China has issued an official warning to Canada demanding the release of Meng Wanzhou – Huawei’s chief financial officer and the daughter of the company’s founder Ren Zhengfe – or else face “grave consequences.
Canadian authorities arrested the 46-year-old executive on the behest of Washington, which is seeking her extradition on charges of defrauding multiple financial institutions and violating US sanctions on Iran.
She was traveling from Hong Kong to Mexico and was boarding a connecting flight in Vancouver on Dec 1 when she was apprehended.
While the arrest was happening, President Donald Trump and his Chinese counterpart Xi Ping were getting ready for their working dinner more than seven thousand miles away in Buenos Aires.
According to China’s state-owned Xinhua News Agency, Vice Foreign Minister Le Yucheng summoned Canadian Ambassador John McCallum on Saturday (Dec 8) and lodged a “strong protest” against her arrest, saying it was a “severe violation” of her “legitimate rights and interests.”
“Such a move ignores the law and is unreasonable, unconscionable, and vile in nature,” Yucheng said in the statement.
“China strongly urges the Canadian side to immediately release the detained Huawei executive,” he said, warning of “grave consequences that the Canadian side should be held accountable for,” if it didn’t comply.
Huawei, one of the world’s leading telecommunications equipment and consumer electronics manufacturers, claimed in a statement that the allegations against Meng were “unspecified” and that company had always complied with “all applicable laws and regulations” wherever it operates.
“There has been very little information provided to Huawei on the specific allegations. Huawei is not aware of any misconduct by Ms Meng,” Huawei CEO Guo Ping said in a WeChat statement on Thursday.
“The company believes the Canadian and US legal systems will ultimately reach a just conclusion,” he added.
When nearly six hours of proceedings in a Vancouver courtroom failed to produce a decision on Thursday, the extradition and bail hearing was adjourned until Monday (Dec 10).
Canadian prosecutor John Gibb-Carsley, arguing the case on behalf of the country’s powerful southern neighbor, accused Meng of doing business with Iran through a Hong Kong-based shell company, Skycom, between 2009 and 2014.
According to the prosecutor, Meng had allegedly misled an executive of a financial institution when she said in a meeting that Skycom was a separate entity and not part of Huawei, thereby putting the institution at risk of financial loss and criminal liability.
“Skycom was Huawei. This is the crux of the alleged misrepresentation. This is the alleged fraud,” Gibb-Carsley said.
He urged the court to deny her bail, saying that she would use her vast resources to flee the country if bail was granted.
He said that Meng and other Huawei executives had stopped visiting the United States ever since they learned about the investigation into their alleged dealings with Iranian telecommunications companies.
“To feel the pull of bail, we are in a different universe in this case,” he said.
Meng’ lawyer David Martin told the judge that his client was a reputable person who would respect the bail conditions if released.
“You can rely upon her personal dignity,” he said, adding that she would not “humiliate and embarrass her father, who she loves” by violating a court order.
Martin’s defense was based on the argument that US sanctions law was complex and had changed over the years, and that telecommunications equipment was exempt from the country’s sanctions on Iran.
Martin argued that the evidence produced by the prosecution did not prove any wrongdoing on the part of his client, in so far as Canadian or US law was concerned.
“The allegations contained in this document do not support a prima facie case of fraud against Ms. Meng, let alone against Huawei,” he said.
The prosecution’s case is, primarily, based on Meng’s alleged misrepresentation to “Financial Institution 1,” which Martin identified as HSBC Holdings Plc.
He claimed that Meng’s PowerPoint presentation to the bank’s executive, which was prepared by several Huawei employees, did not hide the company’s operations in Iran, saying that it was in strict compliance with all applicable sanction laws.
“The suggestion that this 2013 PowerPoint induced the Hong Kong bank, the largest financial institution in the world, with vast compliance departments … to continue to provide financial services is preposterous,” Martin said.
Canadian foreign minister Chrystia Freeland told reporters on Friday that Canada valued its relationship with China and that the country’s ambassador in Beijing had assured the Chinese authorities of full cooperation in regards to consular access for Meng.
“[Canada] has assured China that due process is absolutely being followed in Canada, that consular access for China to Ms. Meng will absolutely be provided,” Freeland said.
“We are a rule of law country and we will be following our laws as we have thus far in this matter and as we will continue to do,” she added.
Responding to a question about a possible Chinese retaliation, Prime Minister Justin Trudeau told reporters that Canada shared a good relationship with China.
Former Canadian ambassador to China, David Mulroney, said that the executive’s arrest may lead to a “deep freeze with the Chinese in high-level visits and exchanges,” adding that “the ability to talk about free trade will be put in the ice box for a while.”
“But we’re going to have to live with that. That’s the price of dealing with a country like China,” he said.
In light of the recent developments, the temporary trade truce between the US and China – announced at the recently concluded G20 summit in Argentina – now hangs by a thread, which, in all likelihood, will snap should Meng get extradited.
“I think it will have a distinctively negative effect on the US-China talks,” said Philip Levy, a senior fellow at the Chicago Council on Global Affairs.
“There’s the humiliating way this happened right before the dinner, with Xi unaware. Very hard to save face on this one. And we may see (Chinese retaliation), which will embitter relations.”