemic that China is an unreliable partner,” he said.
Last week, Prime Minister Justin Trudeau said China had linked the detention of the two Canadians with Meng’s case from the beginning, and had failed to understand that Canada had an independent judicial system.
Meng’s defense has filed a separate civil case against Canadian authorities, arguing that her rights were breached when border officials questioned her for three hours before making an arrest, seized her phones, asked for her passcodes and searched her eight pieces of luggage.
Government prosecutors counter that the border guards had every right to search her.
In early 2019, Meng was released on bail of 10 million Canadian dollars. She has spent the time since living in two different mansions that her family owns in wealthy areas of Vancouver.
Most recently, she has lived in a gated $14 million, seven-bedroom mansion in the city’s exclusive Shaughnessy neighborhood. Until the pandemic hit, she was able to travel relatively freely around the city — shopping and attending musical concerts — though she had to wear a GPS tracker on her ankle.
She takes daily painting lessons and her mother has been living with her.
Last weekend, she appeared at the steps of the imposing modernist British Columbia Supreme Court, making a thumbs-up gesture for photographers.
Many in Canada have noted the contrast between her circumstances and those of the Canadians imprisoned in China, whose access to lawyers and their families is severely limited.
Meng could appeal a final decision on extradition to the Supreme Court of Canada, a process that experts say could drag on for years.
After a ruling from the Supreme Court, the case would move to the political arena, with the justice minister of Canada making the final decision on whether she must be sent to the United States to stand trial.