Canada judge rules Huawei CFO Meng's fraud case will proceed

A Canadian judge has ruled the US extradition case against a senior Huawei executive can proceed to the next stage, a decision that is expected to further harm relations between China and Canada.

Canada arrested China's Meng Wanzhou, the daughter of Huawei's founder and chief financial officer of the company, at Vancouver's airport in late 2018. The US wants her extradited to face fraud charges. Her arrest infuriated Beijing, which sees her case as a political move designed to prevent China's rise.

Associate Chief Justice Heather Holmes said on Wednesday in her decision the allegations against Meng could constitute a crime in Canada as well and the extradition could therefore proceed.

The US accuses Huawei of using a Hong Kong shell company to sell equipment to Iran in violation of US sanctions. It says Meng, 48, committed fraud by misleading the HSBC bank about the company's business dealings in Iran.

Meng's lawyers argued during a hearing in January that the case is really about US sanctions against Iran, not a fraud case. They maintain that since Canada does not have similar sanctions against Iran, no fraud occurred under its laws.

"Ms. Meng's approach to the double criminality analysis would seriously limit Canada's ability to fulfill its international obligations in the extradition context for fraud and other economic crimes," Holmes wrote.

Holmes said Canada did not have economic sanctions against Iran at the time but noted the sanctions used by the U.S. "were not fundamentally contrary to Canadian values."

Her legal team is scheduled to be back in court June 3 to set dates for when her lawyers will argue that Canada Border Services, the Royal Canadian Mounted Police and the FBI violated Meng's rights while collecting evidence before she was actually arrested. Extradition cases typically take years in Canada.

The ruling against Meng, the company's chief financial officer, is expected to erode already damaged relations between Beijing and Ottawa.

In apparent retaliation for Meng's arrest, China detained former Canadian diplomat Michael Kovrig and Canadian entrepreneur Michael Spavor. China has also placed restrictions on various Canadian exports to China, including canola oil seed. China also handed a death sentence to a convicted Canadian drug smuggler in a sudden retrial.

Huawei is the biggest global supplier of network gear for phone and internet companies and some analysts say Chinese companies have flouted international rules and norms amid allegations of technology theft. The company represents China's progress in becoming a technological power and has been a subject of US security concerns.

Ahead of the decision, Meng posed for photos on the court steps this past weekend, giving a thumbs up sign. She showed up to court on Wednesday wearing a black dress and wearing an ankle bracelet.

“Huawei is disappointed in the ruling,” Huawei said in a statement. “We expect Canada's judicial system will ultimately prove Ms. Meng's innocence.” Canada's Justice Department said in a statement that a judge at further hearings will determine whether or not Meng's alleged conduct provides sufficient evidence of fraud to meet the test for extradition.

“An independent judge will determine whether that test is met. This speaks to the independence of Canada's extradition process,” the statement said. “The Minister does not personally make any decisions related to an extradition proceeding until and unless the judge commits the person for extradition."