Hong Kong Teahouse Huddle With HSBC Is Key to Huawei CFO Case

(Bloomberg) -- The legal fate of Huawei Technologies Co.’s chief financial officer may hinge on a fateful meeting at a Hong Kong teahouse with an HSBC Holding Plc banker in 2013.

Meng Wanzhou’s hefty legal team is gearing up to challenge a U.S. extradition request of the Chinese telecom executive, hoping to beat the odds by having a Canadian court throw out the case. If that fails, her prospects may depend on whether her huddle with an HSBC banker comprises enough evidence to justify turning her over.

The U.S. allegations -- that Meng tricked banks into processing Huawei transactions that potentially violated Iran sanctions -- rest heavily on a PowerPoint she presented at a meeting almost six years ago with an executive from "Financial Institution 1," identified in earlier hearings as London-based HSBC.

"The actus reus, as it were, of this matter occurred on August 22nd, 2013 in a teahouse in Hong Kong," Richard Peck, one of Meng’s defense lawyers, told the Vancouver court Wednesday, referring to the alleged crime.

There’s no evidence that Meng committed acts of "deceit, dishonesty or other fraudulent means" in that meeting or that the PowerPoint presentation caused HSBC to put itself at risk, according to a document filed by her defense summarizing the main issues it intends to litigate in the coming months.

Misled HSBC

Instead, the HSBC executive "misled the bank as to Huawei’s relationship with a company called Skycom and the nature of Skycom’s business in Iran," the document said. Representatives for HSBC in London declined to comment.

The U.S. alleges Skycom was Huawei’s defacto subsidiary in Iran and even employed an American there on behalf of Huawei in violation of U.S. laws. A major pillar behind those assertions is the Chinese PowerPoint Meng presented that day and an English version she had delivered to the bank about a week later.

That PowerPoint included "numerous misrepresentations regarding Huawei’s ownership and control of Skycom," according to the U.S. indictment. Based on her assurances that Huawei wasn’t violating any U.S. or E.U. sanctions on Iran, HSBC continued its banking relationship with Huawei, it said.

HSBC and its U.S. subsidiary cleared more than $100 million worth of transactions related to Skycom through the U.S. between 2010 to 2014, according to the U.S. filing. Meng faces multiple criminal charges in the U.S., including bank and wire fraud, money laundering and conspiring to obstruct justice, each of which carries a maximum sentence of 30 years in prison.

Abuse of Process

Her lawyers hope it won’t get to that. They’re arguing that there’s been such an "abuse of processes" that there are grounds for the court to stay the extradition proceedings, which would end the litigation.

They plan to argue that comments by U.S. President Donald Trump about the case amount to "political abuse." They also say Canadian police and border officials -- at the request of the U.S. Federal Bureau of Investigation -- failed to follow a Canadian judge’s order to "immediately arrest" Meng when she landed on a Cathay Pacific flight in Vancouver on Dec. 1. Instead, she was held for three hours without being advised of her right to legal counsel as her devices were seized and passwords extracted.

"Her rights were, we will argue, placed in total suspension," said Scott Fenton, one of her lawyers.

Meng’s next court date was set for Sept. 23.

©2019 Bloomberg L.P.

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